Covidien LP et al v. Esch

Filing 60

Judge Nathaniel M. Gorton: ENDORSED ORDER entered. MEMORANDUM AND ORDER For the foregoing reasons, defendants motion to dismiss, or, alternatively, to transfer venue (Docket No. 41), is DENIED without prejudice.The Court directs the parties to submit supplemental memoranda, not to exceed ten (10) pages, on or before Thursday, September 28, 2017, as to the effect of the Delaware state litigation, if any, on this case. So ordered.(Caruso, Stephanie)

United States District Court
District of Massachusetts
)
Covidien LP and Covidien Holding )
)
Inc.
)
)
Plaintiffs,
)
)
v.
)
)
Brady Esch
)
)
Defendant.
)

Civil Action No.
16-12410-NMG

MEMORANDUM & ORDER
GORTON, J.
This dispute arises out of alleged breaches of an
employment agreement and a separation agreement between Covidien
LP and Covidien Holding Inc. (“plaintiffs” or “Covidien”) and
Brady Esch (“defendant”), Covidien’s former employee.
Plaintiffs allege that defendant breached those agreements by
1) assigning rights to three patents to his new company rather
than to Covidien and 2) disclosing plaintiffs’ confidential
information in the patent applications.
Pending before this Court is defendant’s motion to dismiss,
or, alternatively, to transfer venue.

For the following

reasons, that motion will be denied without prejudice.
I.

Background
Covidien is a global healthcare company and a manufacturer

of medical devices and supplies.

At issue in this case are

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Covidien’s Endovenous products which are used to treat varicose
veins.
A.

The NNC Agreement

Brady Esch began working for Covidien in 2009 when Covidien
acquired VNUS Technologies, Esch’s employer at the time.

In or

about December, 2009, Esch entered into a “Non-Competition, NonSolicitation, and Confidentiality Agreement” (“NNC Agreement”)
with Covidien.
Relevant to the pending motion, the NNC Agreement provides
that Esch
[i]rrevocably consent[s] to personal jurisdiction in
the state courts of Massachusetts and the U.S.
District Court for the District of Massachusetts for
any action arising out of this Agreement, regardless
of where you reside or perform duties.
The NNC Agreement further states that Massachusetts law will
apply.
B.

The Separation Agreement

In or about November, 2013, Esch was terminated from
Covidien.

At that time, he was the Director of Global Marketing

for the VNUS business.

As part of his termination, Esch signed

a “Separation of Employment Agreement and General Release”
(“Separation Agreement”).
The Separation Agreement provides in pertinent part, that
Esch

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waives any objection which [he] may have to the laying
of venue of any . . . suit, action or proceeding in
any . . . court [located in the Commonwealth of
Massachusetts].
The Separation Agreement, like the NNC Agreement, states
that Massachusetts law governs.
C.

Esch’s Patent Applications

Soon after Esch was terminated from Covidien, he
incorporated his own company under the name Venclose, Inc.
(“Venclose”).

Between March, 2014, and March, 2015, Esch filed

two provisional patent applications (Nos. 61/970,498 and
14/670,339) with the United States Patent and Trademark Office
(“USPTO”), purportedly assigning all of his rights to the
applications to Venclose.
Also in or about March, 2015, Esch filed a Patent
Cooperation Treaty application, PCT/US2015/022849 with the USPTO
as a receiving office for the World Intellectual Property
Organization.

Venclose was listed as the applicant.

All three patent applications are directed toward a threewire catheter system.
C.

Procedural History

In November, 2016, Covidien filed a five-count complaint in
this Court for 1) a declaratory judgment that Esch assigned his
rights to the patents-in-suit to Covidien (Count I), 2) breach

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of contract (Counts II, IV and V) and 3) breach of the implied
covenant of good faith and fair dealing (Count III).
In December, 2016, shortly after United States District
Judge George A. O’Toole, Jr. recused himself from the case,
Covidien filed a motion for a preliminary injunction.

This

session of this Court held a hearing on the motion on January 6,
2017, after which it allowed the motion and entered a
preliminary injunction against Esch.
Approximately two weeks later, defendant filed a motion to
dismiss the claims against him for lack of personal jurisdiction
and for failure to join a required party, or, in the
alternative, to transfer venue.

Defendant’s motion is the

subject of this memorandum.
II.

Defendant’s Motion to Dismiss or, Alternatively, to
Transfer Venue
A.

Lack of Personal Jurisdiction

Defendant first contends that the case should be dismissed
for lack of personal jurisdiction by repeating the same
arguments that this Court previously rejected in its Memorandum
and Order dated January 11, 2017 (Docket No. 38).
Although the Court concluded that it had personal
jurisdiction over defendant only for the purpose of determining
whether it could enter an injunction, see Covidien LP v. Esch,
229 F. Supp. 3d 94, 97-98 (D. Mass. 2017), defendant has made no

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attempt to explain why the Court should come to a different
conclusion now.

Thus, for the reasons stated in its

aforementioned Memorandum and Order, the Court affirms that it
has personal jurisdiction over defendant.
B.

Failure to Join a Required Party

Defendant also maintains that the case should be dismissed
because plaintiffs did not join Venclose, which defendant claims
is a required party.
First the Court must determine whether Venclose is a
“required” party as defined in Fed. R. Civ. P. 19(a).

Defendant

apparently skips this step in his analysis and concludes,
without support, that Venclose is required to be a party.

Here,

too, that conclusory argument is underwhelming.
Four of plaintiffs’ five claims against defendant (three
claims for breach of contract and one claim for breach of duty
of good faith and fair dealing) have no bearing on Venclose
whatsoever.
Moreover, plaintiffs’ claim for a declaratory judgment that
defendant assigned his rights in the subject patents to it can
also be resolved without Venclose because it concerns the NNC
agreement between the two original parties.

Although Venclose

might be affected by the outcome of this case, it does not
follow that it is a “required” party. See Bacardi Int’l Ltd.,
719 F.3d at 10 (“[E]xisting parties can resolve their dispute

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and obtain complete relief as to each other without [the] absent
party’s presence [even if] a dispute with [the] absent party may
be left unresolved.” (citing MasterCard Int’l Inc. v. Visa Int’l
Serv. Ass’n, Inc., 471 F.3d 377, 385 (2d Cir. 2006))).
Accordingly, the Court concludes that Venclose is not a
required party and, therefore, dismissal of plaintiff’s claims
is unwarranted on that ground.
C.

Transfer Venue

Finally, defendant moves, in the alternative, to transfer
venue to the United States District Court for the Northern
District of California.

That request will be denied.

When there are valid and binding forum selection clauses,
as there are in this case, the clauses are “given controlling
weight in all but the most exceptional cases”. Atl. Marine
Constr. Co., v. U.S. Dist. Ct. for the W. Dist. of Tex., 134 S.
Ct. 568, 579 (2013) (quoting Stewart Org., Inc. v. Ricoh Corp.,
487 U.S. 22, 33 (1988) (Kennedy, J., concurring)).
Here, defendant contends that other factors, including
convenience and location of witnesses, warrant transfer of this
case regardless of the forum selection clauses he agreed to in
the NNC Agreement and the Separation Agreement.

Because

defendant twice agreed to litigate in this venue the Court
concludes, however, that the interests of justice are best

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served by holding the parties to their agreements. See id. at
583.
Defendant adds that the fact that Venclose filed suit
against Covidien in the Northern District of California supports
transfer.
V.

That case has, however, since been dismissed.

Litigation in Delaware State Court
The Court has been informed that Covidien has filed a

lawsuit against Venclose in Delaware state court.

In light of

that new case, the Court will deny defendant’s pending motion to
dismiss or transfer without prejudice and directs the parties to
file supplemental briefs as to the effect of that new case, if
any, on this litigation.

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ORDER
For the foregoing reasons, defendant’s motion to dismiss,
or, alternatively, to transfer venue (Docket No. 41), is DENIED
without prejudice.
The Court directs the parties to submit supplemental
memoranda, not to exceed ten (10) pages, on or before Thursday,
September 28, 2017, as to the effect of the Delaware state
litigation, if any, on this case.
So ordered.
/s/ Nathaniel M. Gorton
d
Nathaniel M. Gorton
United States District Judge
Dated September 7, 2017

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