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St. Jude Medical, S.C, Inc. v. Biosense Webster, Inc.

United States District Court, D. Minnesota

November 24, 2014

St. Jude Medical, S.C., Inc., Plaintiff,
v.
Biosense Webster, Inc., Johnson & Johnson, and Jose B. de Castro, Defendants.

Edward F. Fox, Esq., Mark R. Bradford, Esq., and Nicole A. Delaney, Esq., Bassford Remele, PA, Minneapolis, MN, on behalf of Plaintiff.

Joseph W. Anthony, Esq., Mary L. Knoblauch, Esq., Courtland C. Merrill, Esq., and Steven C. Kerbaugh, Esq., Anthony Ostlund Baer & Louwagie, PA, Minneapolis, MN, on behalf of Defendants.

MEMORANDUM OPINION AND ORDER

ANN D. MONTGOMERY, District Judge.

I. INTRODUCTION

This matter is before the undersigned United States District Judge for rulings on Defendants Biosense Webster, Inc., and Johnson & Johnson (together, "Biosense") and Jose B. de Castro's Motion for Judgment as a Matter of Law or, in the Alternative, for a New Trial [Docket No. 305], and Plaintiff St. Jude Medical, S.C., Inc.'s ("St. Jude") Motion for Award of Prejudgment Interest and Taxation of Expert Fee Costs [Docket No. 300]. For the reasons set forth below, Defendants' Motion is denied and St. Jude's Motion is granted in part.

II. BACKGROUND

This case was commenced by St. Jude on March 9, 2012 after de Castro, a medical device sales representative for St. Jude, left St. Jude to work for Biosense, a direct competitor. See generally Compl. [Docket No. 1]. After joining Biosense, de Castro sold competing products to some of the same customers he had serviced on behalf of St. Jude. De Castro's competing sales to former customers included the sale of a cardiac mapping system to Sequoia Hospital ("Sequoia").

On February 3, 2014, this Court granted summary judgment to St. Jude on the issues of de Castro's liability for breach of his term-of-years employment agreement and Biosense's liability for tortious interference with de Castro's employment agreement. See Mem. Opinion and Order, Feb. 3, 2014 [Docket No. 223] ("Summary Judgment Order"). Remaining for trial were three potential categories of damages: (1) the costs St. Jude incurred for replacing de Castro after he left St. Jude to work for Biosense; (2) the lost profits St. Jude suffered as a result of de Castro's departure as an employee; and (3) the attorney's fees St. Jude incurred in enforcing its contract rights under the employment agreement.

The parties agreed to submit the issue of attorney's fees damages to the Court and to try the remaining two damage categories to the jury. See Trial Tr. vol. I [Docket No. 316] at 24-27. A jury trial was held from July 8, 2014 to July 14, 2014. The jury found de Castro caused St. Jude to incur $47, 680.52 in replacement costs due to his breach of the employment agreement, and that Biosense caused St. Jude to incur an additional $47, 680.52 in replacement costs. The jury also awarded St. Jude $550, 952 for lost profits as a result of Biosense's tortious interference with de Castro's employment agreement. See Special Verdict Form [Docket No. 289].

The issue of attorney's fees damages was then presented to the Court through oral argument, briefing, exhibits, declarations, and expert reports. On July 18, 2014, the Court ordered Biosense to pay $662, 018.94 to St. Jude in attorney's fees incurred by St. Jude in enforcing its contract rights with de Castro. Mem. Opinion and Order, July 18, 2014 [Docket No. 293] ("Attorney's Fees Damages Order"). The attorney's fees were awarded as damages under the third-party exception to the "American rule" of litigation, an exception recognized in Kallok v. Medtronic, Inc., 573 N.W.2d 356 (Minn. 1998).[1]

On July 21, 2014, judgment was entered against de Castro for $47, 680.52 in replacement cost damages and against Biosense for $47, 680.52 in replacement cost damages, $550, 952.00 in lost profits damages, and $662, 018.94 in attorney's fees damages. Judgment [Docket No. 296].

On August 8, 2014, Biosense and de Castro (collectively, "Defendants") filed their Motion for Judgment as a Matter of Law or, in the Alternative, for a New Trial ("Post-Trial Motion"), and St. Jude filed its Motion for Award of Prejudgment Interest and Taxation of Expert Fee Costs.

III. DISCUSSION

A. Defendants' Post-Trial Motion

Defendants request that this Court grant its motion for judgment as a matter of law or, alternatively, a new trial.

1. Judgment as a Matter of Law

Defendants argue they are entitled to judgment as a matter of law because St. Jude failed to introduce evidence sufficient for a reasonable jury to conclude that St. Jude suffered lost profits and replacement cost damages as a result of de Castro's departure from St. Jude. Defendants further argue that since St. Jude failed to produce sufficient evidence of compensable damages, it is not entitled to recovery of its attorney's fees.

Rule 50(b) of the Federal Rules of Civil Procedure governs renewed motions for judgment as a matter of law. Under Rule 50(b), the court may allow judgment on the verdict, order a new trial, or direct the entry of judgment as a matter of law. Fed.R.Civ.P. 50(b)(1)-(3). The standard of review for granting a Rule 50(b) motion is whether sufficient evidence exists to support the jury verdict. A motion for judgment as a matter of law should only be granted when "all the evidence points one way and is susceptible of no reasonable inferences sustaining the position of the nonmoving party." Washburn v. Kan. City Life Ins. Co., 831 F.2d 1404, 1407 (8th Cir. 1987) (citation omitted). In deciding a motion for judgment as a matter of law, the court must view the evidence in the light most favorable to the party who prevailed before the jury, making all reasonable inferences in that party's favor. Id . (citation omitted). The court must not substitute its own judgment for that of the trier of fact. Ryther v. KARE 11, 864 F.Supp. 1510, 1519 (D. Minn. 1994) (citing Nelson v. Boatmen's Bancshares, Inc., 26 F.3d 796, 803 (8th Cir. 1994)).

a. Lost Profits

Defendants argue there is insufficient evidence to support the jury's conclusion that St. Jude experienced lost profits attributable to de Castro's departure. To establish damages for lost profits, a "plaintiff must establish by a preponderance of the evidence that (a) profits were lost, (b) the loss was directly caused by the breach of the covenant not to compete, and (c) the amount of such causally related loss is capable of calculation with reasonable certainty rather than benevolent speculation." B & Y Metal Painting, Inc. v. Ball, 279 N.W.2d 813, 816 (Minn. 1979).

Defendants contend St. Jude's evidence was too speculative to prove entitlement to lost profits because St. Jude failed to consider other potential causes of its declining profits, including Biosense's superior product and changing market trends. Defendants also argue the correlation between St. Jude's decline in profits and Biosense's nearly identical increase in profits was an insufficient basis for establishing causation.

St. Jude produced ample evidence for a reasonable jury to conclude that St. Jude's lost profits were caused by de Castro's departure from St. Jude. In addition to producing evidence of St. Jude's decline in profits and Biosense's corresponding increase in profits following de Castro's departure, St. Jude produced internal documents from Biosense showing Biosense had targeted Sequoia as a business opportunity and had developed a plan to hire de Castro as a strategy for converting the Sequoia account from St. Jude to Biosense. Trial Exs. P32, P33. Shortly after de Castro was hired at Biosense, he presented Sequoia with the opportunity to acquire a Biosense cardiac mapping system at no charge on a trial basis. Trial Exs. P91-P94.

There was also evidence that St. Jude's declining profits were not attributable to the possibility that Biosense's product was superior. For example, Dr. Gregory Engel, a physician at Sequoia, testified that there are pros and cons to each of the cardiac mapping systems and that neither system is superior to the other. Trial Tr. vol. IV [Docket No. 319] at 654:13-15; 656:12-18. Dr. Engel also testified that the cardiology group's founding physician continued to use the St. Jude system exclusively even when Biosense's product was available to him. Id. at 638:21-639:5.

In sum, the evidence on lost profits was not merely speculative and supports a reasonable inference that St. Jude's lost profits were attributable to de Castro's departure. The evidence proved ...


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