Austin Bird, a Smith & Nephew vice president in charge of the company’s Visionaire program in Memphis, received an unusual phone call on March 8, 2011 from Jennifer Griffin, a project engineer.
Griffin told Bird that nearly the entire Visionaire team had been planning to stage a mass resignation and start a new company using the company’s confidential information with the purpose of offering consulting services to the company and, eventually, the company’s competitors.
Three days later, March 11, the company filed a lawsuit against the group in the Shelby County Chancery Court.
The company is accusing nine former employees (Defendants) of conspiring to use company trade secrets regarding Visionaire, a patient matched instrumentation program for knee replacement surgeries, to start their own competing business.
According to the Complaint and accompanying Affidavits from Bird and Griffin, the Defendants were motivated by fears that a company reorganization would take the group’s knowledge and then outsource all their work.
The suits asks for $56 million or more over breach of contract, misappropriation of trade secrets, civil conspiracy, other allegations and a temporary injunction to prevent the Defendants from taking any action to harm S&N.
According to the suit, this is a conspiracy that “involves several engineers, their managers, the department supervisor and a director who committed overt acts with the collective intent to use S&N’s trade secrets and confidential information to start a competing business and intentionally and maliciously interfere with and disrupt S&N’s ongoing business.”
The Accused
The accused are: David Mehl, Luke Gibson, Megan Rumery, Andrew Wald, Ashley Deken, Carey Bryant, Kaleigh Ross, Patrick Conway and Bonnie Walker.
Wald, Deken, Ross, Conway and Walker were product development engineers who reported to their engineering managers, Gibson and Rumery. The managers in turn, reported to Mehl, the Product Development Manager. Mehl reported to Bryant, the Group Director. Ultimately, Bryant reported to Bird.
Visionaire Beginnings
Visionaire is a system which allows surgeons to obtain pre-operative images of a patient’s anatomy and submit them to product engineers who prepare customized patient instrumentation. This allows surgeons to remove the correct segments of bone so the knee components, when attached, fit better.
The company tells surgeons that it can do this within three weeks of receipt of electronic imaging data. Therefore the company depends “entirely on its ability to properly interpret electronic imaging data and correctly and efficiently manufacture the custom-molded instrumentation…by product development engineers in Memphis.”
Griffin has been with the Visionaire program since its inception in February 2008 when the product was in clinical trials and was known as “Fit-U.” Visionaire officially launched in 2009.
Rumery was hired at the same time as Griffin and eventually promoted to the role of supervising product engineers and was Griffin’s direct supervisor. According to the Complaint, Rumery was, “instrumental” in creating new code for software called “Mask”
Mehl developed a three-dimensional software called “Unigraphics” which is modified by the output from “Mask, ” to create specific patient matched instrumentation.
Both programs are needed to create S&N’s Visionaire and, according to the company, only Rumery, Wald, Conway, and Ross can write, modify, or update “Mask” code.
Alleged Conspiracy
Griffin says in her Affidavit that Mehl called her into his office about a month ago. He allegedly explained that a group of engineers and managers “were unhappy and were planning to leave S&N, form their own corporation, take information from S&N, and consult for S&N and eventually S&N’s competitors.”
Griffin says Mehl told her that Rumery, Gibson and he had devised their plan at the AAOS meeting in San Diego the week of February 14, which the three attended on behalf of S&N.
Griffin heard no more about this until she received a call from Kaleigh Ross on February 27. She said Ross asked her if she had a meeting with anyone about leaving the company. Ross allegedly told her that Mehl and Rumery had met with all of the engineers (except Maroun Tarsha) regarding leaving the company to start a new company.
Ross, says Griffin, told her on March 1 that a meeting had been scheduled that evening at Conway’s house in downtown Memphis. Griffin chose not to attend. However when she got home, she got a call from Mehl, who told her she needed to come to the meeting. She agreed and arrived at the meeting at 7:30 p.m. All the Visionaire engineers and managers were there except for Tarsha and Rumery. Mehl led the meeting where, allegedly, a proposed business plan, exit strategy, and the group’s rationale for leaving the company were discussed.
Outsource Fears
Mehl, according to Griffin, told the group that management was not fighting for Visionaire to stay within the group. Mehl said that S&N wanted to keep the Visionaire group as a case processing group, learn what the group knew, and then outsource all of Visionaire processing, essentially leaving the group without a purpose.
He further allegedly told the group that they could take “Mask” and “Unigraphics, ” and S&N would have to sign a contract with them to design fixes for the software and complete and process Visionaire cases for the company. They would also consult with S&N competitors “on how to optimize their training/process and how to increase efficiencies using patient matched technology.”
Griffin said Gibson presented a PowerPoint presentation on an exit plan strategy and various outcomes depending on whether or not S&N took legal action or enforced the group’s non-compete agreements.
Work Slowdown
After the March 1 meeting, Griffin says the team slowed their work and decreased productivity on patient cases in order to increase their worth as a new company. As more cases remained incomplete, Griffin says the group believed the system would crash.
On March 8, Griffin said Mehl told her that he was not doing any more of S&N’s work and was only focusing on the new company. She immediately made notes documenting what had been discussed.
Griffin met with Rumery on the same day for her year-end review. There was no review; Griffin says Rumery only discussed plans to start a new company.
She also states in her affidavit that she had received an email from Walker encouraging the Defendants to copy and delete all info/material from their S&N computers and to come up with new names for the “Mask” software. The next day, she says she copied the software to protect it from sabotage by the Defendants.
Final Meeting
Again, according to information in Griffin’s affidavit, the group met again the evening of March 8 at the Blue Monkey restaurant. All managers and engineers involved in the project, except Bryant, Hartmann and Tarsha, attended.
According to Griffin, Mehl, Rumery, and/or Gibson told to her that Bryant was willing to fund the new company with anywhere from $100, 000 to $300, 000, and that Bryant’s legal counsel had advised him that S&N would not pursue the group’s non-compete agreements, because science and technology is always changing and that Defendants could not be held liable for any process that they were even slightly altering to create new intellectual property.
The Complaint
The company claims it will suffer immediate and irreparable harm if the confidential information about the proprietary process is disclosed or used by a competitor.
The company says its competitive advantage in the marketplace for patient-matched instrumentation is its ability to produce that instrumentation in three weeks. “The disclosure of the process which allows S&N to meet that goal would cause immediate harm to S&N’s goodwill in the marketplace and create an irreparable and immeasurable loss of that competitive advantage, ” states the Complaint.
Furthermore, the company claims that all the Defendants signed Confidentiality, Non-Compete and Non-Solicitation Agreements.
The company accused the Defendants of the following:
Breach of Contract (Confidentiality)—Defendants used and/or disclosed information about the “Mask” system for the purposes of setting up a company to compete with S&N.
“For any provable and proximate damages…S&N seeks damages against the Defendants individually in an amount no less than $1 million.”
Breach of Contract (Non-Competition)—Defendants engaged in activities which compete with S&N. The company also seeks $1 million individually against the Defendants.
Procurement of Breach of Contract—The company claims each Defendant was aware that every other Defendant (except Carey Bryant) had signed confidentiality and non-competition agreements. “By their actions they attempted to unlawfully induce every other Defendant (except Bryant) to breach their agreements, making them liable for actual and treble damages.”
Misappropriation of Trade Secrets—Defendants misappropriated trade secrets by “surreptitiously making copies of at least the ‘Mask” program and the ‘unigraphics model’…for the use in forming a new company.” As a result the company seeks no less than $20 million from each Defendant individually, plus applicable statutory, treble damages and/or common law punitive damages.
Intentional Interference With Business Relations—Each Defendant intentionally interfered with and disrupted S&N’s business relations with its customers and suppliers with the “malicious intent” to cause harm to S&N. As a result the company seeks damages against each Defendant for no less than $1 million.
Civil Conspiracy—Defendants engaged in a civil conspiracy to, among other things, unlawfully interfere with and disrupt S&N’s business relations with its customers and suppliers. That’s another $1 million plus punitive damages per Defendant.
Punitive Damages—Defendants were reckless and malicious with the intent to cause harm to the company. As a result, the company seeks punitive damages in an amount “sufficient to punish” the Defendants.
Injunctive Relief—The company wants a Restraining Order to enjoin each Defendant from further violations of their agreements with the company and prevent them from rendering any service to anyone competing with S&N.
S&N’s Message
Company spokesman Andrew Burns told OTW that a temporary restraining order was issued on March 11 and will stay in effect until a hearing scheduled for July 14.
A company statement said that all Defendants have been terminated from employment at the company and “have taken this legal action in order to prevent further attempts to steal intellectual property and to ensure they cannot use Smith & Nephew confidential information for personal benefit.”
The alleged mutiny in Memphis is now public record. The company’s swift and public response likely sends a loud message to the rest of the crew at Smith & Nephew.
