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St. Jude Medical, Inc. v. Carter

Court of Appeals of Minnesota

July 10, 2017

St. Jude Medical, Inc., Appellant,
v.
Heath Carter, et al., Respondents.

         Hennepin County District Court File No. 27-CV-15-21203

          Edward F. Fox, Kevin P. Hickey, Mark R. Bradford, Laurel J. Pugh, Bassford Remele, P.A., Minneapolis, Minnesota (for appellant)

          Robert L. Schnell, Jr., Martin S. Chester, Blake J. Lindevig, Faegre Baker Daniels LLP, Minneapolis, Minnesota (for respondent)

          Considered and decided by Bjorkman, Presiding Judge; Hooten, Judge; and Reyes, Judge.

         SYLLABUS

         If a noncompete clause in an employment contract provides that irreparable harm occurs upon an employee's breach and specifies remedies for the breach, the district court, upon a finding of breach by the employee, must enforce the contract against the employee by awarding injunctive relief or other appropriate relief as provided for under the contract.

          OPINION

          HOOTEN, Judge.

         Appellant former employer challenges the district court's order dismissing its amended complaint, arguing that the district court erred by failing to award a remedy, specifically injunctive relief, after a jury and the district court found that appellant's former employee breached the noncompete provision of his employment contract. Appellant also contends that the district court erred by determining that appellant had abandoned or waived its claim for attorney fees against its former employee. We reverse and remand the case for further proceedings consistent with this opinion.

         FACTS

         Appellant St. Jude Medical, Inc. (St. Jude), is a Minnesota corporation that engages in the research, development, marketing, and sale of medical devices, including electrophysiology (EP) products. EP products are used to evaluate heart rhythm disorders and treat diseases such as atrial fibrillation, atrial flutter, and ventricular tachycardia. These products are generally separated into two categories: EP capital products and EP disposable products. EP capital products include circuitry and software-based devices that interpret, digitize, and display electrical information collected from the heart. EP disposable products are accessory items that collect and measure electronic information produced by the heart and transmit such information to an EP capital product.

         In 2007, St. Jude hired respondent Heath Carter, who signed an at-will employment contract. The employment contract contained two standard restrictive covenants: a noncompete clause and a confidentiality clause. The noncompete provision limited Carter's ability to work for any of St. Jude's competitors for one year after his employment at St. Jude ended. The provision stated:

In the event of Employee's termination of employment for any reason, whether voluntary or involuntary, Employee, either personally or through an agent, servant, employee, partner, representative, affiliate or other entity, shall not for a period of one (1) year following termination, without the prior written consent of [St. Jude], directly or indirectly, seek or accept employment with or render services to any other person or entity that competes in any sense with [St. Jude] in connection with the design, development, manufacture, marketing or sale of any product, process or service that is being designed, developed, manufactured, marketed or sold by [St. Jude] and in which the Employee participated in the design, development, manufacture, marketing or sale during Employee's employment with [St. Jude].
. . . The preceding paragraph further specifically prohibits Employee from rendering services to any company where rendering such services would be expected to require or involve Employee's using or disclosing confidential information belonging to [St. Jude].

         The confidentiality provision prohibited Carter from disclosing any of St. Jude's confidential information, including but not limited to information relating to the research, development, and pricing of St. Jude's products. The employment contract also contained a remedies provision, which provided:

In the event Employee breaches the covenants contained in this Agreement, Employee recognizes that irreparable injury will result to [St. Jude], that [St. Jude's] remedy at law for damages will be inadequate, and that [St. Jude] shall be entitled to an injunction to restrain the continuing breach by Employee, the Employee's partners, agents, servants or employees, or any other persons or entities acting for or with the Employee. [St. Jude] shall further be entitled to damages, reasonable attorney's fees, and all other costs and expenses incurred in connection with the enforcement of this Agreement, in addition to any other rights and remedies which [St. Jude] may have at law or in equity.

         During his eight-year tenure at St. Jude, Carter held a variety of different positions. After spending several years performing preclinical research and product development testing on EP products, Carter assisted in redesigning St. Jude's website and was responsible for marketing St. Jude's EP capital products. Toward the end of his tenure, Carter also participated in research regarding one of St. Jude's EP disposable products.

         In 2014, an employee at respondent Boston Scientific Corporation, who was Carter's former supervisor at St. Jude, contacted Carter regarding possible employment in a non-EP related position at Boston Scientific. St. Jude and Boston Scientific are direct competitors in the research, development, manufacture, marketing, and sale of EP products. Carter did not accept the position.

         In June 2015, the former supervisor again contacted Carter, this time regarding an opening on Boston Scientific's marketing team for EP disposable products. On August 21, 2015, Carter voluntarily resigned from his position at St. Jude. He subsequently began employment at Boston Scientific, working as a senior product manager with the primary duty of overseeing the marketing of EP disposable products.

         St. Jude learned the details of Carter's employment at Boston Scientific in October 2015 and asked Boston Scientific to provide assurances that his employment would not involve EP products during his one-year noncompete period and that he had not disclosed any of St. Jude's confidential information. Boston Scientific responded that Carter's position at Boston Scientific did not violate his noncompete obligations to St. Jude, claiming he worked with EP capital products at St. Jude, whereas at Boston Scientific his focus was on EP disposable products.

         In December 2015, St. Jude filed suit against Carter and Boston Scientific (collectively respondents), alleging that Carter breached his employment contract with St. Jude and that Boston Scientific tortiously interfered with Carter's employment contract. St. Jude claimed that as a result of Carter's breach, it was entitled to injunctive relief and monetary damages, as well as attorney fees and costs against Carter, and damages for Boston Scientific's tortious interference.

         St. Jude immediately sought a temporary injunction to prohibit Carter from continuing his employment with Boston Scientific. The district court denied this request, determining that St. Jude failed to demonstrate a reasonable likelihood of success on the merits and that, in considering the balance of harm to the parties, temporary injunctive relief was not justified.

         After engaging in extensive discovery, the parties filed cross-motions for summary judgment. St. Jude specifically requested summary judgment on its breach of contract and tortious interference claims, seeking injunctive relief and attorney fees. The district court denied the parties' summary judgment motions and the case proceeded to jury trial. The parties stipulated before trial that the district court would address any issue ...


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