Synthes, Inc. v. Emerge Medical, Inc.
887 F. Supp. 2d 598
E.D. Pa.2012Background
- Synthes, Inc. sues former employees and related entities for breaches of non-disclosure and non-compete covenants and tortious interference related to a competing venture, Emerge Surgical (later Emerge Medical).
- Marotta and Brown, while employed by Synthes, formed Emerge and developed plans to compete using confidential information; they signed multiple Non-Competition and Non-Disclosure Agreements governing conduct and choice of Pennsylvania law.
- Stassen allegedly assisted Marotta and Brown in forming Emerge, coordinated with investors and others, and remained aware of non-compete provisions while aiding the competing venture.
- Powell also resigned and joined a competing firm; Synthes asserts he violated non-compete and confidentiality obligations and engaged in misconduct related to tuition reimbursement recoupment.
- Plaintiff argues that the forum selection clauses in the signatories’ agreements bind non-signatories like Stassen under the closely-related-party doctrine because Stassen worked with the signatories to advance Emerge against Synthes’s interests.
- Stassen moved to dismiss for lack of personal jurisdiction; Synthes contends jurisdiction exists under forum selection clauses and closely-related-party theory, among other theories.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether forum selection clauses render Stassen subject to PA jurisdiction | Stassen is closely related to the contractual dispute and should be bound by the clause. | Non-signatory cannot be bound absent direct relationship or foreseeability; no reciprocal privity. | Forum selection clauses apply to Stassen; personal jurisdiction granted. |
| Whether Stassen is bound as a closely related party to the contract | Stassen worked with Brown and Marotta to form Emerge in violation of non-competes, making him closely related. | No sufficient close relationship or foreseeability under university painters-like analysis; temporal proximity not required. | Yes; Stassen is closely related and should have foreseen enforcement of the clauses. |
| Whether the non-signatory can be bound under a co-conspirator theory | Plaintiff relies on non-signatories acting in concert to form Emerge in violation of agreements. | Plaintiff cannot rely on conspiracy alone to bind non-signatories to forum clauses. | Court declines to rely on conspiracy theory; closely-related-party doctrine suffices. |
| Whether Pennsylvania choice-of-law provisions govern the forum clause analysis | PA law governs enforceability of the forum clauses and related issues. | Choice of PA law supports enforcement of forum clauses against non-signatories in the Third Circuit. | Pennsylvania law governs forum clause interpretation and enforcement in this context. |
Key Cases Cited
- Mellon Bank (East) PSFS, Nat'l Ass'n v. Farino, 960 F.2d 1217 (3d Cir. 1992) (forum states jurisdiction permissible to constitutional limits)
- In re Mushroom Transp. Co., 247 B.R. 395 (E.D. Pa. 2000) (close relationship or foreseeability binds non-signatories to forum clauses)
- Magi XXI, Inc. v. Stato Della Citta Del Vaticano, 818 F. Supp. 2d 597 (E.D.N.Y. 2011) (close relationship and foreseeability extend to non-signatories)
- Time Share Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61 (3d Cir. 1984) (classic forum-selection clause foreseeability principle for non-signatories)
- Provident Nat'l Bank v. Calif. Fed. Sav. & Loan Ass'n, 819 F.2d 434 (3d Cir. 1987) (burden shifts to plaintiff to show sufficient minimum contacts)