Smith & Nephew (S&N), a medical device maker, has filed lawsuits against two competing companies in Texas federal court, seeking $1 million from each company on allegations that they poached sales personnel who were bound by covenants not to compete.
The lawsuits were filed against Central Texas Orthopedic Products Inc., an Austin-based distributor for Biomet Inc., and Exact Surgical Inc., a Tulsa-based distributor for Exactech Inc. Both lawsuits involve independent contractors who allegedly left Smith & Nephew to work for the other companies despite having signed noncompete agreements promising not to work for a competitor for one year after leaving S&N.
The lawsuits claim that sales representatives are privy to a large amount of confidential information regarding pricing, marketing, customers and product technology. The company also said in court documents that it invests substantial resources in training its sales reps.
Both lawsuits claim that Smith & Nephew’s competitors used the contractors to take customers away from S&N. In both lawsuits, Smith & Nephew filed cease-and-desist letters that it sent to the ex-contractors with the court, stating that the noncompete agreements were being violated and that both the sales representatives and the companies that employed them risked litigation.
Smith & Nephew previously filed a $56 million lawsuit against a group of former managers and sales representatives that also took jobs with a competing company, allegedly in violation of noncompete agreements.