Menu
Blog Banner Image

The Franchise Memorandum

Texas Federal Court Denies Distributor’s Motion for Summary Judgment on Competitive Activities Counterclaim Despite Absence of Competitive Sales
Posted in Terminations

A magistrate judge for the United States District Court for the Southern District of Texas recently denied a distributor’s motion for summary judgment on a counterclaim arising from the distributor’s alleged competitive activities. PPD Enters., LLC v. Stryker Corp., 2017 WL 4950065 (S.D. Tex. Nov. 1, 2017). The defendants, MAKO/Stryker, make orthopedic implants. They entered into an exclusive sales representative agreement with the plaintiff, PPD, for the sale and distribution of those implants. But a little more than a year after the agreement commenced, MAKO/Stryker terminated the agreement, causing PPD to sue for breach of contract and tortious interference with PPD’s business relationships. MAKO/Stryker asserted a counterclaim alleging that, “among other things,” PPD had breached the agreement prior to its termination by selling a competitor’s products. However, the agreement specifically acknowledged the sales at issue, and MAKO/Stryker impliedly conceded that the competitor’s products were not “Competitive Products” within the meaning of the agreement. Citing a lack of evidence of prohibited competitive activities, PPD sought summary judgment on MAKO/Stryker’s counterclaim.

The court denied PPD’s motion. Without addressing the Iqbal/Twombly federal pleading standard, the court found that PPD interpreted MAKO/Stryker’s counterclaim too narrowly, agreeing with MAKO/Stryker that the counterclaim included a claim that PPD had failed to use commercially reasonable efforts to sell MAKO/Stryker’s implants, even though the counterclaim did not contain any explicit allegation to that effect. Ultimately, the court found the issue of commercially reasonable efforts to be a question of fact sufficient to warrant denial of PPD’s motion for summary judgment.

Email LinkedIn Twitter Facebook

The information contained in this post is provided to alert you to legal developments and should not be considered legal advice. It is not intended to and does not create an attorney-client relationship. Specific questions about how this information affects your particular situation should be addressed to one of the individuals listed. No representations or warranties are made with respect to this information, including, without limitation, as to its completeness, timeliness, or accuracy, and Lathrop GPM shall not be liable for any decision made in connection with the information. The choice of a lawyer is an important decision and should not be based solely on advertisements.

About this Publication

The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

To subscribe to monthly emails for The Franchise Memorandum, please click here

Topics

Archives

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Blog Authors