In an August 9 ruling in NuVasive v. Day, the Federal appeals court for the First Circuit upheld a Massachusetts trial court's award of $1.7MM in compensatory damages and attorneys' fees for the defendants' violations of their noncompete agreements, and for their sploliation of critical evidence in the case, more specifically, their failure to preserve certain text messages relevant to their interactions with NuVasive customers after leaving the company.
What Defendants Asserted the District Court Had Gotten Wrong
On appeal, defendants claimed that that in issuing an award in plaintiff's favor, the trial court erred in finding a causal link between their allegedly improper solicitations and the ultimate decisions of various doctors to switch from NuVasive to Alphatec as their primary supplier of spine-related surgical products and/or the link between any of their actions and plaintiff's purported damages. In sum, Day claimed that "[T]he district court assumed a connection between his actions and NuVasive's reduced business from the three surgeons that the record does not support."
What the First Circuit Held
In affirming the District Court's holding, the First Circuit stated, in pertinent part, as follows:
In asserting the inadequacy of the district court's factfinding, Day disregards the substantial circumstantial evidence in the record. See, e.g., Elenza, Inc. v. Alcon Lab'ys Holding Corp., 183 A.3d 717, 725-26 (Del. 2018) (recognizing that facts may be proven with circumstantial evidence); see also Mirabella v. Town of Lexington, 64 F.4th 55, 59 (1st Cir. 2023) (Lipez, J., dissenting) ("[D]irect evidence is no more valuable than circumstantial evidence."). Contrary to Day's suggestion, in finding a causal connection between Day's breaches and the harm to NuVasive, the district court did not rely solely on the dramatic surge in Glazer, Kwon, and Shin's use of Alphatec products following Day's move to that company. Rather, in its summary judgment and damages opinions, the court found particularly telling the multiple instances in which Day improperly interacted with Beth Israel Deaconess Medical Center ("BIDMC") -- and, most significantly, with Glazer -- in the months immediately after Day's departure from NuVasive in April 2019 ...
We thus see no clear error in the district court's finding that the shift of the bulk of Glazer's business from NuVasive to Alphatec between April 2019 and March 2020 -- the operative timeframe for Day's nonsolicitation obligation under the PIIA -- was not a coincidence and that Day was indeed the catalyst.
In short, the district court identified a pattern of improper activity seemingly aimed at switching the affiliation of multiple surgeons from NuVasive to Alphatec -- including a particularly valuable customer, Glazer -- and reached the reasonable conclusion that the campaign worked. Moreover, as explained infra, NuVasive's damages claim was boosted by an adverse inference imposed on Day because he had spoliated evidence -- namely, an inference that text messages he failed to preserve were "unfavorable to him" with respect to "what damages NuVasive was able to prove."
Why This Holding is Significant
In a word, the significance of this holding is its clear discrediting of the notion that absent a "smoking gun" email or text message laying bare the collusion among defendants to divert business from a former employer, no liability for such poaching can be found. Instead, the court followed common sense, and allowed for a (more than) reasonable inference based on the evidence in the factual record to sustain a damages award.