Stability Solutions, LLC v. Medacta USA, Inc.

UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF TENNESSEE

NASHVILLE DIVISION

STABILITY SOLUTIONS, LLC,

Plaintiff, Case No. 3:23-cv-00072

v. Magistrate Judge Alistair E. Newbern

MEDACTA USA, INC.,

Defendant.

MEMORANDUM OPINION

This civil action arises out of a business agreement between Plaintiff Stability Solutions,

LLC (Stability Solutions), and Defendant Medacta USA, Inc. (Medacta). (Doc. No. 67.) Before

the Court are Medacta’s second amended motion for summary judgment (Doc. No. 112) and two

related motions filed by Stability Solutions—a motion for oral argument on Medacta’s summary

judgment motion (Doc. No. 137) and a motion to strike portions of Medacta’s reply brief and

exhibits (Doc. No. 138).

By the parties’ consent and the Court’s order, this action is referred to the undersigned

Magistrate Judge to conduct all proceedings and order the entry of a final judgment in accordance

with 28 U.S.C. § 636(c) and Federal Rule of Civil Procedure 73. (Doc. No. 44.)

For the reasons that follow, Stability Solutions’ motion for oral argument and motion to

strike will be denied and Medacta’s motion for summary judgment will be granted in part and

denied in part.

I. Background

A. Factual Background

Ash Shaalan is the sole owner and employee of Stability Solutions, a Wyoming limited

liability company that sells and distributes medical devices in California. (Doc. No. 128.) Medacta

is a Delaware corporation based in Franklin, Tennessee, that markets and sells implantable

orthopedic medical devices and related products. (Doc. Nos. 114, 114-1.)

Shaalan states that, around December 2020, he began conversations with Jim Shannon,

then Medacta’s Area Director for the Pacific Region, about working for Medacta as a distributor

of hip and knee implants in Northern California. (Doc. No. 128.) Stability Solutions and Medacta

entered into a written agreement effective April 1, 2021 (the Agreement), under which Stability

Solutions would “provide sales, distribution, inventory management, customer support and related

services” for Medacta in several counties in Northern California. (Doc. No. 114-1, PageID# 958;

see also Doc. Nos. 127-2, 135.) The Agreement provided for an initial two-year term beginning

on the effective date. (Doc. No. 114-1.) Shaalan states that, “[a]s part of the deal with Medacta,

Medacta asked [him] to hire [Medacta employee] Larry Walsh [ ] as an independent sales

representative working for Stability” and that he did so. (Doc. No. 128, PageID# 1610, ¶ 26.)

Section 1.2 of the Agreement addresses minimum sales volume (MSV) requirements and

provides that:

1.2. [Stability Solutions] shall be required to achieve a minimum dollar

amount of Product sales (“Minimum Sales Volume”) for each calendar year of the

Term (or portion thereof) (each, a “Sales Period”). The Minimum Sales Volume for

the first Sales Period is set forth on Exhibit B attached hereto. For each subsequent

Sales Period, Medacta will in good faith determine the applicable Minimum Sales

Volume and will provide such Minimum Sales Volume to [Stability Solutions] in

writing approximately thirty (30) days following the end of each Sales Period. The

Minimum Sales Volume will be based on factors reasonably determined by

Medacta (e.g., [Stability Solutions’] sales in the prior Sales Period, the Territory’s

market potential, the availability of additional Products, the existence of like

competitor products and any other factors considered by Medacta in its sole

discretion). Satisfaction of the Minimum Sales Volume shall be determined based

upon a calculation of the “Net Invoice Price” (as defined below) of the Products

sold by [Stability Solutions] during the applicable Sales Period.

1.2.1. Medacta may modify the Minimum Sales Volume in its sole

discretion during a Sales Period in the event of previously

unforeseen events or in accordance with Section 1.5.

1.2.2. Upon failure of [Stability Solutions] to meet the requirements

specified in Section 9.2.5, Medacta may elect to modify or eliminate

portions of the Territory at any time during the Term upon notice

and an opportunity to cure consistent with Section 9.2.5. [Stability

Solutions] must submit a written improvement plan, deemed

acceptable to Medacta, detailing specific actions to cure defaults as

provided in Section 9.2.5. If [Stability Solutions’] efforts to cure are

not successful within the agreed upon time frame, Medacta may

modify, change or eliminate portions of the Territory upon thirty

(30) days written notice.

(Doc. No. 114-1, PageID# 958–59, ¶¶ 1.2–1.2.2.) Exhibit B to the Agreement states that “[t]he

Minimum Sales Volume for the first year of the Initial Term (i.e., the period commencing April 1,

2021 and ending March 31, 2022) shall be $2,000,000 . . . .” (Id. at PageID# 975.) Shaalan states

that, before he signed the Agreement, Medacta Compliance Officer Jaqueline Huber told him that

the $2 million figure was not negotiable. (Doc. No. 128.) Shaalan further states that Shannon and

Medacta Vice President of Sales Steve Kirschner “assured [him] that the quota was only a ‘soft

goal’ and that [he] would not be required or even expected to achieve these numbers.” (Id. at

PageID# 1607, ¶ 14.) Shannon states that the first-year MSV “was always a goal” but “[i]t was

never a hard[ ]line in the sand that [Stability Solutions] had to hit [ ] even though [the Agreement]

says minimum sales volumes.” (Doc. No. 129-11, PageID# 2115.) But Kirschner states that he

“did not assure Shaalan that the Minimum Sales Volume outlined in the Agreement was a ‘soft

goal’ or that Stability would not be expected or required to achieve those number to avoid contract

termination.” (Doc. No. 115, PageID#1003, ¶ 5.)

Section 9.2 of the Agreement addresses Medacta’s right to early termination in certain

circumstances. (Doc. No. 114-1.) It provides that:

9.2 Medacta may, upon notice to [Stability Solutions], terminate this

Agreement prior to the expiration of the Term effective immediately upon the

occurrence of any of the following:

* * *

9.2.5. Failure of [Stability Solutions] to meet (i) the applicable Minimum

Sales Volume for any Sales Period or (ii) at least Seventy-Five percent

(75%) of the applicable Minimum Sales Volume for any 2 consecutive

Quarters of any Sales Period subject to the following opportunity to

“cure” process: Medacta provides written notice advising [Stability

Solutions] of the Minimum Sales Volume default. [Stability

Solutions] must prepare a written improvement plan, detailing specific

actions to cure said defaults. For the avoidance of doubt, the failure to

present, in Medacta’s sole judgment, an acceptable written

improvement plan and/or failure to cure Minimum Sales Volume

defaults after a notice period contained in an improvement plan

approved by Medacta, shall constitute defaults considered no longer

curable by [Stability Solutions], and Medacta may terminate effective

immediately[.]

(Id. at PageID# 968–69, ¶¶ 9.2, 9.2.5.)

The Agreement states that it “is made and shall be governed by, and construed and enforced

in accordance with, the internal laws of the State of Delaware, without regard to its conflicts of

laws principles.” (Id. at PageID# 972, ¶ 13.13.) It further states that the Agreement, including

attached exhibits and schedules, “contains the entire agreement between the parties hereto with

respect to the transactions contemplated hereby, and contains all of the terms and conditions

thereof and supersedes all prior agreements and understandings relating to the subject matter

hereof.” (Id. at PageID# 971, ¶ 13.3.) Section 13.3 provides that “[n]o changes or modifications of

or additions to this Agreement shall be valid unless the same shall be in writing and signed by each

party hereto.” (Id.)

Stability Solutions did not meet the $2 million MSV requirement for the first year of the

Agreement’s Initial Term. (Doc. Nos. 127-2, 135.) According to Medacta records, Stability

Solutions generated $464,449.00 in revenue from new surgeons between April 1, 2021, and March

31, 2022. (Doc. No. 135.) Shaalan states that no one at Medacta ever “informed [him] that

[Stability Solutions] was in default or otherwise commented negatively about [Stability Solutions]

missing the quarterly and annual goals.” (Doc. No. 128, PageID# 1614, ¶ 44.) Instead, Shaalan

states that he “continued to be congratulated for [his] wins along the way” and was also “paid a

higher commission rate that was based on [Stability Solutions’] growth performance.” (Id.)

Shaalan states that, “[i]n or about January 2022, [he] hired Jim Karl as an independent sales

representative . . . [and] had to take out [a] loan from Medacta” to do so, which Stability Solutions

“paid back over time.” (Id. at PageID# 1613, ¶ 37.)

Kirschner acknowledges that, during the first year of the Agreement, Stability Solutions

“was able to grow [Medacta’s] [N]orthern California territory much more effectively than the four

distributors that immediately preceded [it,] . . . with some assistance from Medacta.” (Doc.

No. 129-10, PageID# 2058.) And Medacta Managing Director Matt Goudy concedes that none of

Medacta’s other distributors in California met their sales quotas in 2021. (Doc. Nos. 129-8, 135.)

In late 2021, David Waters replaced Shannon as Area Director. (Doc. Nos. 128, 129-9.)

Waters emailed Kirschner on January 28, 2022, and recommended “extending” Shaalan “through

the end of the year.” (Doc. No. 129-9, PageID# 1989; Doc. No. 129-25, PageID# 2243; Doc.

No. 135, PageID# 2348, ¶ 28.) On April 18, 2022, Waters emailed Kirschner proposing that

Stability Solutions’ MSV for the second year of the initial term be $3,075,000.00, which Kirschner

approved. (Doc. Nos. 129-9, 129-25, 135.) Ten days later, Waters sent Shaalan a text message

stating “FYI- The annual update for your 2nd year to Min Sales per year should be coming to you

this week. Should be coming from DocuSign.” (Doc. No. 128-12, PageID# 1709.) Shaalan states

that this was the first time Waters addressed the MSV for the second year. (Doc. No. 128.) Shaalan

states that he signed the first amendment to the Agreement (the Amendment) on April 29, 2022.

(Id.)

The Amendment signed by Stability Solutions and Medacta provides:

THIS FIRST AMENDMENT TO SALES AGENT AGREEMENT is made

and entered into and effective as of April 1, 2022 by and between MEDACTA

USA, INC. (“Medacta”) and Stability Solutions, LLC, through its principal Ash

Shalaan [sic] (collectively “Sales Agent”) with respect to that certain Sales Agent

Agreement dated April 1, 2021 entered into by and between Medacta and Sales

Agent (“Agreement”). All capitalized terms used but not defined in this First

Amendment shall have the same meaning as set forth in the Agreement.

FOR VALUABLE CONSIDERATION, the adequacy and receipt of

which is hereby acknowledged, the Agreement is hereby amended in the following

particulars only:

1. Exhibit “B” of the Agreement is deleted and replaced with Exhibit “B-1”

attached hereto and incorporated herein by reference.

2. Except as otherwise provided for herein, the terms of the Agreement shall

remain in full force and effect.

(Doc. No. 114-2, PageID# 977.) Exhibit B-1 to the Amendment states that “[t]he Minimum Sales

Volume for the second year of the Initial Term (i.e. the period commencing April 1, 2022 and

ending March 31, 2023) shall be $3,075,000 . . . .” (Id. at PageID# 978.)

On June 27, 2022, Waters emailed Huber and another Medacta employee, copying

Kirschner, and asked them to “prepare termination documents for Ash (Stability Solutions).” (Doc.

No. 129-15, PageID# 2172.) Waters wrote:

I believe he is short on performance metrics minimums YTD, but it has also come

to my attention from multiple sources that he has been also representing a

competitive line and has attempted to sell it (Signature) to one of our current

customers (Dr. Mast). He is also not engaged in the business and has not

participated in meetings like our National Sales meeting and not showed for cases

when he told Jim Karl he would help him.

Rather than a cease demand and performance related termination process I would

prefer we set a mutual termination to control the exit date and make it more timely

and avoid messiness of the infidelity proof . . . .

(Id.) Huber drafted a mutual separation agreement and a notice of breach letter addressed to

Shaalan and emailed them to Waters and Medacta General Manager Mark Waugh on June 29,

2022. (Doc. Nos. 129-5, 129-19.) The draft letter read, in part:

. . . [P]lease consider this letter as notice of default of the Agreement for failure to

[meet] at least 75% of the Minimum Sales Volume requirements for 2 consecutive

quarters, as set forth in Section 9.2.5. More specifically, the Minimum Sales

Volume and the actual sales achievement for recent quarters is set forth below.

Quarter Minimum Sales 75% of Minimum Actual Sales

Volume Sales Volume Achievement

Requirement Requirement

Q4 2021 $625,000 $468,750 $104,152

Q1 2022 $625,000 $468,750 $332,158

Q2 2022 $625,000 $468,750 $324,610

Section 9.2.5 provides you with an “opportunity to cure” this default. Please

provide us with your written improvement plan, including specific details and

action items that you intend to take to cure the default no later than end of business

day on July 7, 2022.

Failure to provide the business plan by July 7 will constitute cause for immediate

termination.

(Doc. No. 129-19, PageID# 2185–86.) Medacta did not send the draft notice of breach letter or

draft mutual separation agreement to Shaalan. (Doc. Nos. 129-5, 135.)

Instead, on July 19, 2022, Medacta sent Shaalan a letter terminating the Agreement based

on Stability Solutions’ failure to meet the MSV for the first year of the Agreement’s Initial Term.

(Doc. No. 114-4.) The termination letter read, in part:

. . . [P]lease consider this letter as notice of termination of the Agreement for

failure to meet the applicable Minimum Sales Volume for any Sales Period, as set

forth in Section 9.2.5. More specifically, the Minimum Sales Volume for the first

year of the Initial Term (i.e., the period commencing April 1, 2021 and ending

March 31, 2022), as set forth in Exhibit B of the Agreement, and the actual sales

achievement for recent quarters is set forth below.

Quarter Minimum Sales Volume Actual Sales Achievement . . .

Requirement

Q2 2021 $250,000 $21,639

Q3 2021 $500,000 $6,500

Q4 2021 $625,000 $104,152

Q1 2022 $625,000 $332,158

Total $2,000,000 $464,449

Based upon the foregoing, please be advised that Medacta elects to terminate the

Agreement pursuant to Section 9.2.5 effective July 22, 2022.

(Id. at PageID# 1001.)

There is no dispute that Medacta hired Walsh and Karl after terminating the Agreement

with Stability Solutions. (Doc. No. 129-10.)

B. Procedural History

Stability Solutions initiated this action by filing a complaint against Medacta in the

Superior Court of California for San Francisco County alleging claims under California’s

Independent Wholesale Sales Representatives Act (IWSRA), Cal. Civ. Code §§ 1738.10–1738.17,

and under California common law for breach of contract, breach of implied covenant of good faith

and fair dealing, unjust enrichment, quantum meruit, an accounting, and unfair business practices.

(Doc. No. 1-1.) Medacta removed the case to federal court in the Northern District of California

(Doc. No. 1) and moved to dismiss Stability Solutions’ complaint for improper venue under

Federal Rule of Civil Procedure 12(b)(3) or, in the alternative, to transfer venue to this Court under

28 U.S.C. § 1404(a) (Doc. No. 5). The Northern District of California denied Medacta’s request

for dismissal and granted its request for transfer. (Doc. No. 21.) Upon transfer to the Middle

District of Tennessee, Medacta answered Stability Solutions’ complaint. (Doc. No. 28.)

On June 23, 2023, Medacta filed a motion for summary judgment (Doc. No. 51) and a

motion to stay discovery (Doc. No. 50) pending resolution of its summary judgment motion. In

response, Stability Solutions filed a motion (Doc. No. 57) for leave to file a proposed amended

complaint (Doc. No. 57-1) under Federal Rule of Civil Procedure 15(a)(2), which Medacta

opposed (Doc. No. 64). The Court granted Stability Solutions’ motion for leave to amend (Doc.

No. 66) and later administratively terminated (Doc. No. 78) Medacta’s summary judgment motion

(Doc. No. 51).

The amended complaint, which remains the operative pleading, alleges that “Medacta set

unachievable quotas for [Stability Solutions] while providing assurances that they would not be

enforced” (Doc. No. 67, PageID# 344. ¶ 3); undermined Stability Solutions’ sales efforts by

“secretly meeting with” and hiring away Walsh and Karl (id. at PageID# 348, ¶ 25); failed to

provide Stability Solutions with written notice of its minimum sales volume default and an

opportunity to cure the default as required by the Agreement (id. at PageID# 349, ¶ 29); and failed

to pay Stability Solutions all earned commissions in accordance with the Agreement (id. at

PageID# 350, ¶ 32). Stability Solutions asserts state law statutory claims against Medacta under

California’s IWSRA (Count 1); California’s unfair competition statute, Cal. Bus. & Prof. Code

§§ 17200 et seq. (Count 7); and Delaware’s Uniform Deceptive Trade Practices Act (UDTPA),

Del. Code Ann. tit. 6, § 2532 (Count 8). (Doc. No. 67.) It asserts Delaware common law claims of

breach of contract (Count 2); breach of the implied covenant of good faith and fair dealing

(Count 3); unjust enrichment (Count 4); quantum meruit (Count 5); fraud (Count 9); and

promissory estoppel (Count 10). (Id.) Stability Solutions also requests an accounting (Count 6),

declaratory relief (Count 11), injunctive relief, and damages. (Id.)

Medacta answered Stability Solutions’ amended complaint (Doc. No. 69) and filed a first

amended motion for summary judgment (Doc. No. 74). Stability Solutions then filed a motion

under Rule 56(d) asking the Court to order Medacta to participate in further discovery before

requiring Stability Solutions to respond to Medacta’s first amended motion for summary judgment.

(Doc. No. 79.) The Court granted Stability Solutions’ Rule 56(d) motion over Medacta’s

opposition, administratively terminated Stability Solutions’ first amended summary judgment

motion, and ordered an additional period of discovery. (Doc. Nos. 92, 102.)

On June 14, 2024, Medacta filed a second amended motion for summary judgment on all

of Stability Solution’s claims against it (Doc. No. 112), supported by a memorandum of law (Doc.

No. 113), a statement of undisputed material facts (Doc. No. 116), and several declarations and

exhibits (Doc. Nos. 113-1–113-3, 114–114-4, 115, 115-1).1 Stability Solutions responded in

opposition, arguing that, at a minimum, there are genuine disputes of material fact regarding its

claims of breach of contract (Count 2), breach of implied covenant of good faith and fair dealing

(Count 3), violation of the IWSRA (Count 1) and California’s unfair competition statute (Count 7),

accounting (Count 6), and fraud (Count 9). (Doc. No. 127.) Stability Solutions supported its

opposition to summary judgment on these claims with declarations and numerous exhibits. (Doc.

Nos. 128–128-22, 129–129-29.) Stability Solutions did not respond to Medacta’s summary

judgment arguments regarding Stability Solutions’ claims of unjust enrichment (Count 4),

quantum meruit (Count 5), violation of Delaware’s UDTPA (Count 8), promissory estoppel

(Count 10), or declaratory relief (Count 11). Medacta filed a reply in support of its motion for

summary judgment (Doc. No. 134) supported by a second declaration from its general counsel

(Doc. No. 134-1) and exhibits (Doc. Nos. 134-2, 134-3).

Stability Solutions moved to strike the general counsel’s second declaration and exhibits

and certain arguments in Medacta’s reply on the ground that they are new and therefore improperly

1 One week later, Medacta also filed a motion to strike Jim Shannon as a witness (Doc.

No. 117), which the Court addresses by separate order.

raised in a reply brief.2 (Doc. No. 138.) Alternatively, Stability Solutions requests leave to conduct

limited discovery and file a sur-reply brief. (Id.) Medacta responded in opposition to the motion to

strike (Doc. No. 140), attaching ten additional exhibits (Doc. Nos. 140-1–140-10), and Stability

Solutions filed a reply (Doc. No. 141) supported by a declaration from its counsel (Doc. No. 142)

and six exhibits (Doc. No. 142-1–142-6).

Stability Solutions also filed a motion requesting that the Court hear oral argument on

Medacta’s second amended motion for summary judgment. (Doc. No. 137.) Medacta has not

opposed Stability Solutions’ motion for oral argument.

II. Legal Standard

In resolving a motion for summary judgment, the Court must undertake “the threshold

inquiry of determining whether there is the need for a trial—whether, in other words, there are any

genuine factual issues that properly can be resolved only by a finder of fact because they may

reasonably be resolved in favor of either party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

250 (1986). Under Federal Rule of Civil Procedure 56, a court must grant summary judgment if

the moving party “shows that there is no genuine dispute as to any material fact and the movant is

entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A fact is material if it “might affect

the outcome of the suit under the governing law[,]” and a dispute about a material fact is genuine

“if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”

Anderson, 477 U.S. at 248.

The moving party bears the initial burden of demonstrating that no genuine issues of

material fact exist. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party

2 Stability Solutions also filed “objections” to the same arguments and evidence. (Doc.

No. 139.)

meets its burden, the non-moving party must “designate specific facts showing that there is a

genuine issue for trial.” Id. at 324 (citation omitted); see also Blizzard v. Marion Tech. Coll., 698

F.3d 275, 282 (6th Cir. 2012) (“Once a moving party has met its burden of production, ‘its

opponent must do more than simply show that there is some metaphysical doubt as to the material

facts.’” (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986))).

The parties “must support” their assertions “that a fact cannot be or is genuinely disputed” by

“citing to particular parts of materials in the record, including depositions, documents,

electronically stored information, affidavits or declarations, stipulations (including those made for

purposes of the motion only), admissions, interrogatory answers, or other materials” or,

alternatively, by “showing that the materials cited do not establish the absence or presence of a

genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.”

Fed. R. Civ. P. 56(c)(1)(A)–(B). Courts must view the record evidence in the light most favorable

to the non-moving party and draw all reasonable inferences in that party’s favor. Barrett v.

Whirlpool Corp., 556 F.3d 502, 511 (6th Cir. 2009). However, if the moving party carries its initial

burden, the non-moving party must show more than “[t]he mere existence of a scintilla of evidence

in support of” his or her position. Anderson, 477 U.S. at 252. In order to proceed to trial, “there

must be evidence on which the jury could reasonably find” for the non-moving party. Id.

III. Analysis

A. Stability Solutions’ Motion for Oral Argument

Stability Solutions argues “that oral argument is necessary to better assist this Court in

understanding the factual and legal issues related to [its] arguments in” opposition to summary

judgment. (Doc. No. 137, PageID# 2360.) Having considered the summary judgment briefing and

record evidence as a whole, the Court finds that further explanation is not required. Stability

Solutions’ motion for oral argument will therefore be denied.

B. Stability Solutions’ Motion to Strike Parts of Medacta’s Reply Brief

At the root of Stability Solutions’ motion to strike Medacta’s reply brief (Doc. No. 138)

are two versions of an email between Medacta employees concerning sales commissions. (Doc.

Nos. 128-20, 134-1). Medacta produced the first version of the email in discovery with redactions

marked “confidential.” (Doc. No. 128-20.) Stability Solutions relied on the redacted email in its

response in opposition to Medacta’s second amended motion for summary judgment, citing it as

evidence that Medacta breached the Agreement’s terms regarding commissions and committed

fraud by concealing at least eight cases in which it owed unpaid commissions to Stability

Solutions. (Doc. No. 127.)

Medacta filed an unredacted version of the email and a second declaration from Medacta

General Counsel Tracy Hancock as an attachment to its reply brief in support of summary

judgment. (Doc. No. 134-1.) Medacta cites these exhibits in support of its argument that Stability

Solutions’ “claim[ ] that ‘through discovery’ it learned of eight (8) ‘hidden’ purchase orders

pointing to an e-mail chain from 2022 . . . is blatantly false and irrelevant.” (Doc. No. 134,

PageID# 2290.) Medacta argues that:

This e-mail in no way supports Stability’s claim of fraud. To remove any doubt,

Medacta provides the unredacted e-mail to show six (6) of the alleged “hidden”

commissions were for cases by Dr. Paul Hughes – not a Stability customer. See

Second Declaration of Tracy Hancock (“Second Hancock Declaration”) attached

hereto as Exhibit D, ¶¶ 2–3; see also Plaintiff’s Supplemental Response to

Defendant Medacta’s Interrogatories attached hereto as Exhibit E, No. 2.

Stability’s other nonpayment allegations are equally false. Stability says that it was

not paid for Case 102926, but this is a case where Stability lost instruments.

(Dkt. 128, ¶ 65). See Second Hancock Declaration, ¶¶ 4–6. The reason for this

nonpayment was provided to Stability on each and every monthly commission

statement since it went missing in 2021. Id. at ¶¶ 4–7. Nowhere does Stability

suggest the instruments were found or that Medacta received payment. Stability

also falsely swears that it was not paid for Cases 120197 and 125381. (Dkt. 128,

¶ 65). Stability’s commission statement from May 2022 clearly shows payment for

Cases 120197 and 125381. See Second Hancock Declaration, ¶¶ 7–9. Notably,

Stability deposed six (6) Medacta employees. It did not question any of them

regarding these alleged nonpayments and thus derived no helpful testimony. To be

admissible evidence of damages, Stability would have to show the commissions

were earned, Medacta received payment for that case, and then did not pay

Stability.

(Id. at PageID# 2290–91.)

Stability Solutions moves to strike the second Hancock declaration and exhibits “from

consideration on the summary judgment motion” on the ground that they are “new” evidence

offered in support of new arguments improperly raised in a reply brief. (Doc. No. 138,

PageID# 2364.) Stability Solutions also asks the Court to strike the arguments in Medacta’s reply

brief that it characterizes as “new,” including that (1) Stability Solutions was not entitled to

commissions on sales for Dr. Hughes; (2) Medacta was not paid for two cases because Stability

Solutions did not follow appropriate procedures; and (3) Stability Solutions’ IWSRA claim fails

on the merits. (Doc. No. 138.) In the alternative, Stability Solutions asks the Court to exclude the

second Hancock declaration and exhibits under Federal Rule of Civil Procedure 37(c) or to allow

Stability Solutions to file a sur-reply and conduct limited discovery. (Id.) Medacta opposed

Stability Solutions’ motion (Doc. No. 140), and Stability Solutions filed a reply (Doc. No. 141).

Federal Rule of Civil Procedure 12(f) provides that the Court may “strike from a pleading

an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R.

Civ. P. 12(f). “Motions to strike are viewed with disfavor and are not frequently granted.”

Operating Eng’rs Local 324 Health Care Plan v. G & W Constr. Co., 783 F.3d 1045, 1050 (6th

Cir. 2015); see also Brown & Williamson Tobacco Corp. v. United States, 201 F.2d 819, 822 (6th

Cir. 1953) (“[T]he action of striking a pleading should be sparingly used by the courts . . . [and] is

a drastic remedy to be resorted to only when required for the purposes of justice.”).

Rule 12(f) provides a basis for striking pleadings, not briefs. See Fed. R. Civ. P. 12(f); see

also Fed. R. Civ. P. 7(a) (defining “pleadings” to include a complaint, a third-party complaint, an

answer to a complaint, counterclaim, crossclaim, or third-party complaint, or a reply to an answer).

Stability Solutions’ “motion is not directed at a pleading; therefore, it does not comply with the

requirements for a motion to strike and will be denied.” Kremer v. Reddit, Inc., Case No. 2:21-cv-

00038, 2022 WL 2912184, at *2 (M.D. Tenn. July 22, 2022).

The Court will also deny Stability Solutions’ request for leave to file a sur-reply. (Doc.

No. 138.) “[T]he decision whether or not to grant filing a sur-reply is within the discretion of the

Court.” Kivilaan v. Am. Airlines, Inc., Case No. 3:04-0814, 2008 WL 11390792, at *1 (M.D. Tenn.

Oct. 17, 2008). “The standard for granting leave to file a sur[-]reply is whether the party making

the motion would be unable to contest matters presented to the court for the first time in the

opposing party’s reply.” Cayton v. Metro. Gov’t of Nashville & Davidson Cnty., Case No. 3:20-

cv-00859, 2022 WL 183437, at *2 (M.D. Tenn. Jan. 19, 2022) (quoting id.). As explained herein,

the evidence and arguments regarding the email and sales commissions are not relevant to the

Court’s determination of Medacta’s second amended summary judgment motion. Stability

Solutions’ request for leave to address these arguments in a sur-reply is therefore moot. Stability

Solutions’ argument that Medacta should be precluded from relying on the unredacted email and

other exhibits at summary judgment under Rule 37(c) is likewise moot at this juncture.

With respect to Medacta’s brief argument about the merits of Stability Solutions’ IWSRA

claim, the Court finds that Stability Solutions put the merits of its IWSRA claim in contention in

its opposition brief by arguing that:

The statute’s application does not turn on whether the sales representative is

incorporated or lives in California. It applies when a sales representative is

“engaged in business within this state [California]” and “solicits orders” in

California. Stability’s territory—the NorCal Territory—was in California and it

solicited orders there . . . .

(Doc. No. 127, PageID# 1576 (first alteration in original) (citing Cal. Civ. Code §§ 1738.12(a)–

(c) and (e), 1738.13).) Medacta responded to this argument in its reply brief, arguing that:

Stability [Solutions] [ ] wrongfully concludes the only factor for IWSRA’s

application is if a sales representative solicits orders in California. (Dkt. 127,

pg. 26). Such broad application would make every internet sale subject to

California law, and it ignores the “most significant relationship test.” Whitwell v.

Archmere Acad., Inc., 463 F. Supp. 2d 482, 485 (D. Del. 2006) (The state that has

the most significant relationship to the occurrence and the parties’ agreement will

govern the rights of the litigants). Medacta’s Summary Judgment Motion provided

this analysis, but Stability does not overcome it. (Dkt. 113, pg. 17). Finally,

application of the IWSRA would only implicate missing contract terms or willful

failure to pay commissions. Cal. Civ. Code § 1738.13, 15. Stability claims Medacta

failed to pay earned commissions and terminated the Agreement without an

opportunity to cure. (Dkt. 67, ¶ 38). The IWSRA would not matter as these same

allegations fail to establish a breach of contract and Stability does not identify any

missing contract terms. Stability’s causes of action based on California law fail.

Summary judgment should be granted on this claim.

(Doc. No. 134, PageID# 2289–90.) Because Stability Solutions raised the issue of the IWSRA’s

application in its opposition brief, it cannot now argue that Medacta “‘presented’” this matter “‘for

the first time in . . . [its] reply’” or that Stability Solutions lacked an opportunity to “‘contest’” it.

Cayton, 2022 WL 183437, at *2 (quoting Kivilaan, 2008 WL 11390792, at *1).

C. Medacta’s Motion for Summary Judgment

1. Unjust Enrichment (Count 4), Quantum Meruit (Count 5), Delaware’s

UDTPA (Count 8), Promissory Estoppel (Count 10), and Declaratory

Relief (Count 11)

Stability Solutions has not opposed Medacta’s second amended motion for summary

judgment on its claims of unjust enrichment (Count 4), quantum meruit (Count 5), violation of

Delaware’s UDTPA (Count 8), promissory estoppel (Count 10), and for declaratory relief

(Count 11). (Doc. No. 127.) Stability Solutions states that it “does not address Medacta’s

arguments” on these claims in order “[t]o streamline the case[.]” (Id. at PageID# 1563, n.4.) The

Court construes this statement as an acknowledgement that Stability Solutions has abandoned the

claims. Summary judgment will therefore be entered in Medacta’s favor on Counts 4, 5, 8, 10, and

11 of Stability Solutions’ amended complaint (Doc. No. 67).

2. Breach of Contract (Count 2)

Stability Solutions’ breach of contract claims are the primary focus of its amended

complaint. Stability Solutions alleges that Medacta breached the Agreement by:

• failing to establish in good faith the applicable Minimum Sales Volume for

the first year of the Agreement, or any quarter therein, as required by

section 1.2;

• failing to establish in good faith the applicable Minimum Sales Volume for

the second year of the Agreement or any quarter therein, as required by

section 1.2;

• withdrawing and failing to provide sales and marketing support;

• purporting to enforce provisions relating to the Minimum Sales Volume that

were unenforceable due to waiver, estoppel, unconscionability,

impossibility, impracticability, prevention of performance, fraud, mistake,

modification and excuse, among other things;

• failing to provide advance notice of Stability Solutions’ purported default,

as required by Sections 1.2.2 and 9.2.5. of the Agreement;

• failing to allow Stability Solutions to prepare a written improvement plan,

as required by Sections 1.2.2 and 9.2.5. of the Agreement;

• failing to allow Stability Solutions the opportunity to cure the default within

the “notice period contained in an improvement plan approved by

Medacta;”

• failing to give an additional “thirty (30) days written notice” upon any

failure by Stability Solutions to cure within the notice period;

• terminating the Agreement without cause; and

• failing to pay Stability Solutions all commissions owed under the

Agreement.

(Doc. No. 67, PageID# 352–53, ¶ 45.)

To prevail on a breach of contract claim under Delaware law, a plaintiff must establish:

“(1) the existence of a contract, whether express or implied; (2) breach of one or more of the

contract’s obligations; and (3) damages resulting from the breach.”3 Geico Gen. Ins. Co. v. Green,

308 A.3d 132, 140 (Del. 2022). The first and third elements are not in dispute. Medacta and

Stability Solutions agree that the Agreement is a valid and enforceable contract, and Medacta has

not argued that there are no questions of fact as to whether Stability Solutions can prove damages.

Instead, the parties’ arguments focus on the second element—whether Stability Solutions can

show, based on the record evidence, that Medacta breached the Agreement.

Medacta argues that it is entitled to summary judgment on Stability Solutions’ breach of

contract claims because: (1) Medacta complied with the plain language of the Agreement allowing

it to terminate the contract based on Stability Solutions’ failure to meet the minimum sales volume

for the first year of the Agreement’s Initial Term; (2) the parol evidence rule bars the Court from

considering any evidence of an oral or implied contract outside the Agreement related to the

minimum sales volume; and (3) the opportunity-to-cure provision of the Agreement was

inapplicable or immaterial to Stability Solutions’ breach. (Doc. No. 113.)

With respect to Medacta’s first argument, Stability Solutions responds that Medacta

violated the Agreement by purporting to enforce the first year minimum sales volume requirement

contained in Exhibit B to the Agreement after the parties deleted Exhibit B and replaced it with

Exhibit B-1, which contained the second year minimum sales volume requirement. (Doc.

No. 127.) Medacta replies that, because Exhibit B-1 did not go into effect until after the sales

period addressed by Exhibit B expired, “Stability’s argument that the first year MSV never existed

cartwheels over logic.” (Doc. No. 134, PageID# 2292.)

3 For purposes of summary judgment, there is no dispute that Delaware law governs these

claims.

“The party seeking summary judgment bears the initial burden of presenting law and

argument in support of its motion as well as identifying the relevant portions of ‘“the pleadings,

depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,”

which it believes demonstrate the absence of a genuine issue of material fact.’” Denoewer v. Union

Cnty. Indus., 611 F. Supp. 3d 458, 468 (S.D. Ohio 2020) (quoting Celotex Corp., 477 U.S. at 323).

Medacta has not met that burden with regard to Stability Solutions’ breach of contract claims.

First, Medacta misconstrues Stability Solutions’ argument regarding the Amendment’s

effect on the Agreement. Stability Solutions argues that Medacta breached their contract by

attempting to enforce Exhibit B’s first year minimum sales volume requirement on July 19, 2022,

more than three months after the parties removed that term from the Agreement. (Doc. No. 127.)

Medacta does not dispute that, effective April 1, 2022, the Amendment “deleted” “Exhibit ‘B’ of

the Agreement” and “replaced” it with “Exhibit ‘B-1.’” (Doc. No. 114-2, PageID# 977, ¶ 1.) But

Medacta has not addressed the effect of that deletion or the Amendment’s term that, “[e]xcept as

otherwise provided for herein, the terms of the Agreement shall remain in full force and effect.”

(Id. at ¶ 2.) While Medacta implies that it is beyond dispute that Exhibit B would remain in effect

after its “delet[ion]” and “replace[ment]” to govern actions taken during the Agreement’s first

year, it offers no argument or authority to support that position as a matter of law. Medacta also

has not addressed Stability Solutions’ claim that Medacta breached the Agreement by failing to

determine the minimum sales volume requirements in good faith.

The Amendment’s effect on the Agreement is central to Stability Solutions’ breach of

contract claims. Because Medacta has not met its summary judgment burden regarding that

threshold issue, the Court need not address its other arguments for summary judgment on this

cause of action.

3. Breach of Implied Covenant of Good Faith and Fair Dealing (Count 3)

“The implied covenant of good faith and fair dealing is the doctrine by which Delaware

law cautiously supplies terms to fill gaps in the express provisions of a specific agreement.”4 Allen

v. El Paso Pipeline GP Co., 113 A.3d 167, 182 (Del. Ch. 2014); see also Dunlap v. State Farm

Fire & Cas. Co., 878 A.2d 434, 441 (Del. 2005) (“The covenant is ‘best understood as a way of

implying terms in the agreement,’ whether employed to analyze unanticipated developments or to

fill gaps in the contract’s provisions.” (footnotes omitted) (quoting E.I. DuPont de Nemours & Co.

v. Pressman, 679 A.2d 436, 443 (Del. 1996))); Nemec v. Shrader, 991 A.2d 1120, 1125 (Del. 2010)

(“The implied covenant of good faith and fair dealing involves a ‘cautious enterprise,’ inferring

contractual terms to handle developments or contractual gaps that the asserting party pleads neither

party anticipated.” (citation omitted)). “The elements of a claim for breach of an implied covenant

of good faith and fair dealing are ‘a specific implied contractual obligation, a breach of that

obligation by the defendant, and resulting damage to the plaintiff.’” Dow Chem. Can. Inc. v. HRD

Corp., 656 F. Supp. 2d 427, 445 (D. Del. 2009) (quoting Cantor Fitzgerald, L.P. v. Cantor,

No. C.A. 16297, 1998 WL 842316, at *1 (Del. Ch. Nov. 10, 1998)). “When presented with an

implied covenant claim, a court first must engage in the process of contract construction to

determine whether there is a gap that needs to be filled.” Allen, 113 A.3d at 183. In other words,

“the court decides whether the language of the contract expressly covers a particular issue, in which

case the implied covenant will not apply, or whether the contract is silent on the subject, revealing

a gap that the implied covenant might fill.” Id. “[B]ecause the implied covenant is, by definition,

implied, and because it protects the spirit of the agreement rather than the form, it cannot be

4 There is no dispute that Delaware law also governs Stability Solutions’ claims for breach

of the implied covenant of good faith and fair dealing.

invoked where the contract itself expressly covers the subject at issue.” Id. (alteration in original)

(quoting Fisk Ventures, LLC v. Segal, Civ. Action No. 3017, 2008 WL 1961156, at *10 (Del. Ch.

May 7, 2008)); see also Allied Cap. Corp. v. GC-Sun Holdings, L.P., 910 A.2d 1020, 1032 (Del

Ch. 2006) (“[I]mplied covenant analysis will only be applied when the contract is truly silent with

respect to the matter at hand[.]”). “Thus, one generally cannot base a claim for breach of the

implied covenant on conduct authorized by the terms of the agreement.” Dunlap, 878 A.2d at 441.

Stability Solutions alleges that “the covenant that each party will act in good faith[,] [ ]

deal fairly with each other . . . [,]” and “do nothing to deprive any party of the contractual benefits

due under the contract” is “[i]mplied in every contract” and that Medacta breached this implied

covenant by:

• falsely promising not to enforce the Minimum Sales Volume numbers

without intending to honor that promise;

• falsely promising to provide sales and marketing support without intending

to honor that promise;

• withdrawing and failing to provide sales and marketing support;

• falsely promising to retain Stability Solutions as a distributor for at least two

years without intending to honor that promise;

• inducing Stability Solutions to spend time, money and resources hiring sales

representatives and developing customers while intending to terminate the

Agreement and contract directly with Stability Solutions’ customers and

sales representatives;

• failing to establish in good faith the applicable Minimum Sales Volume for

the first year or second year of the Agreement, or any quarter therein;

• purporting to enforce provisions relating to the Minimum Sales Volume

which were unenforceable due to waiver, estoppel, unconscionability,

impossibility, impracticability, prevention of performance, fraud, mistake,

modification and excuse, among other things;

• interfering with, undermining and sabotaging Stability Solutions’

relationships with its outside sales representatives and customers;

• failing to provide in good faith notice and opportunity to cure to Stability

Solutions;

• terminating the Agreement based on Minimum Sales Volume numbers after

assuring Stability Solutions that it would not enforce those numbers against

Stability Solutions; and

• terminating the Agreement to contract directly with the surgeon/customers

and sales representatives recruited by Stability Solutions and thereby, avoid

having to pay Stability Solutions for its efforts.

(Doc. No. 67, PageID# 353–54, ¶ 50.) Stability Solutions claims that these breaches caused

“damages to [Shaalan’s] long-standing reputation in the market, lost revenue, income,

commissions, profit, and other compensation, as well as interest, attorneys’ fees, and costs.” (Id.

at PageID# 354, ¶ 51.)

Medacta’s sole argument in support of summary judgment on this claim is that “Stability’s

allegations for the breach of the implied covenant of good faith and fair dealing merely echo its

claim for breach of contract.” (Doc. No. 113, PageID# 913.) Medacta relies on Khushaim v. Tullow

Inc., C.A. No. N15C-11-212, 2016 WL 3594752 (Del. Super. Ct. June 27, 2016), for the

propositions that “‘[a] breach of the implied covenant claim cannot be based on conduct that the

contract expressly addresses’” and that “‘“[m]erely repeating the defendant’s allegedly improper

acts or omissions already the subject of a separate breach of contract claim is insufficient to support

a claim for breach of the implied covenant of good faith and fair dealing.”’” (Id. at PageID# 912

(quoting Khushaim, 2016 WL 3594752, at *4).)

Medacta is correct that the covenant of good faith and fair dealing “‘cannot be invoked

where the contract itself expressly covers the subject at issue.’” Allen, 113 A.3d at 183 (quoting

Fisk Ventures, LLC, 2008 WL 1961156, at *10). There is no genuine dispute of material fact that

the Agreement expressly addresses at least some of the issues underlying Stability Solutions’

breach of implied covenant claims, including, for example, establishing minimum sales volume

requirements in good faith, providing notice and opportunities to cure, compensation, and

termination. (Doc. No. 114-1.)

Stability Solutions argues generally that its breach of implied covenant claims are factually

distinct from its breach of contract claims and cites three examples. (Doc. No. 127.) Stability

Solutions cites evidence that (1) Waters secretly “recruited Stability’s sales representatives and

surgeons to work directly with Medacta” during the contract term to “cut[ ] out Stability” and “cut

[Medacta’s] commission costs almost in half . . .”; (2) “Waters spread false rumors about Stability

to justify its termination despite its excellent performance”; and (3) “Medacta concealed numerous

cases in the NorCal Territory to avoid paying Stability on those cases.” (Id. at PageID# 1573,

1574.) Stability Solutions has not addressed Medacta’s argument that it cannot base its breach of

implied covenant claims on issues expressly covered by the Agreement.

Because there is no genuine dispute of material fact that the Agreement directly addresses

Medacta’s ability to set minimum sales volume requirements and obligation to pay Stability

Solutions commissions—indeed, Stability Solutions’ breach of contract claims are based in part

on Medacta’s alleged failure to comply with these terms of the Agreement—and because Stability

Solutions has not directly responded to this argument, Medacta’s motion for summary judgment

will be granted with respect to Stability Solutions’ claim that Medacta violated the implied

covenant of good faith and fair dealing by setting unachievable minimum sales volume

requirements and failing to pay all commissions owed under the Agreement.

This leaves Stability Solutions’ breach of implied covenant claims based on Waters’s

alleged conduct. Medacta argues in its reply brief that Stability Solutions’ “new allegations of

‘false rumors’ or ‘interference’ cannot rescue [its] [implied covenant] claim because Stability

[Solutions] does not suggest that any such conduct prevented it from achieving the MSV.” (Doc.

No. 134, PageID# 2289.) But the Delaware Supreme Court has held that “the implied covenant

requires ‘a party in a contractual relationship to refrain from arbitrary or unreasonable conduct

which has the effect of preventing the other party to the contract from receiving the fruits’ of the

bargain” and that “parties are liable for breaching the covenant when their conduct frustrates the

‘overarching purpose’ of the contract by taking advantage of their position to control

implementation of the agreement’s terms.” Dunlap, 878 A.2d at 442 (first quoting Wilgus v. Salt

Pond Inv. Co., 493 A.2d 151, 159 (Del. Ch. 1985), superseded by statute; and then quoting

Breakaway Sols., Inc. v. Morgan Stanley & Co., No. Civ.A. 19522, 2004 WL 1949300, at *12

(Del. Ch. Aug. 27, 2004)). Medacta does not address this line of authority or provide any other

support for its cursory argument regarding these remaining claims. Accordingly, summary

judgment will be denied with respect to Stability Solutions’ implied covenant claims based on

evidence that Waters pursued Stability Solutions’ sales representatives and surgeons and spread

false information about Shaalan. Cf. McPherson v. Kelsey, 125 F.3d 989, 995–96 (6th Cir. 1997)

(“‘It is not sufficient for a party to mention a possible argument in the most skeletal way, leaving

the court to . . . put flesh on its bones.’” (alteration in original) (quoting Citizens Awareness

Network, Inc. v. U.S. Nuclear Regul. Comm’n, 59 F.3d 284, 293–94 (1st Cir. 1995))).

4. California Statutory Claims (Counts 1 and 7)

Medacta argues generally that Stability Solutions’ California IWSRA and unfair

competition statutory claims fail because the parties chose to apply Delaware law to the Agreement

and Delaware law does not recognize causes of action based on California statutes. (Doc. No. 113.)

Stability Solutions responds that the choice-of-law clause in the Agreement applies only to claims

arising under the Agreement’s terms and does not preclude Stability Solutions from seeking non-

contractual relief under California law. (Doc. No. 127.) Determination of Medacta’s summary

judgment argument on these claims thus requires defining the scope of the Agreement’s choice-

of-law provision that “[t]his Agreement is made and shall be governed by, and construed and

enforced in accordance with, the internal laws of the State of Delaware, without regard to its

conflicts of law principles.” (Doc. No. 114-1, PageID# 972, ¶ 13.13.)

It is well established that where, as here, a choice of law question arises in a diversity

action, courts apply the forum state’s choice of law rules. CenTra, Inc. v. Estrin, 538 F.3d 402,

409 (6th Cir. 2008). Tennessee is the forum state in this action, but neither Medacta nor Stability

Solutions has applied relevant Tennessee authority. Instead, Medacta relies on the Restatement

(Second) of Conflicts of Laws to argue that, “[t]o rule on a choice of law analysis, the Court uses

a most significant relationship test only if the parties did not include a choice of law provision in

their contract.”5 (Doc. No. 113, PageID# 918 (citing Restatement (Second) of Conflict of L. § 186

(Am. L. Inst. 1971)).) Tennessee law provides a different framework. “The first step of any choice-

of-law analysis under Tennessee law ‘is to decide whether a conflict actually exists between the

relevant laws of the different jurisdictions.’” Miller v. Brightstar Int’l Corp., Case No. 3:20-cv-

00313, 2022 WL 17070541, at *4 (M.D. Tenn. Nov. 17, 2022) (quoting Boswell v. RFD-TV the

Theater, LLC, 498 S.W.3d 550, 555 (Tenn. Ct. App. 2016))), report and recommendation adopted,

2022 WL 17420371 (M.D. Tenn. Dec. 5, 2022). If so, “Tennessee will honor a choice of law clause

if the state whose law is chosen bears a reasonable relation to the transaction and absent a violation

of the forum state’s public policy.” Boswell, 498 S.W.3d at 556 (quoting Bourland, Heflin, Alvarez,

Minor & Matthews, PLC v. Heaton, 393 S.W.3d 671, 674 (Tenn. Ct. App. 2012)).

5 Medacta also cites Jung v. El Tinieblo International, Inc., C.A. No. 2021-0798, 2022 WL

16557663, at *7–8 (Del. Ch. Oct. 31, 2022), in support of its general argument that Delaware law

does not recognize California causes of action. (Doc. No. 113.) But Jung is inapposite because the

contract at issue did not contain a choice of law provision. 2022 WL 16557663, at *15.

To the extent Medacta relies on Tennessee authority, it does so incompletely. Medacta cites

Goodwin Bros. Leasing, Inc. v. H & B Inc., 597 S.W.2d 303, 306 (Tenn. 1980), for the general

proposition that, “[i]f the parties manifest an intent to instead apply the laws of another jurisdiction,

then that intent will be honored . . . .” (Doc. No. 113, PageID# 918 (second alteration in original).)

But this language does not appear in Goodwin Bros. Leasing, Inc. Rather, it is a quotation from

Vantage Technology, LLC v. Cross, 17 S.W.3d 637, 650 (Tenn. Ct. App. 1999), and Medacta omits

important qualifying language:

Tennessee follows the rule of lex loci contractus. This rule provides that a contract

is presumed to be governed by the law of the jurisdiction in which it was executed

absent a contrary intent.

If the parties manifest an intent to instead apply the laws of another jurisdiction,

then that intent will be honored provided certain requirements are met. The choice

of law provision must be executed in good faith. The jurisdiction whose law is

chosen must bear a material connection to the transaction. The basis for the choice

of another jurisdiction’s law must be reasonable and not merely a sham or

subterfuge. Finally, the parties’ choice of another jurisdiction’s law must not be

“contrary to ‘a fundamental policy’ of a state having [a] ‘materially greater interest’

and whose law would otherwise govern.”

Vantage Tech., LLC, 17 S.W.3d at 650 (emphasis added) (alteration in original) (first citing Ohio

Cas. Ins. Co. v. Travelers Indem. Co., 493 S.W.2d 465, 467 (Tenn. 1973); then citing Goodwin

Bros. Leasing, Inc., 597 S.W.2d at 306; and then quoting id. at n.2). Medacta has not addressed

the additional factors a court must consider under Vantage Technology, nor has it addressed how

any other relevant Tennessee authority applies in this case. It therefore has not shown as a matter

of law that the Agreement’s choice-of-law clause bars Stability Solutions from asserting claims

under the IWSRA and California’s unfair competition statute. Because this is the only argument

Medacta makes in support of summary judgment on Stability Solutions’ California statutory

claims, it has not carried its summary judgment burden.

5. Fraud (Count 9)

To prevail on a fraud claim under Delaware law, the plaintiff must establish that:

(1) the defendant falsely represented or omitted facts that the defendant had a duty

to disclose; (2) the defendant knew or believed that the representation was false or

made the representation with a reckless indifference to the truth; (3) the defendant

intended to induce the plaintiff to act or refrain from acting; (4) the plaintiff acted

in justifiable reliance on the representation; and (5) the plaintiff was injured by its

reliance.

DCV Holdings, Inc. v. ConAgra, Inc., 889 A.2d 954, 958 (Del. 2005).

Stability Solutions’ amended complaint alleges that Medacta is liable for fraud based on

false representations it made regarding minimum sales volume requirements. (Doc. No. 67.)

Specifically, Stability Solutions alleges that “Medacta knowingly made false representations to

[Stability Solutions] that Medacta did not expect [Stability Solutions] to achieve its Minimum

Sales Volume numbers and would not terminate the Agreement on the basis of [Stability Solutions]

not achieving these numbers”; “Medacta made these knowingly false representations with the

intent to induce [Stability Solutions] into entering into the Agreement”; “[Stability Solutions]

reasonably relied on Medacta’s misrepresentations and entered into the Agreement in reliance

thereupon”; and “[a]s a direct and foreseeable result of Medacta’s fraud, [Stability Solutions] has

suffered and will continue to suffer damages in the form of damage to [Shaalan’s] long-standing

reputation in the market, lost revenue, income, commissions, profit and other compensation, as

well as interest, attorneys’ fees, and costs.” (Id. at PageID# 358, ¶¶ 76–79.)

Medacta argues that it is entitled to summary judgment on Stability Solutions’ fraud claim

because Delaware law does not allow plaintiffs to “‘“bootstrap”’ a claim of breach of contract into

a claim of fraud” under the circumstances presented here (Doc. No. 113, PageID# 914 (quoting

EZLinks Golf, LLC v. PCMS Datafit, Inc., C.A. No. N16C-07-080, 2017 WL 1312209, at *5 (Del.

Super. Ct. Mar. 13, 2017))); there is “no evidence the alleged promises were false when allegedly

made” (id. at PageID# 915); and “Stability cannot simultaneously allege it was tricked into a

contract while seeking to enforce the same contract with its unilateral modifications” (id. at

PageID# 916).

Stability Solutions does not respond to any of these arguments. Instead, Stability Solutions

argues for the first time that Medacta is liable for “fraudulent concealment” because “Medacta

knew Stability had not been paid on [at least eight] cases, knew Stability had no way of knowing

about them, and concealed their existence to avoid having to pay.” (Doc. No. 127, PageID# 1574.)

Medacta replies that Stability Solutions has changed the basis of its fraud claim from “‘false

representations’ of the MSV being a ‘soft goal’ . . . to unpaid commissions” and argues that “[i]t

is too late for Stability [Solutions] to reimagine its fraud claim.” (Doc. No. 134, PageID# 2290

(first quoting Doc. No. 67, PageID# 358, ¶¶ 76, 77; and then quoting id. at PageID# 347, ¶ 20).)

Medacta is correct “that a plaintiff may not expand its claims to assert new theories in

response to summary judgment . . . .” Vonderhaar v. Waymire, 797 F. App’x 981, 990 (6th Cir.

2020) (alteration in original) (quoting Renner v. Ford Motor Co., 516 F. App’x 498, 504 (6th Cir.

2013)); see also Bridgeport Music, Inc. v. WM Music Corp., 508 F.3d 394, 400 (6th Cir. 2007)

(“To the extent Bridgeport seeks to expand its claims to assert new theories, it may not do so in

response to summary judgment . . . .”). “Rather, if a plaintiff wishes to expand their claim mid-

stream—because, for instance, they unearthed new evidence of misconduct in discovery—“the

proper procedure . . . is to amend the complaint in accordance with Rule 15(a).” Vonderhaar, 797

F. App’x at 990 (alteration in original) (quoting Tucker v. Union of Needletrades, Industrial &

Textile Employees, 407 F.3d 784, 788 (6th Cir. 2005)); see also Renner, 516 F. App’x at 504

(quoting Tucker, 407 F.3d at 788). Stability Solutions “neither amended [its] complaint nor sought

leave to do so, and [it] cannot now claim” Medacta’s alleged concealment of cases as a basis for

its fraud claim. Renner, 516 F. App’x at 504. And, because Stability Solutions has not addressed

Medacta’s arguments regarding the fraud claim as alleged in the amended complaint, it has

effectively abandoned that cause of action.

Accordingly, Medacta’s summary judgment motion will be granted with respect to

Stability Solutions’ fraud claim.

6. Accounting (Count 6)

The amended complaint alleges that Stability Solutions “is unable to ascertain the exact

amount of funds owed to [it] as commission payments and reimbursement for unlawful

deductions” and “seeks an order by the Court directing an equitable accounting of all funds owed

to [it]” by Medacta. (Doc. No. 67, PageID# 356, ¶¶ 62, 63.) Medacta argues that it is entitled to

summary judgment on Stability Solutions’ accounting claim based on sworn statements from

Medacta’s general counsel that Medacta has paid Stability Solutions in full for all commissions it

earned. (Doc. Nos. 113, 114.) Stability Solutions responds that “[a]n accounting is necessary” in

relation to its fraud claim “to identify the remaining amounts” of owed commissions that Medacta

allegedly concealed. (Doc. No. 127, PageID# 1574.) Medacta replies that Stability Solutions’

accounting claim fails as a matter of law because Stability Solutions has not shown the “absence

of an adequate legal remedy; equitable grounds for relief; and that the accounts in question are so

complex the Court could not determine the amounts due without a formal accounting.” (Doc.

No. 134, PageID#2288.)

“Under well-accepted Delaware law, ‘[a]n accounting is an equitable remedy that consists

of the adjustment of accounts between parties and a rendering of a judgment for the amount

ascertained to be due to either as a result.’” Garza v. Citigroup Inc., 192 F. Supp. 3d 508, 511 (D.

Del. 2016) (alteration in original) (quoting Albert v. Alex. Brown Mgmt. Servs., Inc., No.

Civ.A. 762-N, 2005 WL 2130607, at *11 (Del. Ch. Aug. 26, 2005)). Courts applying Delaware

law recognize that “an accounting ‘reflects a request for a particular type of remedy, rather than

an equitable claim in and of itself.’” Jd. (quoting Stevanov v. O’Connor, Civ. Action No. 3820,

2009 WL 1059640, at *15 (Del. Ch. Apr. 21, 2009)). Consequently, accounting is ‘dependent

on the viability and outcome of the underlying causes of action[.]’” /d. (quoting Addy v. Piedmonte,

Civ. Action No. 3571, 2009 WL 707641, at *23).

The Court has already determined that Medacta is entitled to summary judgment on

Stability Solutions’ fraud claim. Because the claim underlying Stability Solutions request for an

accounting 1s not viable, the accounting claim also fails. Further, Stability Solutions has not shown

“the absence of an adequate remedy at law” which, as Medacta argues, is a “necessary prerequisite

to the right to maintain a suit for an equitable accounting[.]” Dairy Queen, Inc. v. Wood, 369 U.S.

469, 478 (1962).

Summary judgment will be granted on Stability Solutions’ accounting claim.

IV. Conclusion

For these reasons, Stability Solutions’ motion for oral argument (Doc. No. 137) will be

denied, Stability Solutions’ motion to strike Medacta’s reply brief (Doc. No. 138) will be denied,

and Medacta’s second amended motion for summary judgment (Doc. No. 112) will be granted in

part and denied in part as set out in this Memorandum Opinion. An appropriate order will issue.

It is so ORDERED.

abit noloorr

ALIST E. NEWBERN

United States Magistrate Judge

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