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Synthes, Inc., Synthes Usa Hq, Inc., Synthes Usa, LLC, Synthes Usa v. Emerge Medical

September 19, 2012

SYNTHES, INC., SYNTHES USA HQ, INC., SYNTHES USA, LLC, SYNTHES USA SALES, LLC, AND SYNTHES USA PRODUCTS, LLC, PLAINTIFFS,
v.
EMERGE MEDICAL, INC., JOHN P. MAROTTA, ZACHARY W. STASSEN, ERIC BROWN, AND CHARLES Q. POWELL DEFENDANTS.



The opinion of the court was delivered by: Buckwalter, S.J.

MEMORANDUM

Currently pending before the Court is the Motion to Dismiss of Defendant Charles Q. Powell. For the following reasons, the Motion is granted in part and denied in part.

I. PERTINENT FACTUAL AND PROCEDURAL HISTORY*fn1

A. General Information About Synthes and Its Efforts to Protect Confidential Information

Plaintiff Synthes, Inc. ("Synthes")*fn2 is a worldwide leader in the medical device industry which markets and sells medical implant devices, including plates, screws, rods, biomaterials, instrumentation, and other devices for orthopedic surgery. (Am. Compl. ¶ 24.) Its customers include hospitals, hospital employees and directors, and physicians together with their employees and staff nurses. (Id. ¶ 25.)

Synthes markets and sells its products through a sales force comprised of Regional Sales Consultants and Associate Sales Consultants. (Id. ¶ 27.) These individuals report to Regional Managers, are assigned to specific territories within regions, and are generally paid on a commission basis. (Id.) The Regional Managers, in turn, are responsible for the maintenance and growth of sales in the territories within their regions, as well as the hiring, training, and management of Sales Consultants. (Id. ¶ 28.) They are often compensated based on sales within their regions and may also receive base compensation in addition to commissions. (Id.) Synthes Area Vice Presidents bear responsibility for the maintenance and growth of sales in their regions and areas and are charged with hiring and managing Regional Managers. (Id. ¶ 29.) Their compensation structure is similar to that of the Regional Managers. (Id.) Finally, the Vice President of Sales for Synthes's Trauma Division oversees all of the divisions' sales employees and sales activities. (Id. ¶ 30.)

Because Synthes invests millions of dollars annually both to develop its technology, systems, products, and strategies and to educate and train its employees, it requires all employees to sign an Employee Innovation and Non-Disclosure Agreement ("Non-Disclosure Agreement"). (Id. ¶ 31.)

In addition, employees hired in sales, marketing, and product development capacities must sign a Confidentiality, Non-Solicitation, and Non-Competition Agreement ("Non-Competition Agreement"). (Id. ¶ 32.) These Agreements, in part, protect against the disclosure of confidential information, prohibit solicitation of Synthes's employees and Synthes's existing or prospective customers, and prohibit activities during and after employment with or on behalf of any individual or entity that competes or intends to compete with Synthes, subject to geographic and temporal limitations. (Id. ¶¶ 31, 32.) In exchange for the employees' execution of these Agreements, Synthes provides the employees with proprietary information, customer relationships, and valuable training programs. (Id. ¶ 33.) Synthes takes other measures to protect these interests by requiring the return of various information upon the employees' separation from Synthes's employment. (Id. ¶¶ 34--36.)

B. Defendant Charles Q. Powell's Employment With Synthes

Defendant Charles Q. Powell applied to Synthes on March 11, 2004, without any background in the orthopedic medical industry. (Id. ¶ 91.) On March 18, 2004, Powell accepted Synthes's offer of a position as a Territory Assistant in its Trauma division based in the Great Lakes West Territory in the area of Chicago, Illinois. (Id. ¶ 92.) Prior to commencing employment, Powell executed a Non-Competition Agreement on March 18, 2004, and a Non-Disclosure Agreement on March 14, 2004. (Id. ¶¶ 93--94.) Powell also reviewed Synthes's Employee Policy Manual, Sales Policy Manual, Global Code of Business Ethics, IT Security Policy, and, subsequently, the amended Policy Manual. (Id. ¶ 95.) Synthes provided Powell with extensive training in the trauma aspects of the orthopedic industry and continued to provide such training on an ongoing basis. (Id. ¶ 96.) Over time, his responsibilities increased and he was promoted to Associate Sales Consultant in September 2004, and ultimately to Sales Consultant in June 2006. (Id. ¶ 97.) With each promotion, Powell executed additional Confidentiality, Non-Solicitation, and Non-Competition Agreements, the latest versions of which were signed on June 1, 2006. (Id. ¶ 97.)

As a Sales Consultant in Colorado in the Denver East Territory and the Eastern Slope Territory, Powell reported directly to Defendant John P. Marotta, and he was highly successful and well-compensated. (Id. ¶¶ 99--100.) Throughout his tenure with Synthes, Powell was privy to valuable customers contacts, goodwill, and business information. (Id. ¶ 101.) Synthes also provided Powell with substantial, specialized training on the technical aspects of Synthes's products and the medical procedures in which these products are used. (Id. ¶ 103.)

Powell's Non-Competition Agreement required that he not "disclose or communicate" Synthes's confidential and proprietary information "to any competitor or other third party" at any time during or after leaving Synthes's employ or to "use or refer to" such information "for any purpose . . . except as necessary for [him] to properly perform services for Synthes during [his] employment." (Id. ¶ 105.) In addition, Powell's Non-Competition Agreement specifically (1) prohibited Powell from competing with Synthes for a period of one year following the termination of his employment with Synthes; (2) prohibited him from soliciting Synthes's customers within his territory in Colorado and with whom he had worked for a period of one year following the termination of his employment with Synthes; and (3) mandated that Pennsylvania law govern the Agreement. (Id. ¶¶ 106--109.)

In addition to the obligations in his Non-Disclosure and Non-Competition Agreements, Powell was obligated to reimburse Synthes for various tuition expenses it paid in connection with his executive MBA program. (Id. ¶ 114.) In the year preceding his resignation, Synthes paid Powell $34,598.75 for tuition expenses he incurred. (Id. ¶ 114.) Synthes's policies provided that if Powell ceased employment with Synthes within one year of completion of the courses, he would have to reimburse Synthes for those tuition expenses paid within the last year. (Id.) To date, however, Powell has not paid Synthes for $16,485.05 of the costs. (Id.)

Defendant Powell resigned from Synthes on March 15, 2010, effective March 30, 2010, and informed Synthes's Human Resources representatives that he had accepted employment in a sales capacity with Sonoma Orthopedics, which Plaintiff believes to be a portfolio company of a venture capital firm founded and managed by Defendant Zachary Stassen's father. (Id. ¶ 116.) According to Plaintiff, Powell's intent was ultimately to join a new company-Emerge-founded by his co-Defendants John Marotta, Eric Brown, and Zachary Stassen. (Id. ¶ 117--18.)

C. The Alleged Conspiracy to Develop Emerge

In the spring of 2009, Defendant John Marotta-at the time a Synthes employee-first conceived the idea for a new business. (Id. ¶ 125.) By the summer, Marotta, along with Defendants Eric Brown (also a then-Synthes employee) and Zachary Stassen were actively involved in the development of a new business model. (Id.) This model was not disclosed to Synthes. (Id.) The business targeted a specific sub-segment of Synthes's business that included surgical screws, drill, bits, and guide wires. (Id. ¶ 126.) They believed they could eliminate the need to provide direct sales support in the operating room, thereby changing the general methods of delivery of products and services in an innovative manner. (Id.) According to Plaintiff, however, this business model was developed using knowledge, information, and resources obtained by Marotta and Brown in connection with their employment with Synthes. (Id.). At some point in the planning process, Brown proposed naming the new company "Emerge." (Id.)

In the summer of 2009, Marotta reached out to an accounting and consulting firm regarding possible names for an "orthopedic and medical device and healthcare consultant" company and researched companies that design corporate logos. (Id. ¶ 128). Around the same time, Marotta and Brown facilitated a series of discussions and meetings between Stassen and a Synthes Sales Consultant in Texas in order to garner information about Synthes's business methods. (Id. ¶ 129.) The Defendants then sought to raise money for this new company from potential investors. (Id. ¶ 130.) The business plan and a private placement memorandum were developed through January of 2010, and then used in January and February 2010 to solicit investors, including Synthes's customers and employees. (Id. ¶ 131.)

By December of 2009, Marotta began making filings with the United States Patent and Trademark Office ("PTO") relating to the name and logo for Emerge. (Id. ¶ 134.) On January 13, 2010-three months before his resignation from Synthes-Marotta met with Venture Law Advisors, who then filed Emerge's articles of incorporation with the Colorado Secretary of State. (Id. ¶ 136.) Around that time, Marotta e-mailed himself a copy of a Regional Manager Non-Competition Agreement saved under his name. (Id. ¶ 137.) Leading up to his resignation, Marotta also e-mailed confidential Synthes documents and information to his personal e-mail account. (Id. ¶ 138.)

On February 22, 2010, Mr. Stassen, then purporting to be Emerge's Chief Operating Officer and a member of the board of directors, filed a Form Notice of Exempt Offering of Securities with the United States Securities Exchange Commission ("SEC"), indicating that Emerge intended to obtain $1.5 million in investment capital and already had obtained two investors for $200,000 just days before the filing. (Id. ¶ 139.) Synthes avers that Marotta and Stassen personally solicited Synthes's employees and customers during late 2009 and early 2010 concerning, at a minimum, their willingness to invest in Emerge. (Id. ¶ 140.) Marotta also sought investments from customers in other territories. (Id. ¶ 142.) Around the same time, Marotta began discussions with Synthes employees who had knowledge of the Defendants' plans and activities about employment opportunities outside of Synthes. (Id. ¶ 143.) By the time Marotta's resignation was effective on April 15, 2010, Emerge was fully operational, and Marotta was involved in all aspects of the business. (Id. ¶ 147.)

On June 23, 2010, Emerge Surgical, Inc. filed with the Colorado Secretary of State to change its name to Emerge Medical, Inc. (Id. ¶ 150.) Less than one month later, Marotta made a new trademark filing with the PTO for the name and logo of "Emerge Medical." (Id. ¶ 151.) Beginning no later than the summer of 2010, Marotta, Stassen, Powell, and Emerge allegedly acquired and used Synthes's confidential and proprietary information by directing and/or encouraging others to access Synthes's computer systems. (Id. ¶ 152.) Further, Marotta and Powell failed to return all Synthes products in their possession at the time of their resignation, for the purpose of reverse engineering the drill bits, guide wires, and cannulated screws that they are now marketing to Synthes customers. (Id. ¶ 154.) Finally, Marotta, Stassen, Powell, and Emerge purportedly made deliberately false and misleading representations about Emerge's products. (Id. ¶ 155.)

D. Commencement of Litigation

On March 4, 2011, Synthes initiated the current federal action against both John Marotta and Emerge Medical, Inc. Thereafter, on March 6, 2012, Plaintiff filed an Amended Counterclaim adding three new defendants and setting forth thirteen causes of action as follows: (1) breach of fiduciary duty and/or duty of loyalty against Marotta and Brown (id. ¶ ¶ 169--88); (2) breach of contract under the Non-Competition and Non-Disclosure Agreements against Marotta, Brown, and Powell (id. ¶¶ 189--214); (3) tortious interference with contract against all Defendants (id. ¶¶ 215--26); (4) aiding and abetting breach of fiduciary duty against Marotta, Brown, Stassen, and Emerge (id. ¶¶ 227--36); (5) misappropriation of trade secrets under Pennsylvania common law and the Pennsylvania Uniform Trade Secrets Act, 12 Pa.C.S. § 5302, et seq., against all Defendants (id. ¶¶ 237--49); (6) violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, against all Defendants (id. ¶¶ 250--60); (7) conversion and replevin against all Defendants (id. ¶¶ 261--68); (8) false or deceptive advertising under the Lanham Act, 15 U.S.C. § 1125(a), against Defendants Marotta, Stassen, Powell, and Emerge (id. ¶¶ 269--81); (9) trespass to chattels against Defendants Marotta, Stassen, Powell, and Emerge (id. ¶¶ 282--86); (10) unfair competition against Defendants Marotta, Stassen, Powell, and Emerge (id. ¶¶ 287--97); (11) fraud against all Defendants (id. ¶¶ 298--302); (12) civil conspiracy against all Defendants (id. ¶¶ 303--09); and (13) breach of contract or, in the alternative, unjust enrichment against Powell. (Id. ¶¶ 310--16.)

On April 18, 2012, Defendant Charles Powell filed the instant Motion to Dismiss. Plaintiff responded on May 29, 2012, Defendant Powell submitted a Reply Brief on June 22, 2012, Plaintiff filed a Sur-reply Brief on July 2, 2012, Defendant Powell filed a Supplemental Reply Brief on August 3, 2012, and Plaintiff filed a supplemental Sur-Reply brief on August 23, 2012, making this Motion ripe for judicial consideration.

II. STANDARD OF REVIEW

Under Rule 12(b)(6), a defendant bears the burden of demonstrating that the plaintiff has not stated a claim upon which relief can be granted. Fed. R. Civ. P.12(b)(6); see also Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007), the United States Supreme Court recognized that "a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 555. Following these basic dictates, the Supreme Court, in Ashcroft v. Iqbal, 556 U.S. 662 (2009), subsequently defined a two-pronged approach to a court's review of a motion to dismiss. "First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. at 678. Thus, although "Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era . . . it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." Id. at 678--79. Second, the Supreme Court emphasized that "only a complaint that states a plausible claim for relief survives a motion to dismiss." Id. at 679. "Determining whether a complaint states a plausible claim for relief will, as the Court of Appeals observed, be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. A complaint does not show an entitlement to relief when the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct.

Id.; see also Phillips v. Cnty. of Allegheny, 515 F.3d 224, 232-34 (3d Cir. 2008) (holding that: (1) factual allegations of complaint must provide notice to defendant; (2) complaint must allege facts suggestive of the proscribed conduct; and (3) the complaint's "'factual allegations must be enough to raise a right to relief above the speculative level.'" (quoting Twombly, 550 U.S. at 555)).

Notwithstanding these new dictates, the basic tenets of the Rule 12(b)(6) standard of review have remained static. Spence v. Brownsville Area Sch. Dist., No. Civ.A.08-626, 2008 WL 2779079, at *2 (W.D. Pa. July 15, 2008). The general rules of pleading still require only a short and plain statement of the claim showing that the pleader is entitled to relief and need not contain detailed factual allegations. Phillips, 515 F.3d at 233. Further, the court must "accept all factual allegations in the complaint as true and view them in the light most favorable to the plaintiff." Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir. 2006). Finally, the court must "determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief."

Pinkerton v. Roche Holdings Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002).

III. DISCUSSION

Defendant Powell now sets forth several broad legal theories seeking dismissal of the majority of the claims against him. First, he asserts that the gist of the action doctrine bars Plaintiff's claims for tortious interference with contract, conversion, unfair competition, and civil conspiracy.*fn3 Second, he contends that Plaintiff fails to state a claim under the Computer Fraud and Abuse Act. Finally, he argues that many of the remaining counts of the Amended Complaint should be dismissed for failure to meet the pleading standards set forth under Iqbal and Twombly. The Court addresses each argument separately.

A. Gist of the Action Doctrine

As a general rule, Pennsylvania courts are cautious about permitting tort recovery on contractual breaches. Glazer v. Chandler, 200 A.2d 416, 418 (Pa. 1964). In eToll, Inc. v. Elias/Savion Advertising, Inc., 811 A.2d 10 (Pa. Super. Ct. 2002), the Pennsylvania Superior Court emphasized that the "gist of the action" doctrine "is designed to maintain the conceptual distinction between breach of contract claims and tort claims [by] preclud[ing] plaintiffs from recasting ordinary breach of contract claims into tort claims."*fn4 Id. at 14. The simple existence of a contractual relationship between two parties does not preclude one party from bringing a tort claim against the other. Smith v. Lincoln Benefit Life Co., No. Civ.A.08-1324, 2009 WL 789900, at *20 (W.D. Pa. Mar. 23, 2009), aff'd, 2010 WL 3730196 (3d Cir. Sep. 24, 2010); see also BohlerUddeholm Am., Inc. v. Ellwood Grp., Inc., 247 F.3d 79, 104 (3d Cir. 2001). The doctrine, however, forecloses a party's pursuit of a tort action for the mere breach of contractual duties, "'without any separate or independent event giving rise to the tort.'" Smith, 2009 WL 789900, at *20 (quoting Air Prods. and Chems., Inc. v. Eaton Metal Prods. Co., 256 F. Supp. 2d 329, 340 (E.D. Pa. 2003)).

"When a plaintiff alleges that the defendant committed a tort in the course of carrying out a contractual agreement, Pennsylvania courts examine the claim and determine whether the 'gist' or gravamen of it sounds in contract or tort." Sunquest Info. Sys., Inc. v. Dean Witter Reynolds, Inc., 40 F. Supp. 2d 644, 651 (W.D. Pa. 1999). To make this determination, the court must ascertain the source of the duties allegedly breached. Sunburst Paper, LLC v. Keating Fibre Int'l., No. Civ.A.06-3957, 2006 WL 3097771, at *2 (E.D. Pa. Oct. 30, 2006). The doctrine bars tort claims: "(1) arising solely from a contract between the parties; (2) where the duties allegedly breached were created and grounded in the contract itself; (3) where the liability stems from a contract; or (4) where the tort claim essentially duplicates a breach of contract claim or the success of which is wholly dependent on the terms of a contract." Id. (citing eToll, 811 A.2d at 19). "In other words, if the duties in question are intertwined with contractual obligations, the claim sounds in contract, but if the duties are collateral to the contract, the claim sounds in tort." Id. Whether the gist of the action doctrine applies in any particular setting is a question of law. Alexander Mill Servs., LLC v. Bearing Distrib., Inc., No. Civ.A.06-1116, 2007 WL 2907174, at *8 (W.D. Pa. Sept. 28, 2007).

In the present case, Plaintiff asserts a breach of contract claim against Defendant Powell as follows:

192. Powell . . . [was] . . . contractually prohibited from competing with Synthes during [his] employment and for a period of one year after terminating [his] employment with Synthes, and, separate from [his] non-competition obligations, [was] . . . contractually prohibited from soliciting employees or customers during the term of [his] employment and for a period of one year after terminating [his] employment with Synthes.

. . . 201. Powell breached [his] contractual non-disclosure obligations with respect to

Synthes' confidential information by failing to return all confidential information and property to Synthes at the termination of [his] employment with Synthes, including the documents produced by Marotta, Stassen, Powell, and Emerge during discovery in this litigation. 202. Upon information and belief, . . . Powell ha[s] further breached [his] contractual duties to Synthes by, directly or indirectly, providing Synthes' sensitive, confidential, proprietary, or trade secret information to Emerge (including its current and former officers, directors, employees, and consultants), Stassen, and third parties, in violation of the confidentiality obligations in their Non-Competition and Non-Disclosure Agreements. 203. Upon information and belief, Powell breached his contractual non-competition and non-solicitation obligations to Synthes during the one-year period of time following the termination of his employment with Synthes, including during his employment with Sonoma Orthopedics, during which time he competed with Synthes and solicited customers from his former sales territories, and during his employment with Emerge, during which time he competed with Synthes and solicited customers from his former sales territories (whether for investment opportunities in Emerge, sales of Emerge products, or regarding Emerge's business model). (Am. Compl. ¶¶ 192, 201--03.) Defendant Powell now contends that, in light of these claims for breach of contract, Plaintiff's related claims against him for tortious interference with contract, conversion, unfair competition, and civil conspiracy are barred by the gist of the action doctrine.*fn5

The Court considers each claim individually.

1. Tortious Interference with Contract

Pennsylvania courts, following the Restatement (Second) of Torts, define the tort of intentional interference with existing contractual relations as:

One who intentionally and improperly interferes with the performance of a contract (except a contract to marry) between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability to the other for the pecuniary loss to the other from the third person's failure to perform the contract.

Binns v. Flaster Greenberg, P.C., 480 F. Supp. 2d 773, 778 (E.D. Pa. 2007) (quoting Adler, Barish, Daniels, Levin and Creskoff v. Epstein, 393 A.2d 1175, 1183 (Pa. 1978)). In order to prevail on a claim for interference with contractual relations, the plaintiff must plead and prove four elements: (1) the existence of a contractual relation; (2) the defendant's purpose or intent to harm the plaintiff by preventing the relation from occurring; (3) the absence of any privilege or justification on the part of the defendant; and (4) damages resulting from the defendant's conduct. Gundlach v. Reinstein, 924 F. Supp. 684, 693 (E.D. Pa. 1996). "A tortious interference with contract claim is barred by the gist of the action doctrine if it is not independent of a contract claim that is pled along with it." Alpart v. Gen. Land Partners, Inc., 574 F. Supp. 2d 491, 505 (E.D. Pa. 2008). In other words, a tortious interference with contract claim that coincides directly and solely with a contractual prohibition on the identical activity will fall within the gist of the action doctrine. See Brown & Brown v. Cola, 745 F. Supp. 2d 588, 621--22 (E.D. Pa. 2010) (holding that tortious interference claims against former employees of the plaintiff regarding alleged unlawful solicitation of both customers and employees were clearly subsumed by the breach of contract claims since the defendants' employment contracts contained provisions prohibiting these actions).

In the present case, several contractual provisions in Powell's Non-Competition Agreement are pertinent. First, the confidentiality provision of the Non-Competition Agreement states:

At all times during and after my employment with Synthes, I will not disclose or communicate any of [Synthes's confidential and proprietary information] to any competitor or other third party, or use or refer to any of this information for any purpose, or remove materials containing any of this information from Synthes' premises, except as necessary for me to properly perform services for Synthes during my employment. . . . I also understand that these provisions apply to all information I may receive that is confidential or proprietary to any customer or other company who does business with Synthes. (Am. Compl., Ex. K., at 2.) In addition, the non-solicitation of customers and prospects provision states:

I will not, for a period of one year after my employment with Synthes terminates for any reason, solicit or contact, directly or through others, for the purpose of competing or interfering with any part of Synthes' business, (1) any customer of Synthes that I solicited at any time during the last three years of my employment; (2) any prospective customer of Synthes that received or requested a proposal or offer from me on behalf of Synthes at any time during the last three years of my employment; or (3) any customer or prospective customer of Synthes for which I had any responsibility, directly or indirectly, at any time during the last three years of my employment. (Id. at 3.) The non-solicitation or hiring of employees provision indicates:

I will not, for a period of one year after my employment with Synthes terminates, directly or indirectly solicit any employee of Synthes to leave their employment with Synthes, offer any employee of Synthes employment elsewhere or hire any employee of Synthes to work elsewhere. (Id.) Finally, the non-competition provision provides, in pertinent part:

I agree I will not, for a period of one year after my employment with Synthes terminates for any reason, work for (as an employee, consultant, contractor, agent or representative) any competitor of Synthes in the territory or territories that I am now, or have been responsible for at any time during the last year of my employment with Synthes. Competitors shall be deemed any persons or entities who now, or in the future, sell, or intend to sell, orthopedic, bone fixation, maxillofacial medical, endoscope and/or spinal implant device or instrumentation technologies, products, or services. (Id.)

Separate and apart from the claims in Count II of the Amended Complaint that Powell breached some of these contractual provisions, Count III asserts a separate cause of action against Powell for tortious interference with contractual relations. Specifically, this Count alleges, in pertinent part:

219. At the time that Powell began working for Emerge, and before, Synthes had existing contractual relationships with Powell, and Marotta, Stassen, and Emerge knew or should have known about those contractual relationships.

220. The Defendants have tortiously interfered with Synthes' contractual relationships with Marotta, Brown, and Powell by causing Marotta, Brown, and Powell to breach their contractual obligations to Synthes.

221. The Defendants have tortiously interfered with Synthes' contractual relationships with other current and former Synthes employees, contractual relationships that Defendants knew or should have know[n] about, including employees the Defendants solicited regarding, without limitation:

* Investment in Emerge;

* Employment opportunities with Emerge, Sonoma Orthopedics, or other companies affiliated with Split Rock Partners, LLC;

* The unlawful acquisition of confidential information and trade secret information;

* Access to Synthes' customers;

* The unlawful acquisition of Synthes product; and

* The concealment of those employees' activities on behalf of Emerge or of their knowledge of the Defendants' activities.

222. The Defendants' [sic] knew or should have known about Synthes' contractual relationships with certain vendors, and the Defendants have tortiously interfered with Synthes' contractual relationships with those vendors.

223. The Defendants' [sic] knew or should have known about Synthes' contractual relationships with its customers, including, without limitation, contractual relationships relating to sales, consignment, and inventory management systems, and the Defendants have tortiously interfered with Synthes relationships with its customers.

(Am. Compl. ¶¶ 219-- 23.) Defendant Powell now contends that because Plaintiff's tortious interference claim is based upon the allegation that Powell, along with Marotta, Brown, and Stassen, solicited Synthes's employees, customers, and vendors in order to compete with Synthes, this claim is nothing more than an effort to re-cast Plaintiff's breach of contract claims into separate tort claims.

In response, Plaintiff argues that Synthes's tortious interference with contract claim against Powell addresses conduct outside the scope of Powell's contractual obligations to Synthes. More precisely, according to Plaintiff, this claim alleges that Powell tortiously interfered with three separate sets of contracts: (1) Synthes's contractual relationships with current and former Synthes employees; (2) Synthes's contractual relationships with its vendors; and (3) Synthes's contractual relationships with its customers outside his former sales territory. (Pl.'s Resp. Opp'n Powell Mot. Dismiss 8 (citing Am. Compl. ¶¶ 220--26, 152--53, 156--59, 223, 283--84).) As such, Plaintiff avers that the tortious interference claim goes beyond the contractual prohibitions to challenge conduct that is unlawful only in tort.

In light of these varied allegations of tortious interference, the Court must conduct a more individualized analysis of each specific claim. First, as to Powell's alleged tortious interference with Synthes's contractual relationships with current and former employees, the Amended Complaint asserts that Powell solicited such employees to invest in Emerge; accept employment elsewhere; provide confidential and trade secret information; provide access to Synthes's customers; provide access to Synthes product; and conceal his activities on behalf of Emerge. (Id. ¶ 221.) The non-solicitation of employees provision in the Non-Competition Agreement, however, explicitly provides that Powell could not, within one year after my employment with Synthes, "directly or indirectly solicit any employee of Synthes to leave their employment with Synthes, offer any employee of Synthes employment elsewhere or hire any employee of Synthes to work elsewhere." (Am. Compl., Ex. K at 3 (emphasis added).) As such, to the extent the tortious interference with employees claim alleges Powell's improper solicitation of Synthes employees to leave Synthes and accept employment elsewhere, the alleged conduct falls squarely within the scope of this provision and must be dismissed under the gist of the action doctrine. To the extent the tortious interference with employees claim alleges activity beyond that-such as solicitation of employees for information, investment capital, or access to trade secrets-the cause of action falls outside the bounds of the Agreement and is not barred by the gist of the action doctrine.

Second, as to Powell's alleged interference with Synthes's contracts with its vendors, the Court does not deem this claim to be subsumed by the breach of contract claim. (Id. ¶ 222.) Notably, nothing within Powell's Non-Competition Agreement expressly precludes him from dealing with Synthes's vendors. Moreover, while Defendant Powell suggests that this claim might be subsumed by the Agreement's prohibition on use of confidential information, it is notable that vendor information is not included in the Agreement's definition of "proprietary and confidential information."*fn6 Accordingly, this portion of Plaintiff's tortious interference claim is not barred by the gist of the action doctrine.

Third and finally, as to Powell's alleged interference with Synthes's contractual relationships with its customers, the analysis is slightly more complicated. The Amended Complaint alleges that Powell "knew or should have known about Synthes' contractual relationships with its customers, including, without limitation, contractual relationships relating to sales, consignment, and inventory management systems, and the Defendants have tortiously interfered with Synthes relationships with its customers." (Id. ¶ 223.) As set forth above, however, the non-solicitation of employees portion of the Non-Competition Agreement only precluded Powell from soliciting Synthes customers or prospective customers within three groups: (1) any customer of Synthes that Powell solicited at any time during the last three years of his employment; (2) any prospective customer of Synthes that received or requested a proposal or offer from Powell on behalf of Synthes at any time during the last three years of his employment; or (3) any customer or prospective customer of Synthes for which Powell had any responsibility, directly or indirectly, at any time during the last three years of his employment. (Id., Ex. K at 3.)

Plaintiff now argues that its claim only contends that "Powell tortiously interfered with Synthes' contractual relationships with its . . . customers outside the restricted territory and with whom Powell had no prior working relationship." (Pl.'s Mem. Opp'n Powell Mot. Dismiss 10.) Defendant Powell, on the other hand, asserts that "as support for the proposition that Powell interfered with Synthes's customers outside of his former sales territory, Plaintiffs rely on allegations that its customers were directed to 'reorder Synthes' surgical drill bits' from Emerge and this process was facilitated in part by Emerge's use of Synthes' part numbers." (Def. Powell's Reply Br. 7.) Because the confidentiality provision in Powell's Non-Competition Agreement precluded him from disclosing or communicating any proprietary and confidential information to "any competitor or other third party," (Am. Compl., Ex. K, at 2), Powell's use of such information to solicit Synthes customers is "inextricably interwoven with the contractual duties at issue." (Def. Powell's Reply Br. 7.)

At this juncture of the litigation, the Court lacks sufficient information to decide whether the gist of the action doctrine applies. Certainly, to the extent Plaintiff alleges that (a) Powell interfered with Synthes's contractual relationships with customers/prospective customers that Powell either solicited, serviced, or otherwise had contact with during his last three years of employment or (b) Powell improperly used Synthes confidential and proprietary information to interfere with Synthes's customers' contracts, that claim may be subsumed by the Non-Competition Agreement. To the extent, however, that Plaintiff challenges Powell's solicitation of customers outside the categories defined in the Non-Competition Agreement, such a claim would be beyond the Non-Competition Agreement and, thus, would not be barred by the gist of the action doctrine.*fn7 "'Caution must be exercised in dismissing a tort action on a motion to dismiss because whether tort and contract claims are separate and distinct can be a factually intensive inquiry.'" Kimberton Healthcare Consulting, Inc. v. Primary PhysicianCare, Inc., No. Civ.A.11-4568, 2011 WL 6046923, at *8 (E.D. Pa. Dec. 6, 2011) (quoting Haymond v. Lundy, Nos. Civ.A.99-5015, 99-5048, 2000 WL 804432, at *8 (E.D. Pa. June 22, 2000)). Indeed, "the application of the gist of the action doctrine depends on the facts of each particular case." Sensus USA, Inc. v. Elliott Bay Eng'g, Inc., No. Civ.A.10-1363, 2011 WL 2650028, at *7 (W.D. Pa. July 6, 2011). Where, as here, the factual nature of the allegations is unclear, "this issue is best left for resolution on a post-amendment motion to dismiss or, even more appropriately, on a post-discovery motion for summary judgment." Id. Heeding these cautionary words, the Court declines to rule on this portion of Defendant Powell's Motion.

In sum, the Court reaches a tripartite ruling on Plaintiff's tortious interference claim. First, to the extent that the claim alleges that Powell interfered with Synthes's contractual relationships with current and former Synthes employees by soliciting them to leave Synthes's employment or accept employment elsewhere, Defendant Powell's Motion to Dismiss is granted under the gist of the action doctrine. Second, Defendant Powell's Motion is denied to the extent it seeks dismissal under the gist of the action doctrine of the portions of the tortious interference claim alleging both (a) solicitation of Synthes's employees for information, investment, concealment, and access to trade secrets; and (b) interference with Synthes's contractual relationships with its vendors. ...


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