By Thy Vo
Law360 – March 21, 2024 – A Colorado medical device distributor urged a federal judge to make Stryker and its lawyers pay $2.3 million in attorney fees as sanctions for “pervasive misconduct” throughout discovery and trial, arguing discovery violations will otherwise become the “cost of doing business” for the medical technology giant.
The request comes after a Tenth Circuit panel in February upheld a $4.7 million judgment against Stryker for hiring away ORP Surgical LLC’s employees but vacated a $2.28 million fee award, finding Stryker didn’t have a duty to indemnify the distributor.
But the circuit court also sent the case back to reconsider the sanctions, citing U.S. District Judge R. Brooke Jackson’s caveat that he would have considered a harsher punishment against the medical device company if not for the fee award.
A special master overseeing discovery for the case had recommended penalties against Stryker for unprofessional behavior by a Seyfarth Shaw LLP attorney during a deposition, along with improper coaching designed to encourage witnesses to “stonewall” opposing counsel and the company’s failure to preserve text messages.
In a motion filed Wednesday, ORP said that, with the fee award now gone, Judge’s Jackson’s $70,473 sanction isn’t enough to deter Stryker and Seyfarth from committing the same misconduct again.
“For a company that enjoys more than $20 billion in annual revenue, and for a law firm with ‘900 lawyers across 18 offices,’ these amounts are not even rounding errors,” according to the motion. “As it stands, the benefit to Stryker in avoiding damages by deleting and concealing critical evidence will have been well worth the cost.”
ORP also accused two Seyfarth attorneys of having “lied to other judges” about being sanctioned in the suit. The motion cites a March 2023 application for admission to a Rhode Island federal court in which Seyfarth attorney Robyn Marsh allegedly answered “no” to a question about whether she has ever been sanctioned.
Another attorney, Michael Wexler, told another court that he served on a team in which the court “admonished counsel in connection with a perceived discovery dispute,” ORP claimed, accusing him of using a “half-truth” to tell a lie.
Stryker and Seyfarth’s lawyers should, at minimum, pay for the company’s fees and costs for discovery and the special master disputes, ORP contended.
The distributor also urged the court to take other measures, including requiring Stryker’s CEO and Seyfarth’s general counsel to apologize to the court, requiring the lawyers involved to disclose the court’s sanctions order in all entries of appearance for the next five years, and referring the misconduct to the federal Committee on Conduct.
The case stems from a May 2020 lawsuit accusing Howmedica Osteonics Corp., which is owned by Stryker, of breaching sales agreements for ORP to sell the company’s joint replacements and trauma devices in Colorado on commission.
According to the Colorado distributor, the longstanding business relationship between the companies soured starting in 2019, when Stryker hired a new executive who terminated the companies’ sales agreement. When ORP disputed the termination, Stryker suggested a buyout in exchange for hiring ORP’s sales representatives.
The companies negotiated for months. As they zeroed in on a deal for Stryker to pay $13.6 million on the condition that it could hire 14 of ORP’s employees, ORP voluntarily ended the sales agreement instead of taking the buyout.
A Stryker executive immediately emailed ORP’s sales team about an upcoming “transition” and, when the sales agreement officially expired, a dozen employees resigned to work for Stryker.
After an eight-day bench trial, Judge Jackson sided with ORP on its breach claims and counterclaims and awarded $4.7 million in damages for the payments required to terminate the sales agreement.
