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Meyer v. Howmedica Osteonics Corp.

United States District Court, S.D. California

February 19, 2015

ANTHONY MEYER, an Individual, SMITH & NEPHEW, INC., a Delaware Corporation, Plaintiff,
v.
HOWMEDICA OSTEONICS CORP., a New Jersey Corporation; and DOES 1-10, Inclusive, Defendant.

ORDER GRANTING DEFENDANT'S MOTION TO TRANSFER AND DENYING PLAINTIFFS' MOTION TO REMAND (Doc. Nos. 5, 14)

ANTHONY J. BATTAGLIA, District Judge.

Before the Court is a motion to dismiss pursuant to 28 U.S.C. § 1404(a) and Rule 12(b)(6) or, in the alternative, to transfer the action, filed by Defendant Howmedica Osteonics Corporation ("Defendant" or "Howmedica") (Doc. No. 5), and a motion to remand, filed by Plaintiffs Anthony Meyer ("Meyer") and Smith & Nephew, Inc. ("Smith") (jointly referred to as "Plaintiffs") (Doc. No. 14). Upon consideration of the motions and the parties' arguments in support and opposition, the Court DENIES Plaintiffs' motion to remand, GRANTS Defendant's motion to transfer and DEFERS Defendant's Rule 12(b)(6) motion to dismiss.

I. BACKGROUND

A. Factual Background[1]

Defendant provides and sells medical products to hospitals and doctors. (Compl. 4, Doc. No. 1-1.) Meyer worked for Defendant as a Trauma Representative from September 2012 to August 4, 2014. (Id.) Meyer began working for Smith on or about September 8, 2014, and presently works for Smith. ( Id. at 5.)

On or about September 28, 2012, Meyer signed an Employment Agreement with Defendant (Defendant is referred to in the Employment Agreement as "Stryker Orthopaedics"). ( Id. at 4; see also Compl. Ex. 1 ("Employment Agreement").) Paragraph 2(e)(vi) of the Employment Agreement states, in part:

[F]or a period of one year following the Employment Termination Date, in order to protect the confidential information and trade secrets of Stryker Orthopaedics, Employee shall not, directly or indirectly, engage in any of the following conduct: (x) solicit or attempt to solicit, on Employee's own behalf or on behalf of any person or entity other than Stryker Orthopaedics, business from customers that Employee contacted or serviced while in the employ of Stryker Orthopaedics in any product lines marketed or sold by Employee for Stryker Orthopaedics; (y) attempt to employ, or solicit for employment by others, any Stryker Orthopaedics employee;.or (z) induce or attempt to induce any of Stryker Orthopaedics' then current consultants, independent contractors or licensees, or any other third party, to alter or terminate any relationship with Stryker Orthopaedics.

(Employment Agreement 6.)

Paragraph 6(h) of the Employment Agreement states, in its entirety:

Jurisdiction. Stryker Orthopaedics and Employee consent and agree that any and all litigation between them relating to this Agreement shall take place in the State of New Jersey, and each of them expressly consents to the jurisdiction of the federal and/or state courts in New Jersey (the "Court").

( Id. at 11.)

Paragraph 6(i) of the Employment Agreement states, in its entirety:

Governing Law. This Agreement shall be construed in accordance with and governed for all purposes by the laws of the State of New Jersey, without regard to its conflicts of laws principles.

( Id. )

Plaintiffs bring three causes of action relating to the Employment Agreement. Plaintiffs' first cause of action seeks declaratory relief in anticipation that Defendant will seek to enforce Paragraph 2(e)(vi) of the Employment Agreement. (Compl. 5-6.) Plaintiffs argue Paragraph 2(e)(vi) of the Employment Agreement violates California Business & Professions Code section 16600[2] and constitutes unlawful business practice pursuant to section 17200. ( Id. ) Section 16600 provides "[e]very contract by which anyone is restrained from engaging in any lawful profession, trade or business of any kind is to that extent void." ( Id. at 6.) Section 17200 addresses unfair business competition including any unlawful, unfair, or fraudulent business act or practice.

Plaintiffs allege that enforcing, threatening to enforce, and attempting to enforce Paragraph 2(e)(vi) will deprive Meyer of his fundamental right, as a California resident, to work within his lawful trade, business, or profession and to move freely within the marketplace. ( Id. at 5.) As such, Plaintiffs request judicial determination that Paragraph 2(e)(vi) is unlawful and void under section 16600, and cannot be enforced against Meyer. ( Id. at 6, 9.)

Plaintiffs allege that enforcing, threatening to enforce, and attempting to enforce Paragraph 2(e)(vi) will deprive Smith of its right to employ individuals of its choice to perform services on its behalf and prevents Smith from using Meyer's services, which violates section 16600 and constitutes unlawful business practice under to section 17200. ( Id. at 5.) As such, Plaintiffs request judicial determination that Meyer has the right to work for Smith and engage in the profession, trade, or business of his choosing in California. ( Id. at 9.)

Plaintiffs' second cause of action seeks declaratory relief as to Paragraphs 6(h) and 6(i). ( Id. at 2.) Plaintiffs argue these paragraphs are void and unenforceable by the presence of Paragraph 2(e)(vi), because enforcing the jurisdiction and governing law provisions will result in disregard of section 16600. ( Id. at 7.) Plaintiffs also argue Paragraphs 6(h) and 6(i) are independently in violation of sections 16600 and 17200. ( Id. at 2.) Lastly, Plaintiffs argue these paragraphs are void and unenforceable because the provisions are adhesive in nature and a result of undue influence and overwhelming bargaining power of Defendant. ( Id. at 7.) As such, Plaintiffs request judicial determination that Paragraphs 6(h) and 6(i) are void and unenforceable against Plaintiffs. ( Id. at 7, 9.)

Plaintiffs' third cause of action alleges violation of state unfair competition laws. ( Id. at 8.) Plaintiffs argue Defendant's use of, and threats or attempts to enforce Paragraphs 2(e)(vi), 6(h), and 6(i) constitute unfair and unlawful business practice in violation of sections 16600 and 17200. ( Id. at 8.) Plaintiffs allege Defendant has profited, is profiting, and will continue to profit from its unlawful and unfair business practices. ( Id. ) As such, Plaintiffs seek an award in the amount of the ill-gotten gains by Defendant, pursuant to section 17203. ( Id. ) Plaintiffs also allege Plaintiffs have lost money and property as a result of Defendant's conduct. ( Id. ) As such, Plaintiffs request restitution in an unspecified amount. ( Id. at 8-9.) Lastly, Plaintiffs request a preliminary and permanent injunction prohibiting the use of Paragraph 2(e)(vi). ( Id. )

B. Procedural Background

Plaintiffs filed the Complaint in the Superior Court of the State of California for the County of San Diego on September 9, 2014. ( See Compl.) Defendant removed the action on October 20, 2014. ( See Not. of Removal, Doc. No. 1.) Plaintiffs now move to remand for lack of subject matter jurisdiction and argue that this Court should abstain from hearing the case because the State of California has a strong policy interest in the issues involved. (Mot. to Remand, Doc. No. 14; Mem. Supp. Remand 7, 9, Doc. No. 14-1.) Defendant responded (Mem. Opp. Remand, Doc. No. 19) and Plaintiffs replied (Reply Supp. Remand, Doc. No. 20).

In addition to Plaintiffs' motion, Defendant moves to dismiss pursuant to 28 U.S.C. § 1404(a) and Rule 12(b)(6) or, in the alternative, to transfer the action. (Mot. to Dismiss, Doc. No. 5; Mem. Supp. Dismiss, Doc. No. 5-1.) Plaintiffs responded to Defendant's motion to dismiss (Mem. Opp. Dismiss, Doc. No. 17) and Defendant replied (Reply Supp. Dismiss, Doc. No. 18).

II. DISCUSSION

In the interest of economy, the Court will consider the motion to remand, then continue ...


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