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.