St. Jude Medical S.C., Inc. v. Biosense Webster, Inc.
818 F.3d 785
| 8th Cir. | 2016Background
- St. Jude employed Jose B. de Castro under a three‑year Minnesota choice‑of‑law employment agreement that limited his ability to leave during the term.
- Biosense (competitor) recruited and hired de Castro while he was still under that agreement; Biosense promised to defend him against consequences of early departure.
- After de Castro joined Biosense, a key St. Jude client, Sequoia Hospital, shifted business to Biosense; St. Jude sued de Castro and Biosense for breach of contract and tortious interference.
- Federal district court in Minnesota granted summary judgment to St. Jude on liability; a jury awarded damages (replacement costs and lost profits); court awarded attorneys’ fees.
- Biosense and de Castro appealed, challenging choice‑of‑law, characterization of the agreement, availability of lost‑profit damages, and sufficiency of the evidence for lost profits.
Issues
| Issue | Plaintiff's Argument (St. Jude) | Defendant's Argument (Biosense / de Castro) | Held |
|---|---|---|---|
| Validity of Minnesota choice‑of‑law clause | Clause is binding; parties agreed in good faith | Clause invalid because not negotiated and seeks to avoid California law | Clause valid — parties acted in good faith and no intent to evade law |
| Nature of employment agreement (term‑of‑years vs. restrictive covenant) | Agreement is a valid term‑of‑years contract enforceable by damages only | The monetary remedy functionally creates an unenforceable restrictive covenant | Agreement is a valid term‑of‑years contract, not a perpetual restrictive covenant |
| Availability of lost‑profit damages for tortious interference | Tortious interference claim can include lost profits caused by inducement | Lost profits are contract damages only, not recoverable on tortious‑interference theory | Lost‑profit damages are recoverable for tortious interference under Minnesota law |
| Sufficiency of evidence for lost‑profit causation | Profit shift and internal documents linking hiring to Sequoia support causation | Evidence conflicted (witness testimony) and correlation alone is insufficient | Evidence was sufficient for a reasonable jury to find Biosense caused St. Jude’s lost profits |
Key Cases Cited
- Milliken & Co. v. Eagle Packaging Co., 295 N.W.2d 377 (Minn. 1980) (parties may contractually select governing law)
- Combined Ins. Co. of Am. v. Bode, 77 N.W.2d 533 (Minn. 1956) (choice‑of‑law clause valid if made in good faith and not to evade law)
- Harris v. Bolin, 247 N.W.2d 600 (Minn. 1976) (monetary forfeiture tied to perpetual noncompetition may be treated as invalid restrictive covenant)
- Medtronic, Inc. v. Gibbons, 684 F.2d 565 (8th Cir. 1982) (application of Minnesota choice‑of‑law principles)
- Storage Technology Corp. v. Cisco Systems, Inc., 395 F.3d 921 (8th Cir. 2005) (discussing available remedies for interference with contract under Minnesota law)
- H.J., Inc. v. International Telephone & Telegraph Corp., 867 F.2d 1531 (8th Cir. 1989) (lost profits may be proper measure for tortious interference)
- Hinz v. Neuroscience, Inc., 538 F.3d 979 (8th Cir. 2008) (standards for reviewing sufficiency of evidence and limits of correlational proof)