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Nuvasive, Inc. v. Absolute Medical, LLC

United States District Court, M.D. Florida, Orlando Division

May 15, 2018

NUVASIVE, INC., Plaintiff,
v.
ABSOLUTE MEDICAL, LLC, GREG SOUFLERIS and DAVE HAWLEY, Defendants.

          ORDER

          CARLOS E. MENDOZA UNITED STATES DISTRICT JUDGE

         THIS CAUSE is before the Court on Plaintiff's Motion for Preliminary Injunction (“Motion, ” Doc. 19). Defendant Absolute Medical, LLC (“Absolute Medical”) filed a Response in opposition (Doc. 38), to which Plaintiff filed a Reply (Doc. 48), and Absolute Medical filed a Sur-reply (Doc. 53). For the reasons set forth below, the Motion will be denied in part and an evidentiary hearing will be set.

         I. Background

         Plaintiff is a medical device company that manufactures products used to treat spine disorders. (Compl., Doc. 1, ¶ 15). Plaintiff markets and sells its surgical products through its exclusive sales force, which consists of both directly-employed personnel and independent sales agents. (Id. ¶ 16). Absolute Medical became an exclusive distributor of Plaintiff's products on January 1, 2013. (Id. ¶ 18). On January 1, 2017, the parties entered into a Sales Agreement (Doc. 19-1 at 3), in which Absolute Medical agreed to distribute Plaintiff's products in a designated sales territory for a five-year term. (Id.). The Agreement also contains a non-competition provision, which prohibits Absolute Medical from “represent[ing], promot[ing], sell[ing], solicit[ing], or otherwise commercializ[ing] (directly or indirectly) any products or services that are, in NuVasive's reasonable judgment, competitive with any of NuVasive's products or services.” (Id. ¶ 23; Doc. 19-1 at 9). On August 17, 2017, the parties executed a Transition Agreement, in which Plaintiff agreed to pay Absolute Medical $636, 403 in exchange for Absolute Medical releasing a portion of its sales territory and three of its sales representatives. (Singer Decl., Doc. 48-1, ¶ 2). On November 27, 2017, Defendant Greg Soufleris, president of Absolute Medical, (Doc. 1 ¶ 9), notified Plaintiff of his intent to end Absolute Medical's partnership with Plaintiff, (id. ¶ 29).

         On December 29, 2017, Plaintiff commenced the instant action, asserting claims for injunctive relief, breach of contract, conversion, and violations of the Florida Deceptive and Unfair Trade Practices Act. (See generally id.). Specifically, Plaintiff alleges that Absolute Medical breached its contract with Plaintiff by attempting to unilaterally terminate the Agreement, failing to enforce its employee's non-compete obligations, and soliciting business on behalf of Plaintiff's direct competitor, Alphatec Spine, Inc. (“Alphatec”). (Id. ¶¶ 2-3, 33, 37). Plaintiff also filed a Motion for Preliminary Injunction to compel Absolute Medical to: (1) “work exclusively for NuVasive and not for NuVasive's competitors”; (2) “maintain sufficient Representative Affiliates to service its sales territory”; (3) “require its Representative Affiliates to sign non-compete agreements and provide those agreements to NuVasive”; (4) “enforce the non-compete agreements between it and its Representative Affiliates”; and (5) “inform NuVasive in any change in the product lines it carries.” (Doc. 19 at 9).

         II. Legal Standard

         To obtain a preliminary injunction, the movant must sufficiently establish that (1) “it has a substantial likelihood of success on the merits”; (2) “irreparable injury will be suffered unless the injunction issues”; (3) “the threatened injury to the movant outweighs whatever damage the proposed injunction may cause the opposing party”; and (4) “the injunction would not be adverse to the public interest.” Forsyth Cty. v. U.S. Army Corps of Eng'rs, 633 F.3d 1032, 1039 (11th Cir. 2011) (quoting Siegel v. LePore, 234 F.3d 1163, 1176 (11th Cir. 2000) (en banc)). “A preliminary injunction, moreover, ‘is an extraordinary and drastic remedy not to be granted unless the movant clearly establishes the burden of persuasion as to the four requisites.'” Llovera v. Florida, 576 Fed.Appx. 894, 896 (11th Cir. 2014) (per curiam) (quoting Forsyth Cty., 633 F.3d at 1039).

         III. Analysis

         As a preliminary matter, the Sales Agreement contains a governing law provision, which provides that “[t]his Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.” (Doc. 19-1, at 17). Florida courts “will generally enforce choice-of-law provisions unless the law of the chosen forum contravenes strong public policy.” Godwin Pumps of Am., Inc. v. Ramer, No. 8:11-cv-580-T-24AEP, 2011 WL 2670191, at *3 (M.D. Fla. July 8, 2011) (quotation omitted). Delaware law on this matter does not contravene public policy. Accordingly, the Court will apply Delaware law in determining whether Plaintiff may obtain a preliminary injunction based on its claims that Absolute Medical unilaterally attempted to terminate the Agreement and breached the non-competition provision therein. See TrueBlue, Inc. v. Dyn, 8:09-cv-1894-T-30MAP, 2010 WL 1223895, at *2 (M.D. Fla. Mar. 2, 2010) (“It is well established that when the parties to a contract have indicated their intention as to the law which is to govern, it will be governed by such law in accordance with the intent of the parties.” (quotation omitted)), report and recommendation adopted, 8:09-cv-1894-T-30MAP, 2010 WL 1223894 (M.D. Fla. Mar. 24, 2010).

         A. Specific Performance of the Agreement as a Whole

         Plaintiff seeks specific performance from Absolute Medical of all of its contractual obligations. Specifically, Plaintiff requests an order from this Court compelling Absolute Medical to distribute Plaintiff's medical devices for the remainder of the agreed-to term-roughly four years, hire more employees, and enforce its and its employees' non-compete obligations. Absolute Medical argues that Plaintiff cannot compel it to complete the remainder of the Agreement because it has an adequate remedy at law. In response, Plaintiff claims that Absolute Medical waived any objection to Plaintiff's request for specific performance.

         “Under Delaware law, a contractual stipulation of irreparable harm may suffice to demonstrate irreparable harm.” AM Gen. Holdings LLC v. Renco Grp., Inc., C.A. No. 7639-VCN, 2012 WL 6681994, at *4 (Del. Ch. Dec. 21, 2012) (quotation omitted). In AM General Holdings, the court found the following language to be a sufficient stipulation of irreparable harm:

The parties hereto agree that any party by whom this Agreement is enforceable shall be entitled to specific performance in addition to any other relief or remedy. Such party may, in its sole discretion, apply to a court of competent jurisdiction for specific performance or injunctive relief . . . and, to the extent permitted by applicable law, each party waives any objection to the imposition of such relief.

Id. at 4. Here, Plaintiff asserts that its Agreement with Absolute Medical contains a similar stipulation of irreparable harm, resulting in Absolute Medical's waiver of the issue. The language relied on by Plaintiff is contained within the Agreement's arbitration provision and states, “Nothing contained in this Agreement shall in any way deprive either Party of its right to obtain injunctions or other equitable relief from a court of competent jurisdiction, including preliminary relief, pending arbitration.” (See Doc. 19-1 at 18). This provision, however, does not explicitly entitle either party to specific performance nor does it expressly stipulate to the existence of irreparable harm in the event one party breaches the Agreement. Cf. Martin Marietta Materials, Inc. v. Vulcan Materials Co., 68 A.3d 1208, 1226 (Del. 2012) (validating stipulation of irreparable harm where the contract specified that “money damages would not be [a] sufficient remedy for any breach” (emphasis omitted)); True N. Commc'ns Inc. v. Publicis S.A., 711 A.2d 34, 44 (Del. Ch. 1997) (upholding stipulation where the contract stated ...


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