Arguments set to begin in ex-Stryker rep’s appeal of $750k loss

A former Stryker (NYSE:SYK) sales rep is slated to appeal his nearly $750,000 loss in a lawsuit over his move to rival Biomet (now Zimmer Biomet (NYSE:ZBH)), with oral arguments due to begin tomorrow.

Stryker in 2013 sued a pair of former sales agents, Christopher Ridgeway and Richard Steitzer, accusing them of scheming to poach reps and business from Stryker in Louisiana and New York. Stryker fired Ridgeway in September 2013, after discovering that he was allegedly running a pair of medical supply businesses on the side. In June of that year, Stryker alleged, Biomet began courting Ridgeway, looking to bring his entire Stryker sales teams on board. Ridgeway also allegedly induced a 3rd Stryker employee, Sheldon Green, to jump ship for Biomet and forwarded Stryker’ Louisiana customer list to Green, according to the complaint.

Ridgeway counter-sued, alleging that Stryker defamed him by falsely telling his customers that he was bound by a non-compete, costing him millions. A federal jury in the U.S. District Court for Western Michigan in February 2016 found for Stryker, awarding $745,195 in damages on 3 counts: breach of contract, breach of fiduciary duty and a trade-secrets claim. Ridgeway appealed to the U.S. Court of Appeals for the 6th Circuit, arguing that there never was a non-compete and that Stryker fabricated the non-compete document used in his district court action.

After Stryker sought millions more in costs and attorney’s fees, Ridgeway declared bankruptcy, prompting a stay in the district court case pending the resolution of the 6th Circuit appeal.

Ridgeway also argues in his appeal that the case should have been tried under Louisiana law, where he was based, rather than under the laws of Michigan, Stryker’s home state.

“The lower court should have applied Louisiana law to the noncompete agreement. Under Michigan’s conflict-of-law rules, a choice-of-law provision will not be enforced if another state has a more significant relationship to the parties and the transaction at issue, and has a fundamental policy that would be violated by application of the law chosen by the parties. The Michigan choice-of-law clause fails because Louisiana had the closest relationship to the case and was the location of the risk the noncompete clause concerned: Ridgeway was a Louisiana citizen who sold Stryker products in Louisiana to customers located in Louisiana, and the enforcement of a noncompete clause affected his ability to make a living in Louisiana. The law of Michigan, which favors noncompete clauses, is also contrary to Louisiana’s strong public policy disfavoring them, which has been expressed by a statute making them unenforceable absent narrow, specific exceptions not satisfied here. Thus, Louisiana law should have been applied to the noncompete clause,” according to the appeal.

“The district court also erred in excluding two allegedly privileged emails showing Stryker knew Ridgeway had no noncompete agreement. First, the court applied the wrong standard in rejecting Ridgeway’s argument that the privilege was waived under the crime-fraud exception. The court required Ridgeway to produce conclusive proof of fraud rather than merely showing a reasonable basis to suspect fraud as required under Michigan law. Even Ridgeway’s substantial evidence of Stryker’s misconduct was not sufficient to satisfy this test. This alone is reversible error. The court also ignored Ridgeway’s argument that Stryker waived the privilege by voluntarily placing the validity of Ridgeway’s noncompete agreement in dispute,” Ridgeway argued, according to court documents.

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