St. Jude Medical S.C., Inc. v. Biosense Webster, Inc. et al

Filing 134

MEMORANDUM OPINION AND ORDER Overruling 89 Objection To Discovery Ruling filed by St. Jude Medical S.C., Inc., Affirming 87 Judge Boylan's June 18, 2013 Amended Order (Written Opinion). Signed by Judge Ann D. Montgomery on 07/29/2013. (TLU)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
St. Jude Medical, S.C., Inc.,
Plaintiff,
MEMORANDUM OPINION
AND ORDER
Civil No. 12-621 ADM/AJB

v.
Biosense Webster, Inc., Johnson & Johnson,
and Jose B. de Castro,

Defendants.
______________________________________________________________________________
Edward F. Fox, Esq., Carrie L. Hund, Esq., Mark R. Bradford, Esq., Jeffrey R. Mulder, Esq., and
Nicole A. Delaney, Esq., Bassford Remele, PA, Minneapolis, MN, on behalf of Plaintiff.
Joseph W. Anthony, Esq., Mary L. Knoblauch, Esq., Courtland C. Merrill, Esq., and Steven C.
Kerbaugh, Esq., Anthony Ostlund Baer & Louwagie, PA, Minneapolis, MN, on behalf of
Defendants.
______________________________________________________________________________
I. INTRODUCTION
This matter is before the undersigned United States District Judge for a ruling on Plaintiff
St. Jude Medical, S.C., Inc.’s (“St. Jude”) Objection [Docket No. 89] (“Objection”) to Magistrate
Judge Arthur J. Boylan’s June 17, 2013 Order [Docket No. 86].1 In the Discovery Order, Judge
Boylan granted in part and denied in part a motion to compel discovery brought by Defendants
Biosense Webster, Inc. (“Biosense”), its parent company Johnson & Johnson (“J&J”), and
Biosense employee Jose B. de Castro (“de Castro”). For the reasons set forth below, St. Jude’s
objection is overruled and Judge Boylan’s order is affirmed.

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Judge Boylan issued an Amended Order [Docket No. 87] on June 18, 2013, which
included the correction of a typographical error. Although St. Jude formally objected to Judge
Boylan’s original order, the Court shall construe the Objection as challenging the Amended
Order (referred to as “Discovery Order” hereafter).

II. BACKGROUND
St. Jude markets and sells lines of cardiac care medical devices, including devices
designed to diagnose and treat atrial fibrillation (“AF”), a type of cardiac arrhythmia. In support
of its efforts to sell AF devices, St. Jude trains and employs technical personnel it refers to as
Field Clinical Engineers (“FCEs”). Biosense, owned by J&J, directly competes with St. Jude in
the area of AF diagnosis systems. Am. Compl. [Docket No. 43] ¶¶ 10-13.
In 2006, de Castro began working for St. Jude as a senior FCE. At the start of his
employment, de Castro entered into a term-of-years agreement (the “Agreement”) lasting one
year. In the Agreement, de Castro agreed not to compete with St. Jude during his term of
employment, and further agreed not to share St. Jude’s confidential information. Id. ¶¶ 21-22,
Ex. A. De Castro further agreed that if he breached his Agreement, damages would be
insufficient, and that St. Jude could obtain injunctive relief against him. Id. ¶ 23, Ex. A. Over
the intervening years, St. Jude promoted de Castro to a sales representative position in the AF
field, and the two parties continued to extend de Castro’s Agreement. In January 2011, St. Jude
and de Castro agreed to extend the Agreement until January 4, 2014. Id. ¶¶ 17-18.
On March 6, 2012, de Castro notified St. Jude of his intent to resign from the company
and begin employment with Biosense. Id. ¶ 26. St. Jude filed this action on March 9, 2012,
alleging a breach of contract claim against de Castro and a tortious interference claim against
Biosense and J&J. On March 16, 2012, de Castro’s resignation took effect. Id.
On April 30, 2013, Defendants moved to compel the production of documents responsive
to several discovery requests, including the production of documents related to St. Jude’s
“business purposes” for the Agreement. Disc. Order 5. Judge Boylan granted Defendants’

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motion to compel in part, and ordered St. Jude to respond to Defendants’ request regarding the
Agreement’s business purposes. Id. at 8-9.
III. DISCUSSION
A. Standard of Review
A district court judge will not modify or set aside a magistrate judge’s ruling on a
nondispositive matter unless the ruling is clearly erroneous or contrary to law. D. Minn. LR
72.2(a); see also 28 U.S.C. § 636(b)(1)(A). A decision is “clearly erroneous” when, although
some evidence supports it, “the reviewing court on the entire evidence is left with the definite
and firm conviction that a mistake has been committed.” Chakales v. Comm’r of Internal
Revenue, 79 F.3d 726, 728 (8th Cir.1996) (citation omitted). “A decision is ‘contrary to law’
when it misapplies or does not apply the relevant statutes, case law or rules of procedure.”
Knutson v. Blue Cross & Blue Shield of Minn., 254 F.R.D. 553, 556 (D. Minn. 2008) (citation
omitted). Courts in this district have characterized this standard of review as “extremely
deferential.” Reko v. Creative Promotions, Inc., 70 F. Supp. 2d 1005, 1007 (D. Minn. 1999).
B. St. Jude’s Objection
St. Jude argues Judge Boylan improperly allowed Defendants’ to seek discovery
regarding the business purposes of de Castro’s Agreement. Because the Agreement is an
unambiguous contract, St. Jude argues, the parol evidence rule precludes Defendants from
introducing extrinsic evidence to challenge the contract’s purpose or validity. As a result,
Defendants should not be allowed to discover such extrinsic evidence because it will not lead to
the discovery of evidence admissible at trial. See Fed. R. Civ. P. 26(b).
St. Jude also argues the merits of the Agreement’s validity. St. Jude cites a Ramsey

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County District Court decision in which the court granted an order upholding the enforceability
of an identical term-of-years agreement in a challenge brought by Biosense and J&J in an action
with a different employee but the same corporate parties. See St. Jude Med. S.C., Inc. v.
Biosense Webster, Inc., File No. 62-cv-11-718 (Ramsey Dist. Ct. Jan. 31 2012) (the “Jackson”
case). This order, according to St. Jude, collaterally estops Defendants from challenging the
Agreement’s validity in this action. St. Jude also argues generally for the proposition that
Minnesota courts have upheld the validity of term-of-years agreements.
Defendants respond that St. Jude has prematurely entered into a debate on the merits and
the admissibility of evidence. With the discovery request at issue, Defendants argue, they seek
evidence which does not vary the terms of the Agreement, but rather challenges the
enforceability of the Agreement as an invalid restrictive covenant. To pose such an argument,
Defendants require factual evidence regarding St. Jude’s business interests and whether the
Agreement is necessary to protect those interests. Defendants also contend St. Jude’s arguments
on the merits of the Agreement, including the applicability of collateral estoppel, is premature;
the Court should resolve these arguments at the dispositive motion stage.
Judge Boylan allowed Defendants some discovery regarding the nature of the
Agreement. St. Jude’s argument regarding the enforceability of the Agreement, Judge Boylan
held, was a dispositive contract interpretation issue properly reserved for dispositive motion
practice. As a result, Judge Boylan acknowledged St. Jude’s challenge under the parol evidence
rule, but held he would not “foreclose all discovery related to Defendants’ attacks on the validity
and enforceability of the agreement simply because the defense has been challenged as
insufficient.” Disc. Order 4.

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Judge Boylan committed no clear error, as St. Jude’s arguments do indeed attempt to
prematurely resolve dispositive issues. Generally, parties may seek discovery so long as the
information sought is “relevant to any party’s claim or defense.” Fed. R. Civ. P. 26(b).
Defendants argue de Castro’s Agreement includes unenforceable restrictive covenants. As a
result, Defendants should have the ability, under Rule 26, to pursue discovery regarding the
business interests behind the Agreement, as such evidence is necessary for Defendants’ theory of
defense. See, e.g., Novus Franchising, Inc. v. AZ Glassworks, LLC, No. 12-1771, 2013 WL
1110838, at *8 (D. Minn. Mar. 18, 2013) (evaluating whether non-competition agreement
justifiably protected plaintiff’s “legitimate business interests”).
St. Jude’s arguments against such discovery implicitly require the resolution of
dispositive issues before any dispositive motions have been heard. St. Jude argues the parol
evidence rule precludes the discovery Defendants seek, and thus the requested discovery should
not be allowed. However, the application of the parol evidence rule is premised on the
assumption that the Agreement is unambiguous. See Reliable Metal, Inc. v. Shakopee Valley
Printing, Inc., 407 N.W.2d 684, 687 (Minn. Ct. App. 1987) (holding extrinsic evidence may only
be examined if contract is “first determined to be ambiguous on its face”) (citation omitted).
Simply because St. Jude asserts the Agreement is unambiguous does not make it so. The Court
declines to make a nuanced contract interpretation decision at this stage of the litigation.2 As a

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The only decisions the Court has located in which the parol evidence rule has been
used to bar discovery are in the context of a Rule 56(d) request for additional discovery in lieu of
summary judgment. In those instances, the court concluded the contract was unambiguous as
part of its dispositive ruling, and thus found additional discovery unwarranted. See, e.g., United
States v. Light, 766 F.2d 394, 397-98 (8th Cir. 1985); Farnam Street Fin., Inc. v. Balaton Grp.,
Inc., No. 10-4277, 2011 WL 1258512, at *3 (D. Minn. Mar. 30, 2011).
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result, it would be premature to apply the parol evidence rule and exclude an entire category of
evidence.
Even if the parol evidence rule were to apply in this case, the rule would not necessarily
preclude the evidence Defendants request. By their own admission, Defendants do not seek to
vary the terms of the Agreement. Instead, Defendants request information related to the
“business purposes” of St. Jude’s term-of-years agreements, seeking to challenge the Agreement
as including unenforceable restrictive covenants. In evaluating the validity of a restrictive
covenant, Minnesota courts have long considered whether an employer’s “legitimate business
interests” justify such a restriction. Where an otherwise unambiguous employment contract has
included a restrictive covenant, courts have routinely considered factual evidence regarding the
employer’s justifications. See, e.g., Prow v. Medtronic, Inc., 770 F.2d 117, 120-21 (8th Cir.
1985).
St. Jude attempts to pre-empt this conclusion by arguing Minnesota courts have generally
found term-of-year contracts valid and enforceable. St. Jude believes Defendants have made a
losing argument, and thus should not be entitled to pursue discovery. Again, while Minnesota
law may indeed find term-of-years contracts generally enforceable, St. Jude’s argument
necessarily requires a ruling regarding the overall enforceability of de Castro’s Agreement. Rule
26(b) does not limit discovery to information “relevant to any party’s undisputedly viable claim
or defense.” Certainly, courts and litigants should exercise care in proportionately tailoring the
scope of discovery to the lawsuit at hand. However, parties are generally entitled to pursue
discovery relevant to their stated claims or defenses, even if their opponent has a dim view of
those positions. See Chubb Integrated Sys. Ltd. v. Nat’l Bank of Wash., 103 F.R.D. 52, 59

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(D.D.C. 1984) (“In ruling on questions of discovery, typically, courts do not determine the legal
sufficiency of claims and defenses.”) (citations omitted). To hold otherwise would allow St.
Jude to prematurely resolve a dispositive issue at the discovery stage.
Finally, St. Jude argues Defendants are collaterally estopped from challenging the
enforceability of de Castro’s Agreement due to the Ramsey County District Court’s decision in
Jackson. Defendants respond that collateral estoppel does not apply here, as the facts in and
posture of this case differ from those in Jackson. As with the other dispositive issues above,
collateral estoppel is an argument appropriately decided on the merits in the context of a
dispositive motion.
IV. CONCLUSION
Based on the foregoing, and all the files, records and proceedings herein, IT IS
HEREBY ORDERED that:
1.

Plaintiff’s Objection [Docket No. 89] is OVERRULED; and

2.

Judge Boylan’s June 18, 2013 Amended Order [Docket No. 87] is AFFIRMED.

BY THE COURT:

s/Ann D. Montgomery
ANN D. MONTGOMERY
U.S. DISTRICT JUDGE
Dated: July 29, 2013.

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