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

United States Court of Appeals, Eighth Circuit

April 12, 2016

St. Jude Medical S.C., Inc., a Minnesota corporation, Plaintiff - Appellee
v.
Biosense Webster, Inc., a California corporation; Johnson & Johnson, a New Jersey corporation; Jose B. de Castro, an individual, Defendants - Appellants

         Submitted November 18, 2015

          Appeal from United States District Court for the District of Minnesota - Minneapolis.

         For St. Jude Medical S.C., Inc., a Minnesota corporation, Plaintiff - Appellee: Mark R. Bradford, Nicole A. Delaney, Edward F. Fox, BASSFORD & REMELE, Minneapolis, MN.

         For Biosense Webster, Inc., a California corporation, Johnson & Johnson, a New Jersey corporation, Jose B. de Castro, an individual, Defendants - Appellants: Joseph William Anthony, Steven C. Kerbaugh, Mary L. Knoblauch, ANTHONY & OSTLUND, Minneapolis, MN.

         Before SMITH, BYE, and BENTON, Circuit Judges.

          OPINION

         SMITH, Circuit Judge.

         Biosense Webster, Inc. (" Biosense" ), a subsidiary of Johnson & Johnson, recruited and hired Jose B. de Castro while de Castro was working for St. Jude Medical S.C., Inc. (" St. Jude" ). St. Jude had signed a three-year employment agreement with de Castro, which would not expire for almost two more years. Soon after de Castro's departure, Sequoia Hospital, a large St. Jude client, took its business to Biosense. St. Jude sued de Castro and Biosense alleging, among other things, state-law claims of breach of contract and tortious interference. The district court[1] granted summary judgment to St. Jude with respect to de Castro's breach and Biosense's liability for tortious interference. After a jury trial on damages, the district court entered judgments against de Castro and Biosense and awarded damages for the cost of replacing de Castro, lost profits from Sequoia Hospital, and attorney's fees. Biosense and de Castro appeal. We affirm.

         I. Background

         St. Jude and Biosense are competitive manufacturers of medical equipment. Both companies employ sales representatives assigned to specific geographical areas. In 2009, St. Jude promoted de Castro from field engineer to sales representative for an area including San Francisco and San Jose, California. After two years as a sales representative, in January 2011, St. Jude and de Castro executed a three-year employment agreement. In relevant part, their agreement limited St. Jude's ability to terminate de Castro and prevented de Castro from leaving St. Jude during the term of the agreement.

         Later in 2011, after St. Jude and de Castro entered into the agreement, Biosense began courting de Castro as a potential employee. Biosense selected de Castro on the basis of his relationship with Sequoia Hospital, a then-current St. Jude client that Biosense desired to obtain. After multiple meetings, Biosense offered to hire de Castro and promised to defend him from the repercussions of terminating his employment agreement with St. Jude before the term expired. The day after de Castro resigned in February 2012, Biosense filed a declaratory judgment action against St. Jude, asking a federal court in California to declare the employment agreement invalid. St. Jude, a Minnesota-based company, sought application of the Minnesota choice-of-forum provision in the employment agreement, and the California court transferred the case to Minnesota.

         The district court in Minnesota granted summary judgment to St. Jude on all issues except damages, which St. Jude tried to a jury and to the court. The jury awarded St. Jude damages from Biosense and de Castro for the cost of replacing de Castro and for lost profits; the court awarded St. Jude attorney's fees. After the trial, the district court denied Biosense's motion for a judgment as a matter of law with respect to damages for lost profits. Biosense and de Castro appeal. We have jurisdiction to review this final judgment of the district court pursuant to 28 U.S.C. § 1291.

         II. Discussion

         Biosense and de Castro challenge the district court's grant of summary judgment to St. Jude, arguing that (A) Minnesota substantive law does not apply despite the written choice-of-law provision and that (B) de Castro's employment agreement with St. Jude was a restrictive covenant rather than a valid term-of-years employment contract. Biosense further argues that (C) St. Jude cannot recover damages for lost profits on the basis of its tortious-interference claim. Biosense also challenges the district court's denial of its motion for judgment as a matter of law, arguing that (D) the evidence at trial was insufficient to support damages for lost profits. Our review of these matters is de novo. Pittari v. Am. Eagle Airlines, Inc., 468 F.3d 1056, 1061 (8th Cir. 2006); St. Paul Fire & Marine Ins. Co. v. Schrum, 149 F.3d 878, 880 (8th Cir. 1998).

         A. The Minnesota ...


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