St. Jude Medical (NYSE:STJ) hung on to a win over Johnson & Johnson (NYSE:JNJ) subsidiary Biosense Webster after a federal appeals court found that Biosense and the rep, Jose de Castro, breached the terms of his contract with St. Jude.
Originally a field technician for St. Jude, de Castro was promoted in 2009 to sales rep, signing a 3-year contract in 2011, according to court documents. Later that year, Biosense began courting de Castro, hoping his defection would also bring Sequoia Hospital’s business. Biosense offered to cover de Castro for any repercussions from breaking his deal with St. Jude; a day after he signed on with that company in February 2012, Biosense filed for declaratory judgment to invalidate the St. Jude contract, according to the documents.
But St. Jude won summary judgment from Judge Ann Montgomery of the U.S. District Court for Minnesota on all but the damages portion of the case; a jury later awarded St. Jude damages for the cost of replacing de Castro and for lost profits; including pre-judgment interest and legal fees, Biosense was on the hook for about $1.6 million, court records show.
Biosense and de Castro appealed to the U.S. Court of appeals for the 8th Circuit; a 3-judge panel on April 12 found unanimously for St. Jude.
“In sum, the district court correctly concluded that St. Jude’s term-of-years employment agreement with de Castro is valid and enforceable under Minnesota law and that Biosense was liable for tortuously interfering with that agreement,” the panel found.
It’s not the 1st time Biosense Webster and St. Jude have tangled in a poaching case. The accusations went the other way in a case in Florida involving 3 Biosense reps who allegedly jumped ship for St. Jude; in August 2014 a California federal judge tossed a suit filed against Biosense Webster by St. Jude and a former Biosense rep that sought to block that firm from enforcing a non-compete agreement.