UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF NEW YORK 

----------------------------------------------------------x 

MEDTECH PRODUCTS, INC., 

 Plaintiff, No. 07-CV-3302 (KMK)(LMS) 

 

 -v- ECF Case 

DENTEK ORAL CARE, INC., et al., 

 

 Defendants. 

----------------------------------------------------------x 

REPLY MEMORANDUM OF LAW BY DEFENDANTS RAY DUANE AND 

C.D.S. ASSOCIATES, INC. IN FURTHER SUPPORT OF THEIR MOTION TO 

DISMISS THE SECOND AMENDED COMPLAINT AND FOR OTHER RELIEF 

GREENBERG FREEMAN LLP 

24 West 40th Street, 17th Floor 

New York, NY 10018 

(646) 366-0881 

Attorneys for Defendants Ray Duane 

 and C.D.S. Associates, Inc. 

Case 7:07-cv-03302-KMK-LMS Document 148 Filed 04/03/2008 Page 1 of 14
TABLE OF CONTENTS

 Page

TABLE OF AUTHORITIES .................................................................................................... iii 

I. INTRODUCTION ........................................................................................................1 

II. ARGUMENT ON REPLY ...........................................................................................1 

 

 Point I 

MEDTECH HAS NOT ALLEGED ANY FACTS SUFFICIENT TO AVOID 

DISMISSAL OF THE BREACH OF CONTRACT CLAIM.......................................1

A. The Non-Competition Clause in the Consulting Agreement Does Not 

Apply Here........................................................................................................2 

1. Medtech’s attempt to manufacture an issue of fact surrounding 

the termination of the Consulting Agreement should be rejected.........2 

2. The Duane Defendants’ continued employment after the date 

of sale did not trigger the non-competition clause ...............................4 

3 Medtech cannot acquire rights greater than those held by its 

predecessors ..........................................................................................5 

B. The General Release Superseded the Confidentiality Provisions in 

the PII Agreement Because the Subject Matter Was the Same. .......................6 

Point II 

MEDTECH DOES NOT REFUTE THAT THE SAC FAILS TO ALLEGE 

ALL THE ELEMENTS OF A CLAIM FOR TORTIOUS INTERFERENCE 

WITH CONTRACT .....................................................................................................8 

Point III 

MEDTECH DOES NOT REFUTE THAT THE SAC FAILS TO ALLEGE ALL 

THE ELEMENTS OF A CLAIM FOR TORTIOUS INTERFERENCE WITH 

ADVANTAGEOUS BUSINESS RELATIONSHIP/ECONOMIC ADVANTAGE ...8 

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Page

Point IV 

MEDTECH HAS FAILED TO ALLEGE THE DISCLOSURE OF ANY 

INFORMATION THAT AMOUNTS TO A PROTECTIBLE TRADE SECRET......9 

III. CONCLUSION.............................................................................................................10

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TABLE OF AUTHORITIES

Page

Arena Construction Co., Inc. v. Sackaris & Sons, 282 A.D.2d 489 

 (2nd Dep’t 2001) .............................................................................................................5 

Egan v. Marsh & McLennan Companies, Inc., No. 07 Civ. 7134 (SAS), 

 2008 WL 245511 (S.D.N.Y. Jan. 30, 2008) ...................................................................4 

Faulkner v. Beer, 463 F.3d 130 (2d Cir. 2006).................................................................9 

First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763 (2d Cir. 1994).....................3 

5-Star Management, Inc. v. Rogers, 940 F. Supp. 512 (E.D.N.Y. 1996) .........................3 

G-I Holdings, Inc. v. Baron & Budd, 179 F. Supp. 2d 233 (S.D.N.Y. 2001)...................3 

Gilbraltar Petroleum Corp. v. Bank Sepah, 526 F. Supp. 560 (S.D.N.Y. 1981) ..............5 

Kronos, Inc. v. AVX Corp., 81 N.Y.2d 90 (1993)............................................................8 

NBT Bancorp Inc. v. Fleet/Norstar Financial Group, Inc., 87 N.Y.2d 614 (1996) ..........8 

Sunbeam Products, Inc., v. Wing Shing Products (BVI) Ltd., 311 B.R. 378 

 (S.D.N.Y. 2004)..............................................................................................................2 

Case 7:07-cv-03302-KMK-LMS Document 148 Filed 04/03/2008 Page 4 of 14
I. INTRODUCTION

 Defendants Ray Duane and C.D.S. Associates, Inc. submit this reply 

memorandum of law in further support of their motion pursuant to Fed. R. Civ. P. 

12(b)(6) to dismiss the claims alleged against them in the SAC and for other relief.1

 The Duane Defendants hereby adopt the arguments set forth in the reply briefs 

submitted by DenTek and Kaplan, both dated December 14, 2007, in further support of 

their respective motions to dismiss the SAC. The arguments below reply solely to those 

raised by Medtech’s opposition brief (“Opp Br.”) in response to the unique arguments 

advanced by the Duane Defendants in their moving brief. 

II. ARGUMENT ON REPLY

Point I

MEDTECH HAS NOT ALLEGED ANY FACTS SUFFICIENT TO 

AVOID DISMISSAL OF THE BREACH OF CONTRACT CLAIM

Medtech seeks to avoid dismissal of its breach of contract claim against the 

Duane Defendants, based on alleged breaches of the non-competition clause in the 

Consulting Agreement and the confidentiality clause in the PII Agreement, by arguing 

that: (1) the absence of allegation in the SAC describing how the Consulting Agreement 

was terminated creates an issue of fact as to whether the non-competition clause in the 

Consulting Agreement was triggered (Opp. Br. at 7-8); (2) by continuing to consult after 

the sale on Dental Concepts, the Duane Defendants triggered the non-competition clause 

(Opp. Br. at 9); (3) the assignment provision of the Consulting Agreement triggered the 

non-competition clause (Opp. Br. at 10); and (4) the General Release does not supersede 

 

1

 Capitalized terms not defined herein shall have the same meaning as they did in the Duane Defendants 

moving brief, dated February 29, 2008 (“Mov. Br.”). Exhibits referenced herein shall refer to the exhibits 

attached to the moving papers unless otherwise indicated. 

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the confidentiality provision in the PII Agreement (Opp. Br. 10-17). None of these 

arguments are supported by the allegations in the SAC or by the language of the 

Consulting Agreement or the PII Agreement. 

A. The Non-Competition Clause in the Consulting Agreement Does Not Apply Here.

1. Medtech’s attempt to manufacture an issue of fact surrounding the 

termination of the Consulting Agreement should be rejected. 

As a threshold matter, there can be no reasonable debate, and Medtech does not 

appear to dispute, that the parties did not intend for the non-competition clause to be 

applicable in all circumstances upon the termination or expiration of the Consulting 

Agreement. If that is what they intended, they certainly could have provided for that. 

See Sunbeam Products, Inc., v. Wing Shing Products (BVI) Ltd., 311 B.R. 378, 392 

(S.D.N.Y. 2004) (a court should not read a contract to include omitted language where 

the parties were capable of including it). Instead, as applicable here, pursuant to ¶¶ 6(a) 

and 7(b), the non-competition clause did not apply if the Consulting Agreement were 

terminated by Medtech (or its predecessor) following the sale of Dental Concepts. (Exh. 

A. at ¶ 6(a) and ¶ 7(b).) Thus, the only question on this motion to dismiss is whether 

there is a legitimate issue of fact surrounding the circumstances under which the 

Consulting Agreement was terminated. Plainly, there is none. 

Medtech readily acknowledges that the Duane Defendants were retained for the 

explicit purpose of positioning Dental Concepts for purchase by a strategic buyer (Opp. 

Br. at 4), and not for a sales position. Nonetheless, trying manufacture an issue of fact 

where none exists, Medtech argues that the Duane Defendants “ended the relationship,” 

and rendered ¶ 7(b) inapplicable, when they “declined continued employment in a sales 

position that was offered by Prestige.” (Opp. Br. at 8; see also Opp. Br. at 5, citing SAC 

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¶ 88.) The SAC does not contain any allegation, however, that the Duane Defendants 

voluntarily terminated the Consulting Agreement, an allegation critical to the survival of 

Medtech’s breach of contract claim. Instead, Medtech contends that, even though the 

goal for which the Duane Defendants were hired (the sale of Dental Concepts) had been 

attained, by rejecting an inferior job opportunity having nothing to do with the reason 

they were hired (SAC ¶¶ 71, 87), the Duane Defendants terminated the Consulting 

Agreement and triggered the non-competition clause. 

Without jusitifcation, Medtech seeks to have the omission of any explicit 

allegations regarding the circumstances surrounding the termination of the Consulting 

Agreement construed in its favor, asserting that because “nothing in the SAC states or 

implies” that Dental Concepts had exercised its “option” to terminate the Consulting 

Agreement pursuant to ¶ 6(a)(vi), the question of whether this provision applies cannot be 

decided on a motion to dismiss. (Opp. Br. at 7-8.) Even under the permissive pleading 

standards that govern a motion to dismiss for failure to state claim, Medtech cannot use 

its failure to plead necessary facts to its advantage by arguing that their absence gives rise 

to an issue of fact. G-I Holdings, Inc. v. Baron & Budd, 179 F. Supp. 2d 233, 264 

(S.D.N.Y. 2001) (“It is inconsistent with the standards for resolving a motion to dismiss 

to have this Court draw inferences from facts not pleaded in the Complaint.”); 5-Star 

Management, Inc. v. Rogers, 940 F. Supp. 512, 519 (E.D.N.Y. 1996) (an omission of fact 

regarding a pivotal element of a pleader’s claim justifies the court to assume the nonexistence of the operative fact, citing O’Brien v. DiGrazia, 544 F.2d 543, 546 n.3 (1st 

Cir. 1976)); see also First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763, 771 (2d 

Cir. 1994) (“unwarranted deduction of fact” need not be accepted as true). Rather, in 

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light of Medtech’s failure to allege that the Duane Defendants terminated the Consulting 

Agreement, this Court should reach the obvious conclusion to be derived from the 

allegations in the SAC, namely, that the Consulting Agreement was unilaterally 

terminated by Prestige, resulting in Duane being offered a different job, because the 

engagement for which the Duane Defendants were hired – to position Dental Concepts so 

that it could be acquired – was finished. 

2. The Duane Defendants’ continued employment after the date of sale did 

not trigger the non-competition clause. 

 Medtech’s next, and far less compelling, argument is that the Duane Defendants 

triggered ¶ 7(c) of the Consulting Agreement by continuing to work for several weeks 

following the sale of assets in order to assist in transitioning Dental Concepts into 

Medtech (SAC ¶ 87), which, in turn, invoked the non-competition clause in ¶ 7(b). This 

argument should be rejected as a matter of law.2

 Paragraph 7(c) of the Consulting Agreement provides: 

The provisions of Section 7 . . . shall survive the termination or expiration of this 

Agreement and/or the Term, irrespective of the reason therefor, including 

without limitation under circumstances in which [the Duane Defendants] 

continue[ ] thereafter to be engaged by the [Dental Concepts]. 

(Exh. A. at ¶ 7(c), emphasis by Medtech in Opp. Br. at 9.) The first highlighted clause 

of this paragraph says simply that ¶ 7 shall survive the termination of the Consulting 

Agreement, regardless of why it was terminated. The non-competition obligations in ¶ 

7(b), however, only apply if the Consulting Agreement was terminated by C.D.S. or 

 

2

 “‘The interpretation of an unambiguous contract is a question of law for the court, and the provisions of a 

contract addressing the rights of the parties will prevail over the allegations in a complaint.” 

Egan v. Marsh & McLennan Companies, Inc., No. 07 Civ. 7134(SAS), 2008 WL 245511 at *4 (S.D.N.Y. 

2008) (quoting Taussig v. Clipper Group, L.P., 13 A.D.3d 166, (1st Dep't 2004). “At the motion to dismiss 

stage, where a plaintiff's ‘factual allegations or legal conclusions are flatly contradicted by documentary 

evidence, they are not presumed to be true, or even accorded favorable inference[,]’ in the context of a 

breach of contract action.” Id. 

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terminated by Dental Concepts for “Just Cause.” There is nothing which expands the 

scope of that clause or the Duane Defendants’s obligations depending on how the 

Consulting Agreement was terminated. The second highlighted clause states only that, if 

the Duane Defendants continue their engagement after the Consulting Agreement is 

terminated, the provisions of ¶ 7 apply once the engagement finally ends. There is 

nothing in this clause which alters or expands the scope of ¶ 7(b) if the engagement 

continues; the parties agreed simply that ¶ 7(b) as written would continue to apply. 

Medtech’s argument that the Duane Defendants somehow agreed to greater restrictions 

on their future employment activities simply because they did not walk out the door the 

day the company’s assets were sold is illogical and not supported by the language of the 

document. 

3. Medtech cannot acquire rights greater than those held by its predecessors. 

While it is not disputed that Medtech would be entitled to the benefits arising 

under the Consulting Agreement as the successor to Dental Concepts, Medtech’s rights 

can be no greater that those held by Dental Concepts or Prestige. Gilbraltar Petroleum 

Corp. v. Bank Sepah, 526 F. Supp. 560, 561 (S.D.N.Y. 1981) (assignee can have no 

greater rights to sue than its assignor); Arena Construction Co., Inc. v. Sackaris & Sons, 

282 A.D.2d 489 (2nd Dep’t 2001) (assignee “stands in the shoes” of its assignor). 

Medtech’s assertion that the language in the Consulting Agreement, stating that it “shall 

be binding upon and inure to the benefit of” any successor of Dental Concepts (Opp. Br. 

at 4-5 and 10, citing Exh. A at ¶ 8), subjects the Duane Defendants to a some sort of 

“long term” obligation beyond the scope and term of the Consulting Agreement is 

untenable. All it means is that whatever rights are held by or restriction imposed upon 

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Dental Concepts, including its inability to enforce the non-competition clause if the 

Consulting Agreement was terminated following a sale of the assets of Dental Concepts 

(Exh. A at ¶ 7(b)), applies equally to Medtech. 

B. The General Release Superseded the Confidentiality Provisions in the PII 

Agreement Because the Subject Matter Was the Same. 

In their moving brief, the Duane Defendants argued that they cannot be liable for 

breach of contract based upon the confidentiality provisions of the PII Agreement, which 

was incorporated into the Consulting Agreement, because that agreement was supplanted 

by the General Release and, thus, ceased to exist. (Mov. Br. at 10-11.) Medtech counters 

that: (1) the subject matter of the General Release and the PII Agreement cannot be the 

same because they include different parties (Opp. Br. at 14); and (2) the confidentiality 

provisions of the General Release are far narrower, and serve a different purpose, than the 

provisions contained in the PII Agreement (Opp. Br. at 13-17). Both of these contentions 

lack merit.3

First, Medtech’s conclusion that the General Release, the PII Agreement and the 

Consulting Agreement cannot cover the same subject matter because they include 

different parties is flawed in that it ignores the obvious fact that Duane was the only 

employee of C.D.S. that rendered any services to Dental Concepts under the Consulting 

Agreement. (Exh. A at ¶ 2(b): “The Consultant shall provide its services to [Dental 

Concepts] solely through Duane.”) Other than Duane, there was no other person at 

C.D.S. who could have disclosed confidential information or alleged trade secrets, which 

means that by having Duane sign the General Release with its confidentiality provision, 

Medtech achieved the same result as if both of the Duane Defendants had signed the 

 

3

 The Duane Defendant also adopted and incorporate by reference the arguments set forth Kaplan’s Reply 

Memorandum of Law, dated December 14, 2007, at 13-15, which are equally applicable here. 

Case 7:07-cv-03302-KMK-LMS Document 148 Filed 04/03/2008 Page 10 of 14
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General Release. Accordingly, the decision not to have C.D.S. also sign the General 

Release does not establish that the subject matter of that documents differed from the 

similar provisions in the Consulting Agreement and the PII Agreement.4

Second, Medtech’s assertion that the confidentiality provision in General Release 

is different from those in the Consulting Agreement and the PII Agreement is wholly 

undermined by Medtech’s allegations in the SAC, which describe the confidentiality 

clause in the General Release, like those in the PII Agreement, as “further evidence of the 

efforts that Dental Concepts made to keep [its proprietary] information confidential.” 

(SAC ¶¶ 76-77; see also ¶¶ 40-46.) Indeed, an examination of the confidentiality 

provision in the PII Agreement as compared to the one contained in the General Release, 

shows that both documents were intended to protect the identical categories of 

information from being disclosed, namely, all manufacturing, marketing and sales 

information. For example, where the PII Agreement contained specific categories of 

information, e.g., “marketing plans and opportunities, cost and pricing data, strategies, 

forecasts and customer lists” (Exh. A. to Exh. A at ¶ C), the General Release covered this 

same information under the more general description of “confidential information and 

material concerning manufacturing, distribution, marketing, [and] sales . . . .” (Exh. B at 

¶ 7.) These are distinctions without a difference. Both the PII Agreement, incorporated 

into the Consulting Agreement, and the General Release were intended to prevent the 

disclosure of confidential information, and, as such, the General Release supplanted the 

 

4

 While Medtech is correct that C.D.S. cannot individually argue that the General Release supplanted the 

Consulting Agreement and PII Agreement because C.D.S. is not a party to the General Release (Opp. Br. 

14), the reality is that if the Court finds that Duane is not liable for divulging trade secrets, the same result 

would have to follow for C.D.S. because Duane was its only active employee. 

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confidentiality provisions of the earlier agreements. Accordingly, the Duane Defendants 

cannot be held liable for breaching provisions in agreements that are no longer extant. 

Point II

MEDTECH DOES NOT REFUTE THAT THE SAC FAILS TO ALLEGE ALL THE 

ELEMENTS OF A CLAIM FOR TORTIOUS INTERFERENCE WITH CONTRACT 

The Duane Defendants’ moving brief asserts that Medtech’s cause of action 

against Duane for tortious interference with contractual relations, arising from his 

supposedly having “procured Kaplan’s breach” of her General Release, fails to state a 

claim because, among other things, the SAC fails to allege the essential element that 

Duane intentionally induced Kaplan to breach her General Release. (Mov. Br. at 12-13, 

citing Kronos, Inc. v. AVX Corp., 81 N.Y.2d 90, 94 (1993).) Medtech offers no 

opposition to this argument, thereby conceding that the Duane Defendants are correct. 

Accordingly, Medtech’s claim against Duane for tortious interference with contract 

should be dismissed. 

Point III

MEDTECH DOES NOT REFUTE THAT THE SAC FAILS TO ALLEGE ALL 

THE ELEMENTS OF A CLAIM FOR TORTIOUS INTERFERENCE WITH 

ADVANTAGEOUS BUSINESS RELATIONSHIP/ECONOMIC ADVANTAGE

 The Duane Defendants also argued in their moving brief that Medtech had failed 

to state a claim for tortious interference with advantageous business relationship/ 

economic advantage because Medtech had not alleged the required element of conduct by 

the Duane Defendants that rose to the level of “wrongful means” as defined by the New 

York Court of Appeals in NBT Bancorp Inc. v. Fleet/Norstar Financial Group, Inc., 87 

N.Y.2d 614, 621 (1996) (citing Guard-Life Corp. v. Parker Hardware Mfg. Corp., 50 

N.Y.2d 183, 191 (1980)). (Mov. Br. at 13-14.) Medtech, once again, has conceded that 

Case 7:07-cv-03302-KMK-LMS Document 148 Filed 04/03/2008 Page 12 of 14
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the Duane Defendants are correct by failing to respond to this argument or otherwise 

identifying allegations in the SAC that that could establish “wrongful means.” 

Accordingly, Medtech’s claim for tortious interference with advantageous business 

relationship/economic advantage should be dismissed. 

Point IV

MEDTECH HAS FAILED TO ALLEGE THE DISCLOSURE OF ANY 

INFORMATION THAT AMOUNTS TO A PROTECTIBLE TRADE SECRET 

 Medtech did not respond directly the Duane Defendants’ arguments as to why 

Medtech’s claim for misappropriation of trade secrets should be dismissed because the 

Duane Defendants have incorporated the arguments of the other defendants, which have 

already been fully briefed. (Opp. Br. at 17.) “As an aside,” however, Medtech 

challenges the propriety of the Duane Defendants’ reliance on a list of alleged trade 

secrets derived from the SAC (see Mov. Br. at 7) instead of what is supposedly a more 

complete list of purported trade secrets contained in a letter brief from Medtech’s counsel 

to the Court, dated February 8, 2008. (Opp. Br. at 17.) As a threshold matter, although 

the Court may, in limited circumstances, consider materials outside the four corners of 

the complaint on a motion to dismiss, see Faulkner v. Beer, 463 F.3d 130, 134 (2d Cir. 

2006), Medtech should not be permitted to rely on legal argument by its counsel to 

bolster the allegations in the SAC. More importantly, however, should the Court choose 

to examine Medtech’s counsel’s letter and compare it to the list of alleged trade secrets 

identified in the Duane Defendants’ moving papers (Mov. Br. at 7), it is readily apparent 

that the lists do not substantially vary from one another. If, as Medtech asserts, the 

Duane Defendants’ list of trade secret appears to be nothing more than a “strawman” that 

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can easily be torn down (Opp. Br. at 17), this is because none of the information 

defendants have been accused of divulging constitutes a protectible trade secret. 

III. CONCLUSION

 For the foregoing reasons, as well as those set forth in the Duane Defendants’ 

moving brief, the SAC should be dismissed against the Duane Defendants for failure to 

state a claim against them, and this Court should grant leave to allow the Duane 

Defendants to submit a motion to recover their attorneys’ fees and litigation costs. 

Dated: New York, New York 

 April 3, 2008 

 Respectfully submitted, 

 GREENBERG FREEMAN LLP 

 

By: /s/ Michael A. Freeman 

 Michael A. Freeman (MAF-9600) 

24 West 40th Street, 17th Floor 

New York, NY 10018 

(646) 366-0881 

Attorneys for Defendants Ray Duane 

 and C.D.S. Associates, Inc. 

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