Johnson & Johnson (NYSE:JNJ) can’t keep a trio of its former sales representatives from working for rival St. Jude Medical (NYSE:STJ), a federal judge ruled in Florida this week.
The sales reps and St. Jude sued Biosense Webster last October to prevent Biosense from enforcing non-competition agreements between Biosense and the 3 reps. Biosense countersued, asking the court to bar St. Jude and its new employees from selling in competing markets.
Judge John Antoon II denied Biosense Webster’s bid, ruling May 28 that Biosense failed to present enough proof that its suit would win on its merits, according to court documents.
Douglas Kissell, William Hamel and Adam Dietterich worked as a team in central Florida, selling Biosense Webster’s atrial fibrillation products before quitting en masse in July 2012 to sell St. Jude’s Afib products as well as its CRM devices. Biosense argued that their non-compete agreements barred them from selling CRM products to their former Biosense customers and from selling any products to their former Biosense Afib customers.
But Antoon ruled that the non-competes had only "narrowly tailored" restrictions, 1 on disclosing confidential information that could "disadvantage any company or advantage the competitor," according to the documents.
"By its express terms, then, the confidentiality clause does not flatly prohibit the sales representatives from working for a competing company during the post-employment period. It only prohibits the sales representatives from working for a competitor in a position where the sales representatives could disadvantage Biosense or advantage St. Jude Medical through the disclosure or use of confidential information," Antoon wrote.
"Biosense also carries the burden of proof with respect to the alleged confidential information it claims the sales representatives received," he wrote. "Biosense has the burden of presenting sufficient evidence that the information was not generally known to the industry and that the information poses a risk of affecting Biosense’s or St. Jude Medical’s ability to compete. In other words, in order to establish a likelihood of success with regard to to the confidentiality clause, Biosense must present sufficient evidence concerning the information at issue."
"Biosense has provided few specific examples or documents to support these conclusory assertions, and much of the information to which Biosense refers appears on its face to be stale," Antoon added.
For their part, the plaintiffs argued that all of the marketing and product-specific information was all for public distribution and that the pricing information had a limited lifespan and was sometimes made public.
Antoon also shot down Biosense’s arguments regarding the non-competes’ 2nd clause, barring Kissell, Hamel and Dietterich from selling to any Biosense customers with whom they had contact during the last 12 months of their tenures there. Citing the plaintiff’s claims that any of those contacts were either with customers outside of the 12-month window or concerned non-competing products, the judge also wrote that St. Jude Medical’s chief medical officer, Dr. Mark Carlson, testified that the Afib and CRM products at issue are complementary, not competing.
"Carlson’s declaration clearly suggests that the 2 products do not compete, and nothing in the record indicates that the products’ complementary nature in itself means that a sales representative selling CRM products to former customers will "inevitably" sell Afib products to those customers," he wrote. " Biosense has not shown a single instance of the sales representatives violating the clause during the 10 months that they have already worked for St. Jude."
