A California federal jury has ordered local medical device maker NuVasive Inc. to pay at least $27 million to a former distributor for allegedly poaching the distributor’s business.
The verdict, announced Feb. 22, is the latest in a series of setbacks for NuVasive, a multibillion-dollar company rebuilding its reputation under Gregory Lucier, a highly esteemed biotech executive in San Diego.
Madsen Medical, a Nevada-based distributor, sued NuVasive in September 2013 after being fired the previous year. Madsen previously sold NuVasive products to hospitals and surgeons in Las Vegas and Reno. After firing the company, NuVasive allegedly undertook a months-long stealth campaign to poach most of Madsen Medical’s employees and cut off the distributor’s stream of business, according to Madsen’s lawyers.
Madsen owner Kris Madsen alleged that NuVasive breached its contract when it recruited six Madsen Medical representatives to sell directly to their former Madsen clients, according to court documents.
The jury ordered NuVasive to pay $20 million in punitive damages, and either $14 million for unjust enrichment, or $7.5 million in compensatory damages and $300,000 in back commissions, according to Joseph Ybarra of Huang Ybarra Singer & May LLP, who was Madsen Medical Inc.’s attorney.
To be clear, NuVasive will not have to pay Madsen both unjust enrichment and compensatory damages, and it has not yet been decided which amount NuVasive will be required to pay. Instead, Judge Barry Ted Moskowitz will review the evidence and verdict and consider post-trial written arguments from both sides before deciding which of the two damage amounts (either $7.5 million or $14 million) NuVasive will pay, if affirmed. This means NuVasive could pay up to $34 million when all is said and done.
“We are aware that the court in the Madsen case reached a verdict unfavorable to NuVasive, and we are in the process of filing post-trial motions to overturn the verdict and/or seek a new trial,” NuVasive said in a statement released to San Diego Business Journal. “We believe that neither the law nor the facts support the verdict in this matter, and we intend to appeal in the event our post-trial motions are unsuccessful and a judgment is entered by the Court. As this is an ongoing litigation matter, our policy is not to comment further.”