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Tabbert v. Howmedica Ostenonics Corp.

United States District Court, E.D. Washington

October 24, 2017

THOMAS TABBERT, Plaintiff,
v.
HOWMEDICA OSTEONICS CORP., Defendant.

          ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

          SALVADOR MENDOZA, JR. UNITED STATES DISTRICT JUDGE

         Before the Court is Plaintiff Thomas Tabbert's Third Renewed Motion for Summary & Declaratory Judgment, ECF No. 191. Mr. Tabbert moves for summary judgment on his claim for declaratory judgment that his 1995 non-compete agreement with Howmedica is invalid and unenforceable. He also moves for summary judgment on Howmedica's breach of contract claim and on his affirmative defense of estoppel.

         The Court held a hearing on the motion on October 17, 2017. Upon consideration of the briefing and the arguments presented at the hearing, the Court denied Mr. Tabbert's motion for summary judgment on all grounds. This order memorializes and supplements the Court's oral ruling.

         BACKGROUND

         A. Undisputed Facts

         1. Mr. Tabbert worked as a sales representative for Howmedica from 1993 to June of 2014.

         In 1993, Mr. Tabbert began working as a sales representative for a medical supply distribution company known as Stryker. Initially, Mr. Tabbert sold bone-saws and other surgical tools in a territory in Wisconsin. In 1995, he applied for a position as a sales representative with the company now known as Howmedica Osteonics Corp. (Howmedica), a Stryker subsidiary corporation. Mr. Tabbert's transfer to Howmedica was effective January 1, 1996.

         As part of his new position, Mr. Tabbert moved to the Eastern Washington/North Idaho region. He began selling hip and knee implants. He also provided technical assistance during surgeries to advise physicians and explain design aspects of implants.

         a. Non-compete Agreements

         Mr. Tabbert signed a non-compete agreement when he first began his employment with Stryker in 1993. Howmedica has a copy of this agreement in Mr. Tabbert's personnel file.

         When Mr. Tabbert transferred to the new position with Howmedica, Stryker required Mr. Tabbert to sign a new non-compete. This non-compete (the 1995 Agreement) was signed on December 12, 1995. Under the 1995 Agreement, Mr. Tabbert would be prohibited from either competing against Stryker or soliciting its customers for the sale of orthopedic products in the territory in which he worked for a period of one year following the termination of his employment. The agreement contained a choice of law clause designating New Jersey as the governing state.

         The 1995 Agreement is an “unpaid non-compete” meaning that Stryker was not required to provide compensation for the one-year non-compete period. The 1995 Agreement states that it was supported by consideration, but does not specify what this consideration is. Howmedica has a copy of the executed agreement in Mr. Tabbert's personnel file.

         2. Mr. Tabbert resigned from Howmedica, and Stryker indicated it would enforce the 1995 agreement.

         On May 29, 2014, Mr. Tabbert informed his supervisor, Duane Riggs, that he was resigning from his position at Stryker effective June 10, 2014. That same day, Jenny Lavey, Howmedica's HR Client Services Manager, sent Mr. Riggs an email titled “RE: Tabbert non-compete.” ECF No. 36-3 at 8. The email states “FYI-it's pretty old, guessing it's a paid one!” Id. Attached to the email was a copy of the 1995 non-compete agreement. Mr. Riggs responded, “It's a paid non-compete, but I will not enforce it. Please do not let him know that until we absolutely have to. His resignation day is June 10, so I am assuming we do not have to let him know until July 10!” Id. Ms. Lavey sent this email only to Mr. Riggs. Mr. Tabbert did not receive a copy of this communication.

         In July of 2014, Mr. Tabbert contacted Ms. Lavey and asked whether Stryker would hold Mr. Tabbert to a non-compete agreement. Mr. Tabbert recalls that Ms. Lavey informed him that the non-compete was “non-compensatory.” On July 16, 2014, Mr. Tabbert sent an email to his attorney stating that he had learned “through word of mouth” that Stryker intended to enforce the 1995 Agreement. ECF No. 298-2 at 92. After Mr. Tabbert left Howmedica, Stryker did not compensate Mr. Tabbert.

         3. In June of 2014, Mr. Tabbert began working for Rocky Mountain Medical Distributors.

         After he resigned from Howmedica, Mr. Tabbert began working for Rocky Mountain Medical Distributors, LLC (RMMD). RMMD is a medical supply distribution company. RMMD had a distribution agreement with MicroPort Orthopedics, Inc. (MicroPort). Microport designs, manufactures, and distributes medical devices, including orthopedic hip and knee implants. MicroPort competes directly with Howmedica.

         Mr. Tabbert joined RMMD as the Regional Vice President of Sales. ECF No. 298-8. His sales territory included North Idaho, Washington, Oregon, Alaska and Hawaii. His sales territory in North Idaho and Washington overlapped with his territory as a sales representative for Howmedica.

         4. In the twelve months following his resignation from Howmedica, Mr. Tabbert contacted surgeons with whom he worked as a Howmedica sales representative.

         a. Dr. Craig Bone

         Mr. Tabbert communicated with Dr. Bone, one of his former surgeons. Mr. Tabbert informed Dr. Bone when he sent his letter of resignation. In the twelve months following his resignation from Howmedica, Mr. Tabbert met with Dr. Bone three or four times. Mr. Tabbert characterized the meetings as “[s]ocial, to say hello.” ECF No. 298-3 at 44. In the year after Mr. Tabbert resigned from Howmedica, Howmedica's sales to Dr. Bone declined ninety-six percent. In October of 2016, Dr. Bone submitted a letter indicating that he did not discontinue his business with Howmedica because of Mr. Tabbert's actions. He also submitted a declaration to the same effect. ECF 191-2 at 38 (dated June 21, 2017).

         b. Dr. Patrick Dawson

         Mr. Tabbert communicated with Dr. Dawson in person and via text message. On May 9, 2014, Mr. Tabbert sent a text message to Dr. Dawson that said, “Received a termination threat e-mail this morning. Call me when you can.” Mr. Tabbert also met with Dr. Dawson in Las Vegas, Nevada on or about March 25, 2015. Howmedica's sales to Dr. Dawson declined ninety-nine percent in the year following Mr. Tabbert's resignation. Dr. Dawson submitted a declaration denying that Mr. Tabbert solicited his business or that Howmedica's sales decline was attributable to Mr. Tabbert. ECF No. 191 at 41 (dated June 26, 2017).

         c. Dr. Mark Merrell

         Mr. Tabbert acknowledged that he communicated with Dr. Merrell. Howmedica's sales to Dr. Merrell declined twenty percent in the year following Mr. Tabbert's resignation. Dr. Merrell did not submit a declaration.

         d. Dr. John Staheli

         Mr. Tabbert communicated with Dr. Staheli. When asked if he solicited or attempted to solicit Dr. Staheli, Mr. Tabbert responded, “gray area.” Mr. Tabbert spoke with Dr. Staheli on behalf of Microport. On one occasion, Mr. Tabbert sent a text message to Dr. Staheli that said, “John, Rocky will call you today for dinner arrangements this evening if it's still good. We will coordinate through Rocky, and I will not be there.” Howmedica's sales to Dr. Staheli declined one percent in the year following Mr. Tabbert's resignation. Dr. Staheli submitted a declaration denying that Mr. Tabbert solicited his business or that Howmedica's sales decline was attributable to Mr. Tabbert.

         e. David Gibbons

         Mr. Tabbert communicated with Dr. Gibbons. Mr. Tabbert had dinner with Dr. Gibbons, his personal assistant, Tim Nicholas, and his new partner, Josh Miller, on or about September 15, 2014. Howmedica's sales to Dr. Gibbons declined forty-one percent in the year following Mr. Tabbert's resignation. Dr. Gibbons submitted a declaration denying that Mr. ...


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