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St. Jude Medical S.C., Inc., A Minnesota Corporation v. Annette Cormier

April 30, 2013

ST. JUDE MEDICAL S.C., INC., A MINNESOTA CORPORATION, PLAINTIFF,
v.
ANNETTE CORMIER, AN INDIVIDUAL, DEFENDANT.



The opinion of the court was delivered by: Donovan W. Frank United States District Judge

MEMORANDUM OPINION AND ORDER

INTRODUCTION

This matter is before the Court on a Motion for Judgment on the Pleadings brought by Defendant Annette Cormier ("Defendant") (Doc. No. 9). For the reasons set forth below, the Court grants the motion.

BACKGROUND

Defendant was formerly employed at-will by St. Jude Medical S.C. ("St. Jude") as a cardiac rhythm management ("CRM") technical services specialist. (Doc. No. 1, Compl. ¶¶ 15, 18, Ex. B § 2.2.) At the time, Defendant's husband, Joe Cormier, was a St. Jude CRM sales representative. (Compl. ¶ 11.) Joe Cormier had a term-of-years employment agreement with St. Jude that expired in October 2011. ( Id. ¶ 41.) Defendant helped her husband with servicing his assigned accounts (such as hospitals and physicians) in the Miami area. (Id. ¶¶ 13, 18.)

In February 2009, Defendant resigned from St. Jude and became employed by Medtronic as a sales representative. (Id. ¶ 38.) In February 2010, St. Jude sued Medtronic in Florida state court (the "Florida Action"). (Id. ¶ 44.) St. Jude alleged that Medtronic tortiously interfered with the relationship between St. Jude and Joe Cormier and, specifically, that Medtronic's employment of Defendant was part of a scheme in which Joe Cormier diverted business from his St. Jude accounts to Defendant and other Medtronic employees. (Id.; Doc. No. 20, Moskowitz Aff. ¶ 2, Ex. A ¶¶ 15-18.) St. Jude and Medtronic agreed to arbitrate the dispute and stay the Florida Action (the "Florida Arbitration"). (Compl. ¶ 45.) The relevant arbitration agreement between St. Jude and Medtronic provided in part:

Directly related claims and/or parties may be added in the Florida Arbitration, subject to the discretion of the arbitrator(s) and/or the Florida Court, in which event those claims shall also be considered "Claims" for purposes of this Agreement. In particular, but without limitation, either party may seek to add Joe Cormier, Annette Cormier, and/or Mikel Mancini as a party to the Florida Arbitration. It is understood and agreed that any parties added to the Florida Arbitration shall not be parties to this Agreement and may only participate in the Florida Arbitration if they explicitly agree in writing to participate in the Florida Arbitration with the arbitrator(s) selected by St. Jude and Medtronic and subject to the terms set by this Agreement . . . . Nothing herein contained shall be construed to preclude St. Jude from proceeding against Joe Cormier, Annette Cormier, and/or Mikel Mancini in relation to the Claims in, by and through any other action or proceeding (with or without their consent), and, in the event St. Jude does so proceed against Joe Cormier, Annette Cormier and/or Mikel Mancini in, by and through some other action or proceeding, the Florida Arbitration between St. Jude and Medtronic shall not be delayed, interrupted, impaired or otherwise affected in any way. (Moskowitz Aff. ¶ 2, Ex. B ¶ 8.)

In the Florida Arbitration, St. Jude alleged that Medtronic wanted to hire Joe Cormier, but could not because he had an employment agreement with St. Jude. (Moskowitz Aff. ¶ 2, Ex. D ("Arbitration Demand") ¶ 17.) According to St. Jude, Medtronic therefore hired Defendant to induce Joe Cormier to divert St. Jude business from Joe Cormier's accounts to Medtronic while he remained employed by St. Jude. (Id. ¶¶ 17-22.) St. Jude alleged that Joe Cormier had control over the accounts, and that Medtronic's employment of Defendant was part of a scheme to divert accounts from St. Jude to Medtronic. (Id. ¶¶ 12, 20-22.) St. Jude also alleged that Defendant marketed Medtronic's CRM devices to his St. Jude accounts during an applicable one-year non-compete, and that Joe Cormier encouraged his accounts to purchase Medtronic products. (Id. ¶¶ 20-24.) Based on these factual allegations, St. Jude asserted the following claims against Medtronic: (1) tortious interference with its business relationship with Joe Cormier; (2) tortious interference with its employment contract with Joe Cormier; (3) tortious interference with its business relationship with Joe Cormier's accounts; and (4) unfair competition. (Id. ¶¶ 28-48.)

With respect to each claim, St. Jude alleged that Medtronic was liable for Defendant's conduct because Defendant was acting on behalf of Medtronic as its employee and agent. (Id. ¶¶ 18, 22, 28, 33, 38, 43.) Specifically, St. Jude alleged that Medtronic induced Joe Cormier to divert business to Medtronic "through [Defendant] as a Medtronic employee" and that Defendant "on behalf of and for the benefit of Medtronic" acted in concert with and induced Joe Cormier to breach his contractual and common law duties to St. Jude. (Id. ¶¶ 18, 22.) St. Jude also specifically alleged that Medtronic committed each alleged tort "by and through [Defendant and other employees] acting within the course and scope of their employment with Medtronic." (Id. ¶ 22.)

The Florida Arbitration lasted approximately two years. (Compl. ¶¶ 45, 51.) The arbitration panel was made up of three arbitrators, each a jurist from either California or Minnesota. (Id. ¶ 46.) The parties were able to conduct discovery. (Moskowitz Aff. ¶ 2, Ex. B ¶ 4.) Both Defendant and Joe Cormier were deposed. The arbitration panel conducted a trial from January 4 through January 20, 2012. (Compl. ¶ 52, Ex. C ("Final Award") at 1.) On July 3, 2012, a Final Award was issued, wherein the arbitration panel ruled in St. Jude's favor on Counts I and II, on the theory that Medtronic had hired Defendant knowing that Joe Cormier would stop working diligently to sell St. Jude products. (Final Award at 1-13.)*fn1 The arbitration panel awarded St. Jude lost profits in the amount of $2,659,192.10. (Id. at 15.) The arbitration panel also awarded costs and prejudgment interest. (Id.)

Medtronic paid the judgment. (Doc. No. 7, Answer ¶ 56, Ex. D.) St. Jude then commenced an arbitration proceeding against Joe Cormier, and alleges that it would have no objection to Defendant joining as a co-respondent in that arbitration proceeding.

(Compl. ¶ 58.) On July 30, 2012, St. Jude filed a Notice of Voluntary Dismissal with the Florida court, dismissing the Florida Action against Medtronic with prejudice. (Answer ¶ 44.)

St. Jude then commenced the present action against Defendant (the "Present Action"). (Compl.) In the Present Action, St. Jude asserts the following claims: (1) unjust enrichment; (2) breach of contract (Defendant's contract); (3) tortious interference with the Joe Cormier agreement; (4) misappropriation of trade secrets; (5) civil conspiracy; and (6) breach of fiduciary duties. (Compl. ¶¶ 62-86.) The Complaint in the Present Action states that: "St. Jude brings the instant related action against [Defendant] to recover additional compensatory damages and restitution beyond the damages awarded in the [Florida] Arbitration." (Id. ¶ 57.) At the heart of St. Jude's claims for unjust enrichment, tortious interference, conspiracy, and breach of fiduciary duty is the allegation that Defendant and her husband agreed to divert business from St. Jude to Medtronic in exchange for Medtronic hiring Defendant, and that the compensation Medtronic paid Defendant was an inducement to Joe Cormier to breach his agreement with St. Jude. (See generally id. ¶¶ 34-64, 67, 70, 79-81.) With respect to its trade secret misappropriation claim, St. Jude alleges that Defendant transmitted St. Jude's confidential information to Medtronic after it was disclosed to her by Joe Cormier. (Id. ¶¶ 72-78.) In support of its claim for breach of contract against Defendant, St. Jude alleges Defendant breached her contract with St. Jude by breaching the non-compete provision and the confidentiality provisions. (Id. ¶¶ 64-66.)

Defendant now moves for judgment on the pleadings, arguing that: each count in the Present Action is based on the same alleged facts that formed the basis for the award in the Florida Arbitration; the arbitration panel determined the full amount of St. Jude's loss for the alleged conduct; and Medtronic satisfied the full award. Defendant asserts that the ...


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