Medtronic loses bid to enforce noncompete against Alphatec exec

Alan Condon -   Print  | Email

A federal court in New York denied Medtronic a preliminary injunction in its noncompete lawsuit against Joseph Walland, former CEO of Medicrea, a New York City-based spine company that Medtronic acquired in November 2020.

Mr. Walland was hired as Medicrea's vice president of sales in 2017, during which time he resided in California, according to court documents. In July 2018, he was promoted to CEO, a role he held until his voluntary departure in December 2020.

He alleges that he entered into an employment agreement —  which also contained a noncompete clause — when he became CEO while he was living in California, not New York.

A couple of weeks after leaving Medicrea, Mr. Walland joined Alphatec Spine as vice president of sales. While acknowledging that the two companies provide spine surgery products and services, Mr. Walland said that those products and services have different uses, target different pathologies and have different users.

While Alphatec was negotiating its acquisition of EOS imaging, two emails were sent to Mr. Walland's email account at Medicrea on March 30 and March 31, 2021.

Medicrea officials alleged that one of the emails contained information that appeared to have been "derived from confidential Medicrea information of which [Mr. Walland] had knowledge," but the plaintiffs did not elaborate on what that information was, according to court documents.

Under California law, "every contract by which anyone is restrained from engaging in a lawful profession, trade or business of any kind is to that extent void," Judge Edgardo Ramos of the U.S. District Court of Southern New York wrote.

The judge found that an injunction would "impose a hardship" on Mr. Walland, as it would bar him from his current employment, and he would likely be unable to work for another spine technology company in the country.

"Further, if enjoined, [Mr. Walland] will be deprived of the benefits of California law — specifically, its prohibition on anticompetitive restraints," the judge said. "By contrast, absent an injunction, plaintiffs may lose some business and customers, but as noted, there has been no evidence yet of such a loss."

The court denied the injunction on the grounds that the noncompete agreement was unenforceable under California law and would hinder Mr. Walland’s job mobility.

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