Sherman & Howard announced a recent jury verdict in favor of its clients Michael Shatzer and The Ortho Agency LLC against its former sales director, Chad Giarratano, and global medical device manufacturer Exactech U.S., Inc., for allegedly collaborating to take over existing and prospective business relationships, violating contractual agreements with Ortho Agency, misusing Ortho Agency’s trade secrets, and poaching contracted sales representatives. Mr. Shatzer and Ortho Agency were represented by trial lawyers Peter G. Koclanes and Nick M. DeWeese.
After a five-day trial in Denver District Court, a jury found in favor of Mr. Shatzer and Ortho Agency on all of their claims, including that Exactech had breached an exclusive Sales Agency Agreement to sell its products to hospitals, surgeons and surgery centers in three states and portions of two others. The jury further found that Mr. Giarratano and his business entities had breached their Independent Services Agreement based upon the Defendants conducting a months-long stealth campaign to eliminate Mr. Shatzer and Ortho Agency as the exclusive distributor for Exactech in those territories and to take over their business. The jury awarded Mr. Shatzer and Ortho Agency $4,000,001.
“This jury verdict is a landmark decision in the medical-device industry where corporate raiding of smaller distributors’ business and personnel by large manufacturers occurs all too often,” said Peter G. Koclanes. “Given the dollar amount ordered by the jury, its verdict is one of the largest monetary awards for damages for a case of this kind in Colorado in the last several years.”
In addition to alleging that Exactech breached its Sales Agency Agreement, Ortho Agency alleged that Mr. Giarratano breached his contractor agreement with the company in a variety of ways, including violating non-disclosure of confidential and trade secret information, non‑competition, and non-solicitation provisions, including when he went to work for Exactech as a new distributor, and solicited and recruited Ortho Agency’s sales personnel to work for his distributorship and Exactech.
“This is a defining verdict in the medical-device industry and sends a clear message that manufacturers in this field should not engage in conduct that interferes with their distributors’ sales and customer relationships, or with the distributors’ relationships with their sales representatives,” said Nick M. DeWeese.