Stone Surgical, LLC v. Stryker Corp., 2017 U.S. App. LEXIS 9031 (6th Cir. May 24, 2017):
This case arises out of the deterioration of a decade-plus employment relationship between Stryker Corporation and Christopher Ridgeway. Stryker, a medical-device manufacturing company, employed Ridgeway as a sales representative, where he sold customized plates and screws for use in craniomaxillofacial (CMF) surgery on Stryker's behalf in his Louisiana-based sales territories. In 2013, however, the relationship between [*2] Stryker and Ridgeway became strained as Ridgeway sought other business opportunities with a regional competitor, Biomet. Stryker terminated Ridgeway as a result. Litigation ensued, a jury trial was conducted in the Western District of Michigan, and judgment was awarded to Stryker. At the core of the present dispute is a non-compete agreement Ridgeway signed at the start of his tenure with Stryker and whether that agreement is valid. For the reasons that follow, the district court properly ruled for Stryker.
Christopher Ridgeway was employed as a sales representative by Stryker Corporation and Howmedica Osteonics Corporation (collectively, "Stryker") from 2001 to 2013. Stryker offered Ridgeway the sales representative position through a sixteen-page fax letter on October 24, 2001. Ridgeway's employment was contingent on his signing and returning certain attached documents--an offer letter, a form non-compete agreement, and a code of conduct. From 2000 to 2005, Stryker used the same form non-compete agreement with all employees, which included a one-year non-compete clause, a customer non-solicit clause, and an employee non-solicit clause. The non-compete agreement included a Michigan [*3] choice-of-law clause and a Michigan forum-selection clause. On October 25, 2001, Ridgeway accepted the job offer with a four-page fax containing a cover page, the signed offer letter, and executed signature pages for his form [**3] non-compete agreement and code of conduct. The cover letter stated: "Here are signed copies of my offer letter, non-compete agreement, and code of conduct."
We review the district court's evidentiary rulings for an abuse of discretion and will reverse only "if the abuse of discretion caused [*15] more than harmless error." Taylor v. TECO Barge Line, Inc., 517 F.3d 372, 378 (6th Cir. 2008) (citation omitted).
Ridgeway challenges the district court's decision to exclude internal Stryker emails from evidence pursuant to the attorney-client privilege. The two emails at issue include one from Stryker's human resources director to a member of the in-house counsel team, dated two weeks prior to Ridgeway's termination, and a second between the sales team leader and the human resources director, approximately four weeks before this suit was filed. Both emails allegedly discuss the existence of Ridgeway's non-compete agreement. The emails were inadvertently produced during discovery and retracted by Stryker under the attorney-client and work product privileges. Ridgeway argues that the emails fall under the crime-fraud exception and alternatively, that Stryker waived the attorney-client privilege by putting the validity of the non-compete agreement at issue. These arguments fail.
The crime-fraud exception allows a party to access the contents of privileged communications when an attorney-client relationship is used to advance a crime or perpetrate fraud. United States v. Zolin, 491 U.S. 554, 563-65 (1989). The party seeking to use the crime-fraud exception must first "make a prima facie showing that [*16] a sufficiently serious crime or fraud occurred to defeat the privilege [and] second . . . must establish some relationship between the communication at issue and the prima facie violation." In re Antitrust Grand Jury, 805 F.2d 155, 164-66 (6th Cir. 1986) (emphasis omitted); see also United States v. Collis, 128 F.3d 313, 321 (6th Cir. 1997).
[**11] Ridgeway argues that the internal Stryker emails show that the company was engaged in fraud. Specifically, he asserts that Stryker management knew that Ridgeway did not have a non-compete, a fact that Ridgeway alleges they tried to conceal by filing the initial complaint with a form copy of the non-compete rather than with his original agreement. Ridgeway offered no other evidence to demonstrate that the agreement attached to the complaint was not his, and therefore that Stryker's statement that it was a "true and correct copy" was false. Nor did Ridgeway offer any further evidence of fraudulent activity. The law does not permit Ridgeway to rely on the emails themselves to prove the fraud. The district court did not require Ridgeway to unequivocally prove the fraud but instead asked for some evidence to establish a reasonable basis for believing that fraud occurred. Because Ridgeway did not make such a showing, the district court did not abuse its discretion by [*17] rejecting Ridgeway's crime-fraud-exception argument.
Ridgeway's argument that Stryker put the validity of the non-compete "at issue" also fails because he never raised it before the district court. He points to two places in the record where he raised this argument: first, in his memorandum in support of the motion to retain disclosed documents; and second, in his appeal to the district court of the magistrate's decision to deny his motion to retain disclosed documents. However those two sources provide little clarity as to Ridgeway's argument. It was not until his brief on appeal that he developed these cursory references into a full-fledged argument. The fact that Ridgeway never raised this alternate argument outside of ambiguous language in two briefs below indicates that the argument was not squarely presented to the district court and, therefore, the argument is waived.6
6 Having found no abuse of discretion in the district court's exclusion of the privileged communications from the record, we also, for the same reasons, deny Ridgeway's motion to supplement the record on appeal.
Ridgeway also appeals the district court's denial of his motion for an adverse-inference jury instruction based on Stryker's actions; namely, for attaching the form non-compete as a "true and correct" copy of Ridgeway's agreement instead of the original copy signed by Ridgeway. But Ridgeway has not explained why [*18] Stryker had an obligation to preserve the original 2001 agreement signed by Ridgeway. Even if Ridgeway returned the agreement to [**12] Stryker when he faxed his acceptance, the company would have had it since 2001, and Stryker did not fire Ridgeway until 2013. Thus, Stryker had no knowledge of potential litigation over Ridgeway's non-compete for twelve years. During that time, the company had no obligation to preserve the agreement as evidence. The district court did not abuse its discretion by refusing to give an adverse-inference jury instruction against Stryker.
For the reasons stated above, we affirm the judgment of the district court.
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