Boston Scientific Corp. (NYSE:BSX) faced a pair of legal challenges, one new and one old, as St. Jude Medical Inc. (NYSE:STJ) and a former BSX employee challenge a non-compete agreement and shareholders appeal a class action securities lawsuit.
King & STJ vs. BSX
Kara Ruth King, a former Boston Scientific sales rep based in Charlotte, worked for the company from November 2005 until she left to take a job at STJ in June 2009, according to documents filed with the U.S. District Court for Western North Carolina. King alleges that she was never told she’d be required to sign a non-disclosure agreement until several days after her tenure there began. The agreement she signed provided no additional compensation, according to the documents, and read in part:
"I further agree that for a period of two years after the termination of my employment with [Boston Scientific], I will not, without the written consent of the Company work for or assist any business organization which competes with [Boston Scientific] with respect to its products being sold or in development."
King’s territory initially covered South Carolina and western North Carolina, including
Charlotte, Winston-Salem, Asheville and Hickory. In December 2008, parts of her territory in South Carolina were assigned to another sales representative, according to the lawsuit. When she started with St. Jude, although her territory included parts (and former customers) from the Carolinas she’d covered for BSX, King "has not and is not currently selling any products for St. Jude that compete with products that she sold at Boston Scientific" and hasn’t violated the agreement, according to the lawsuit.
Beginning in Sept. 2009, King received several letters from her former employer "complaining about her activities," according to the documents, and despite negotiations "the parties have been unable to resolve their dispute on this matter and thus Ms. King and St. Jude seek court intervention to allow her to work for St. Jude unfettered by the invalid and overbroad covenant in her Agreement with Boston Scientific," according to the lawsuit.
Miss. PERS vs. BSX
The Miss. Public Employees’ Retirement System appealed a federal judge in Boston’s decision to toss a class action securities lawsuit filed against Boston Scientific, which accused the company of misleading investors about problems with its Taxus Express drug-eluting stent.
Judge Douglas Woodlock of the U.S. District Court for Massachusetts ruled in April that the Miss. PERS failed to prove that the Natick, Mass.-based medical device giant concealed problems with the Taxus Express that led to a partial recall in 2004. The plaintiffs appealed to the U.S. Court of Appeals for the First Circuit May 27, signaling their intent to seek to have Woodlock’s decision overturned.
