A former group president for St. Jude Medical Inc. (NYSE:STJ) must stop working for Twin Cities rival Medtronic Inc. (NYSE:MDT), a Minnesota judge ruled.
Joseph McCullough must stop working for Medtronic until Nov. 1, Judge M. Michael Monahan of the Ramsey County, Minn., district court decided, ruling that McCullough’s non-compete began when he was forced out at St. Jude late last year.
St. Jude had accused McCullough of violating their agreement and sharing confidential information with Medtronic in a complaint filed July 26. McCullough had “complete and unfettered” access to its “most sensitive and confidential” information concerning global operations, according to the lawsuit. He is alleged to have pilfered information regarding St. Jude’s pending entry into the minimally invasive heart valve market, including knowledge of each product’s profit margin.
The lawsuit alleged that McCullough, 60, left STJ voluntarily in May after a 16-year run to work at Fridley, Minn.-based Medtronic as its international general manager for its cardiovascular division. St. Jude alleged it would “suffer substantial damage and irreparable harm if such information were to be disclosed or fall into the hands” of a competitor and wanted McCullough on the sidelines until May of next year.
Medtronic confirmed that McCullough will sit out the next 11 weeks, according to the Wall Street Journal, while claiming that he was working in a "noncompetitive capacity." But Monahan ruled that the business competes directly with St. Jude, noting that McCullough was "second in importance and access" to St. Jude CEO Daniel Starks.
For its part, a St. Jude spokeswoman wrote in an email statement that "We are pleased that a temporary restraining order has been granted prohibiting further work by Mr. McCullough for a competitor. This order supports our claim that his employment with a competitor was a direct violation of the non-compete agreement he signed while at St. Jude Medical."
The company is still seeking to bar McCullough from releasing any confidential information and wants him to pony up any money derived from "misconduct and unfair competition" and damages. St. Jude had agreed to pay McCullough a reduced, $500,000-a-year salary as long as he remained an employee for the one-year non-compete period, but he voluntarily jumped ship in May before signing on with Medtronic last month.
Medtronic "invested substantial time to ensure that [McCullough], and Medtronic, complied with all of [their] respective obligations, incuding any legally enforceable obligations that [McCullough] had to [St. Jude}," according to court documents. Monahan agreed, writing that the detailed employment agreement exhibits "an attention to linguistic detail more commonly encountered in tax legislation or SEC filings rather than in employment contracts." But that amounts to "evidence that both defendant and Medtronic recognized that they were embarking upon a relationship that was laden with serious legal and ethical problems," the judge wrote.
At Medtronic, McCullough would report to Michael Coyle, another former St. Jude suit who was hired last year to run MDT’s cardiology division, according to the Journal.