NuVasive loses ground to Alphatec in court battle over 2017 executive departure

Angie Stewart -  

Alphatec Holdings secured a partial victory Aug. 31 in a lawsuit brought by competitor NuVasive, according to court documents.

The court battle began when NuVasive sued Alphatec Holdings and Patrick Miles in 2017, alleging that Mr. Miles conspired during his 17-year tenure at NuVasive to "decamp to Alphatec, taking confidential information, employees and customers with him," according to court documents.

In 2016, Mr. Miles allegedly advised NuVasive against acquiring Alphatec, and in 2017, he secretly executed a securities purchase agreement to buy $500,000 of Alphatec stock in a private placement.

Mr. Miles reportedly resigned from his positions as vice chairman and board member at NuVasive Oct. 1, 2017, and became executive chairman at Alphatec the next day. He also served as NuVasive's president and COO before he joined Alphatec — where he eventually became CEO.

After Mr. Miles' departure, NuVasive accused Alphatec of unfair competition; tortious interference with contract; tortious interference with prospective economic advantage; aiding and abetting breach of fiduciary duty; and deceptive and unfair trade practices under Florida and North Carolina law.

In its latest decision, the Delaware Chancery Court struck down NuVasive's claim that Alphatec aided and abetted breach of fiduciary duty, among other allegations, on the grounds that the case was pled improperly. It was the third time the dispute has been narrowed, according to Bloomberg Law.

In 2019, a court rejected NuVasive's non-competition claims, finding that its non-compete agreement with Mr. Miles was void under California law. If the non-compete agreement had been viable, NuVasive might have been able to support a claim of aiding and abetting breach of a non-compete — not breach of fiduciary duty.

"The pled facts would need to support an inference that Alphatec not only intended to lure Miles away from NuVasive, but also that it materially supported or encouraged the purloining of NuVasive confidential information while Miles owed fiduciary duties."

Click here to view the court opinion.

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