a

Alphatec, Patrick Miles file complaint against NuVasive in ongoing dispute Featured

Written by  Laura Dyrda | Wednesday, 01 November 2017 11:57
Social sharing
Alphatec Spine and Patrick Miles filed a complaint against NuVasive in the Superior Court of California, County of San Diego, citing unfair competition and breach of contract, among other issues. Mr. Miles left his position at NuVasive for Alphatec amid controversy.
 
The complaint was filed on Oct. 13, two weeks after Alphatec named Mr. Miles, a former NuVasive executive, the company's chairman and three days after NuVasive filed a complaint against Mr. Miles in Delaware Chancery Court. Mr. Miles joined NuVasive in 2001 and rose to a leadership position within the company under former Chairman and CEO Alex Lukianov, who resigned in 2015. The Alphatec complaint notes Mr. Miles was identified to the NuVasive board as "the internal candidate most qualified to be the successor to Mr. Lukianov," but the company named NuVasive board member and former Life Technologies CEO Greg Lucier interim and then permanent CEO instead.
 
The complaint also notes Mr. Lucier agreed to name Mr. Miles CEO at the end of 2016 and appoint him to the board while Mr. Lucier maintained the executive chairman role. Before the promotion could occur, Mr. Miles resigned from the company on Sept. 16, 2016, with the intention of leading Alphatec. At the time of his resignation, Mr. Miles was NuVasive's president and COO. However, NuVasive's CFO at the time brokered a deal that resulted in a counterproposal to Mr. Miles, naming him vice chairman of the company, which he accepted. The new package would compensate Mr. Miles as much as $25 million to $30 million over five years and gave him an ongoing seat on the company's board.
 
NuVasive's vice chairman agreement outlined at-will employment in addition to a non-compete covenant. Non-compete covenants are illegal for California residents and employees; Mr. Miles resides in California. The agreement also outlined a non-solicitation covenant, also violating California law. The agreement outlined recourse for breaching both covenants; NuVasive would recover matching restricted stock units vested or paid to Mr. Miles, which currently amount to zero.
 
While the agreement was drafted to be governed by Delaware's laws, Alphatec's complaint against NuVasive argues the non-compete and non-solicitation provisions are unlawful because Mr. Miles resided in California and provided services to NuVasive there for the duration of the agreement.
 
Mr. Miles again resigned from NuVasive on Oct. 1, 2017, and announced his new position as Alphatec Spine's executive chairman on Oct. 2. In the year between resignations, the Alphatec complaint states Mr. Miles was not consulted or involved in company decision-making, despite his promotion, and he never attended a board meeting. NuVasive's complaint outlines a different scenario: during that time NuVasive considered acquiring Alphatec, but decided against it. NuVasive's complaint includes an email from Mr. Miles advising against the acquisition, which NuVasive claims had "substantial weight" in the decision not to acquire Alphatec. NuVasive also states concerns that Mr. Miles could share proprietary information in his new position.
 
According to Alphatec's complaint, NuVasive's complaint released "certain confidential information relating to Alphatec's business operations and product portfolio — information which was subject to a nondisclosure agreement between NuVasive and Alphatec relating to a possible acquisition." Alphatec maintains NuVasive released confidential information in their complaint, selecting negative facts about Alphatec's portfolio and assessments; as a result, Alphatec is seeking "declaratory, injunctive, compensatory and other equitable relief."
 
As of Oct. 13, when Alphatec and Mr. Miles filed their complaint, neither had been served with NuVasive's complaint.
© Copyright ASC COMMUNICATIONS 2017. Interested in LINKING to or REPRINTING this content? View our policies here.

Top 40 Articles from the Past 6 Months