St. Jude Medical S.C., Inc. v. Biosense Webster, Inc. et al
MEMORANDUM OPINION AND ORDER denying 5 Motion for Injunctive Relief to Enjoin Preemptive Action; granting 5 Motion to Expedite Hearing (Written Opinion). Signed by Judge Ann D. Montgomery on 05/04/2012. (TLU)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
St. Jude Medical, S.C., Inc., a Minnesota
Civil No. 12-621 ADM/AJB
Biosense Webster, Inc., a California
corporation; Johnson & Johnson,
a New Jersey corporation; and Jose B.
de Castro, an individual,
Edward F. Fox, Esq., Nicole A. Delaney, Esq., Kevin P. Hickey, Esq., and Mark R. Bradford,
Esq., Bassford Remele, PA, Minneapolis, MN, on behalf of Plaintiff.
Mark A. Neubaer, Esq., Steptoe & Johnson LLP, Los Angeles, CA, and Mary L. Knoblauch,
Esq., Courtland C. Merrill, Esq., and Steven C. Kerbaugh, Esq., Anthony Ostlund Baer &
Louwagie PA, Minneapolis, MN, on behalf of Defendants.
On April 26, 2012, the undersigned United States District Judge heard oral argument on
Plaintiff’s Motion for Injunctive Relief to Enjoin Preemptive Action and For Expedited Hearing
[Docket No. 5] (“PI Motion”).1 For the reasons set forth below, Plaintiff’s PI Motion is denied.
St. Jude Medical, S.C., Inc. (“St. Jude”) and Biosense Webster, Inc. (“Biosense”) are
direct competitors in the medical-device industry. Compl. [Docket No. 1] ¶ 13. St. Jude is a
Minnesota corporation with its principal place of business in Austin, Texas, and it is a wholly-
Prior to the hearing on this PI Motion, the Court agreed to hear the motion on an
“expedited basis” on April 26, 2012. There were no objections. Accordingly, only the
injunctive relief remains.
owned subsidiary of St. Jude Medical, Inc., a Minnesota corporation with its principal place of
business in St. Paul, Minnesota. Id. ¶ 2. Biosense, a California corporation, is a subsidiary of
Johnson & Johnson (“J&J”), a New Jersey corporation. Id. ¶¶ 3–4. Jose de Castro is a resident
and citizen of California. Id. ¶ 5.
In 2006, Jose de Castro began working for St. Jude in California as a Senior Field
Clinical Engineer under a Term-of-Years (“TOY”) Agreement. Id. ¶ 17. On January 5, 2009, he
was promoted to a Direct Sales Representative position and he entered into another TOY
Agreement (the “Employment Agreement”) for a specified two-year term. Id. After
negotiations, Jose de Castro’s TOY Agreement was extended an additional three years pursuant
to a written amendment on January 3, 2011. Id. ¶ 18. This Employment Agreement does not
expire until January 4, 2014, unless and until terminated earlier as a result of: (1) cause; (2)
disability; or (3) death. Id.; see also Compl. Ex. A (“Emp’t Agreement”) § 5.
The Employment Agreement specifies it “will be governed by the laws of the state of
Minnesota without giving effect to the principles of conflict of laws of any jurisdiction.” Emp’t
Agreement § 10(G). Additionally, in a section entitled “Exclusive Jurisdiction,” the
Employment Agreement states:
All actions or proceeding[s] relating to this Agreement will be tried and litigated
only in the Minnesota State or Federal Courts located in Ramsey County,
Minnesota. Employee submits to the exclusive jurisdiction of these courts for the
purpose of any such action or proceeding, and this submission can not be revoked.
Employee understands that Employee is surrendering the right to bring litigation
against [St. Jude] outside the state of Minnesota.
Id. § 10(H).
On March 6, 2012, Jose de Castro emailed St. Jude his resignation. Compl. ¶ 26; Compl.
Ex. B. St. Jude emailed him that same day, refusing to accept his resignation and stating that it
expected him to honor his Employment Agreement through January 4, 2014. Id. Also on March
6, 2012, Jose de Castro and Biosense filed a complaint for declaratory relief in California state
court. Compl. Ex. C (“Cal. State Compl.”). The California state action was later removed to a
federal court in the Central District of California. St. Jude filed its Complaint with this Court on
March 9, 2012. See Compl.
Standard of Review
Ordinarily, motions for preliminary injunction in Minnesota are considered according to
the following factors: (1) the threat of irreparable harm to the movant; (2) the state of the balance
between this harm and the injury that granting the injunction will inflict on other parties litigant;
(3) the probability that movant will succeed on the merits; and (4) the public interest. Dataphase
Sys. Inc. v. CL Sys., Inc., 640 F.2d 109, 113 (8th Cir. 1981). However, “orders enjoining a party
from proceeding with a duplicative, second-filed lawsuit in another forum, are not subject to the
Dataphase standards for injunctive relief.” Nw. Airlines, Inc. v. Am. Airlines, Inc., 989 F.2d
1002, 1004 (8th Cir. 1993). Although the airlines case specifically considered enjoining a
second-filed lawsuit in a sister court of equal jurisdiction, the reasoning would apply to a
preemptive first-filed case which was duplicative or to a case where the first-filed rule does not
apply. See id. (“[T]he Dataphase factors are inapposite, since the question . . . is simply
whether, as between two courts both having jurisdiction over the parties and the subject matter of
the dispute, the court in which jurisdiction first attached should proceed to adjudicate the
controversy and should restrain the parties from proceeding with the later-filed action.”).
Instead, motions to enjoin a duplicative lawsuit filed in a court of equal and concurrent
jurisdiction are assessed under the standards set forth in U.S. Fire Ins. Co. v. Goodyear Tire &
Rubber Co., 920 F.2d 487, 488–89 (8th Cir. 1990). Under Goodyear analysis, the wellestablished first-filed rule generally grants the first court in which jurisdiction attached the
priority to hear the case and enjoin the second-filed proceeding. Id. (citing Orthmann v. Apple
River Campground, Inc., 765 F.2d 119, 121 (8th Cir. 1985)). The first-filed rule is not “intended
to be rigid, mechanical, or inflexible” however, but to serve the interests of justice it is applied in
the absence of compelling circumstances. Id. Red flags of compelling circumstances suggest
that the first-filed rule should not be applied. Nw. Airlines, 989 F.2d at 1007. One red flag
occurs when the first-filer was on notice that the second-filer was considering filing suit
imminently. Id. Another red flag is when the first-filed action is a declaratory judgment action
indicative of a preemptive strike against the true plaintiff-in-fact. Id. A letter threatening
imminent lawsuit gives clear notice and would qualify as a compelling circumstance. Id. A
significant delay in the filing of the second-filed motion, however, indicates that the first-filer
was not on notice of an “imminent” lawsuit, and therefore falls short of “compelling
circumstances.” ABC Teacher’s Outlet, Inc. v. School Specialty, Inc., Civ. No. 07-159, 2007
WL 2122660, at *3 (D. Minn. July 17, 2007). Additionally, a declaratory judgment action filed
by a plaintiff who suffered actual harm, rather than merely prospective injury, also does not rise
to the level of “compelling circumstances” sufficient to disregard the first-filed rule. Id.
Defendants argue that the first-filed rule applies and therefore California has priority, that
preliminary injunctive relief is inappropriate here, and that the forum selection clause is
unenforceable. Plaintiff avers that the first-filed rule is inapplicable and Minnesota has
jurisdiction, that injunctive relief is necessary here, and that the forum selection clause is prima
facie valid and enforceable.
1. Forum Selection Clause is Enforceable
“Forum selection clauses are prima facie valid and are enforced unless they are unjust or
unreasonable or invalid for reasons such as fraud or overreaching.” M.B. Rests., Inc. v. CKE
Rests., Inc., 183 F.3d 750, 752 (8th Cir. 1999) (citing M/S Bremen v. Zapata Off-Shore Co., 407
U.S. 1, 15 (1972)). “Minnesota courts routinely enforce such clauses and  there is no public
policy in Minnesota that contravenes the enforcement of such a clause.” Airtel Wireless, LLC v.
Mont. Elec. Co., Inc., 393 F. Supp. 2d 777, 785 (D. Minn. 2005). When parties agree to litigate
contract disputes in a certain forum, courts generally enforce that agreement unless it is unfair or
unreasonable. Hauenstein & Bermeister, Inc. v. Met-Fab Indus., Inc., 320 N.W.2d 886, 889–90
(Minn. 1982). A forum selection clause is unjust or unreasonable if: (1) the clause is the product
of fraud or overreaching; (2) the party would effectively be deprived of his day in court if the
clause is enforced; and (3) enforcing the clause would contravene the public policy of the forum
in which suit is brought. Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 593–95 (1991);
Servewell Plumbing, LLC v. Fed. Ins. Co., 439 F.3d 786, 789–90 (8th Cir. 2006).
Defendants’ arguments that the forum selection clause is overreaching are rejected.
Although Defendants contend that the clause is part of a contract of adhesion, the clause here is
not the product of unequal bargaining power. Hauenstein, 320 N.W.2d at 891. Although the
parties dispute whether the forum selection clause was presented on a take-it-or-leave-it basis,
Jose de Castro and St. Jude were not of highly unequal bargaining strength. The inclusion of
boilerplate language is only one factor suggesting an adhesion contract. Id. Other factors
include the parties’ relative sophistication, opportunity for negotiation, and bargaining-power
disparity. Alpha Sys. Integration, Inc. v. Silicon Graphics, Inc., 646 N.W.2d 904, 909–10 (Minn.
Ct. App. 2002) (citation omitted). Agreements between parties with business experience are not
products of unequal bargaining power. Id. (citation omitted). Courts will not invalidate forum
selection clauses merely because one party is less sophisticated than the other — if that were the
law, any person who signed a standard form contract with a large corporation could later
invalidate all or part of that agreement by claiming unequal bargaining power. Sander v.
Alexander Richardson Inv., 334 F.3d 712, 720 (8th Cir. 2003) (citation omitted).
Jose de Castro is a highly educated, highly paid professional who repeatedly renegotiated
and extended his employment agreements with St. Jude. The exclusive jurisdiction provision at
issue here — “All actions or proceeding relating to this Agreement will be tried and litigated
only in the Minnesota State or Federal Courts” –- is clearly not written in technical legal
language and is an obvious, distinct paragraph in the seven-page agreement. Although St. Jude
is a major corporation and Jose de Castro is an individual, the disparity of their bargaining power
was not so great as to amount to overreaching. Compare ELA Medical, Inc. v. Arrhythmia
Mgmt. Assocs., Inc., Civ. No. 06-3580, 2007 WL 892517, at *5 n. 9 (D. Minn. Mar. 21, 2007)
(enforcing a clearly labeled forum selection clause against a sophisticated sales representative
even though the agreement terms may not have been actually negotiated) with Nelson v. Master
Lease Corp., 759 F. Supp. 1397, 1402 (D. Minn. 1991) (invalidating a forum selection clause
where the sole Minnesota sales representative did not notice a Pennsylvania forum selection
clause contained in a document entitled “NON DISCLOSURE AGREEMENT AND
COVENANT NOT TO COMPETE”). Moreover, Jose de Castro’s longstanding employment
with St. Jude suggests that he had ample opportunity to negotiate his contract. Accordingly, the
forum selection clause here is not overreaching and is enforceable.
Despite Defendants’ contentions, the forum selection clause is valid and enforceable.
Although Defendants cite numerous California authorities, the question is whether enforcing the
clause contravenes the public policy of the forum in which suit is brought — in this case,
Minnesota. Notwithstanding another jurisdiction’s public policy interests, “there is no public
policy in Minnesota that contravenes the enforcement of such a clause.” Airtel Wireless, LLC,
393 F. Supp. 2d at 785. The California cases and statutes that Defendants cite to support their
argument are authority only for the proposition that California generally disfavors restraints of
competition and employee mobility. See, e.g., Latona v. Aetna U.S. Healthcare, Inc., 82 F.
Supp. 2d 1089, 1093 (C.D. Cal. 1999); Cal. Bus. & Prof. Code § 16600.2 As these arguments do
not apply to the forum selection clause analysis here in Minnesota, they are inapposite. Because
However, there is also California law suggesting the forum selection clause may be
found enforceable and not contrary to California public policy. The argument “that enforcing the
forum selection clause would violate California’s strong public policy against non-competition
clauses” has been rejected by federal courts in California. Mahoney v. Depuy Orthopaedics,
Inc., No. Civ. F. 07-1321, 2007 WL 3341389, at *8 (E.D. Cal. Nov. 8, 2007); see also, Swenson
v. T-Mobile USA, Inc., 415 F. Supp. 2d 1101, 1104–05 (S.D. Cal. Jan. 26, 2006); Multimin
USA, Inc. v. Walco Internation, Inc., No. CV F 06-0226, 2006 WL 1046964, at *7 (E.D. Cal.
Apr. 11, 2006).
Minnesota public policy favors the enforcement of forum selection clauses, the clause is
enforceable under this analysis.
Furthermore, the forum selection clause in the Employment Agreement does not deny
Jose de Castro his day in court. The location and convenience of witnesses is not generally
considered a serious convenience. Hauenstein, 320 N.W.2d at 890. The inconvenience of the
forum will not normally be a factor because “the presumption is that consideration was received
at the time of contracting for the alleged inconvenience.” Id. Since the inconvenience factor is
connected to whether the agreement was equally bargained, see id., and since no fraud or
overreaching has been found here, the forum selection clause is not significantly inconvenient
and does not deny Jose de Castro his day in court.
2. Biosense is Bound by the Forum Selection Clause under the Closely-RelatedParty Doctrine
Defendants’ argument that Biosense is not bound by Jose de Castro’s forum selection
clause because it was not a signatory to the agreement is unavailing. Although contracts
generally bind only signatories, a third party may be bound by a forum selection clause to which
it is not a signatory if it is “‘closely related’ to the dispute such that it becomes ‘foreseeable’ that
it will be bound.” Medtronic, Inc. v. Endologix, Inc., 530 F. Supp. 2d 1054, 1056 (D. Minn.
2008) (quoting Marano Enters. of Kan. v. Z-Teca Rests., L.P., 254 F.3d 753, 757 (8th Cir.
2001)); see ELA Medical, Inc., 2007 WL 892517, at * 6 (applying the closely-related-party
doctrine to bind the non-signatory new employer to a forum selection clause in case involving
tortious contractual interference). When third parties join with one contracting party to bring
suit against another contracting party, they are “arguably acquiescing in the forum-selection
clauses within those agreements.” Marano Enters. of Kan., 254 F.3d at 757–58.
voluntary plaintiff, [they] will not now be heard to object to jurisdiction limited to the venue to
which [their] co-plaintiffs agreed.” Id. at 758.
Here, the closely-related-party doctrine applies to Biosense’s posture in this litigation.
Biosense was a willing party to the first-filed California state action. Further, it was precisely
the acts of this closely related party — namely, Biosense’s employment of Jose de Castro —
which precipitated St. Jude’s Complaint alleging breach of contract and tortious contractual
interference. Biosense is so closely related to the dispute that it was foreseeable it would be
bound by the Employment Agreement’s forum selection clause. Under the closely-related-party
doctrine, therefore, Biosense is bound by the forum selection clause.
3. The First-Filed Rule is Inapplicable
Defendants argue that the first-filed rule should apply here and that, therefore, the court
in the California action should determine whether the case should be resolved in California or
Minnesota. St. Jude contends that the first-filed rule is inapposite here because red flags suggest
compelling circumstances to abandon the first-filed rule. Both red flags are present here —
Defendants were on constructive notice that St. Jude would file an action soon after learning of
Jose de Castro’s resignation, and they are not a “true” plaintiff in the California action, seeking
declaratory judgment rather than damages. As a result, the first-filed rule does not apply.
Notice of an imminent lawsuit is a red flag indicating that the first-file rule should be
disregarded. Nw. Airlines, 989 F.2d at 1007. Biosense and St. Jude are direct competitors in the
medical device industry, and they have recently litigated breach of contract and tortious
interference claims arising out of TOY Agreements. See, e.g., Compl. Ex. D (St. Jude Medical
S.C., Inc. v. Biosense Webster, Inc., 62-cv-11-718 (MN State Dist. Court Jan. 31, 2012)) (the
“Jackson” case); Defs.’ Request for Judicial Notice [Docket No. 15] Ex. M (Dowell v. Biosense
Webster, Inc., Case No. BC337177 (Cal. Super. Ct. July 6, 2005)). The Jackson case concerns
the same companies and the same issues — a former St. Jude sales representative, employed
under a TOY Agreement, resigned her employment and began working with Biosense. Given
the previous litigation history between St. Jude and Biosense regarding the same issue, Biosense
was on constructive notice that St. Jude would file an imminent action after Jose de Castro
resigned and began his employment with Biosense. This constructive notice is further evidenced
by the filing of Biosense’s seven-page California Complaint the very same day Jose de Castro
resigned. The simultaneity of Jose de Castro’s resignation and the California Complaint filing is
strong evidence that Biosense was attempting to preempt St. Jude’s imminent lawsuit. Indeed,
St. Jude’s lawsuit was imminent, filed a mere three days after Jose de Castro’s resignation. See
The second red flag mentioned in Nw. Airlines is also waved here. On March 6, 2012,
the same day Jose de Castro emailed his resignation to St. Jude, Defendants filed a declaratory
judgment action against St. Jude, seeking among other relief a “declaration of the parties’ rights
and obligations relating to de Castro.” See Cal. State Compl. At that point, Defendants had not
yet been harmed at all. Like the plaintiffs in ABC Teacher’s Outlet, Inc., and unlike the plaintiff
in Nw. Airlines, Defendants’ California Complaint did not allege that they had suffered harm but
rather that they would suffer future harm. Compare ABC Teacher’s Outlet, Inc., 2007 WL
2122660, at *3 with Nw. Airlines, 989 F.2d at 1007. Because this declaratory judgment action
was filed to preempt the plaintiff-in-fact — the party who had suffered actual harm — this red
flag also militates toward a departure from the first-filed rule. Due to these compelling
circumstances, the first-filed rule does not apply to this action and Minnesota, not California, is
the proper venue for this case.
4. Injunctive Relief is Inappropriate
Notwithstanding the Court’s determination that jurisdiction is appropriate in Minnesota,
Plaintiff’s request that this Court enjoin Defendants’ California suit is not a proper remedy here.
While “second-filed courts have declined to apply the first-filed rule rigidly and have maintained
jurisdiction over the later-filed actions,” “the procedural posture presented by Plaintiff’s Motion
is unusual in that it asks this Court to enjoin litigation proceeding in another jurisdiction.” Fed.
Cartridge Co. v. Remington Arms Co., Inc., No. Civ. 03-6105, 2003 WL 23101805, at *3 (D.
Minn. Dec. 31, 2003). Neither party cites to a case where a second-filed federal court has
enjoined proceedings in a first-filed federal court. Plaintiffs cite as support Dominium Austin
Partners, L.L.C. v. Emerson, 248 F.3d 720 (8th Cir. 2001), where the Eighth Circuit affirmed a
federal district court’s determination to enjoin a California state proceeding involving identical
parties and issues. Id. at 723, 727. That case, however, involved a federal court enjoining a
state court proceeding so that the federal court proceeding and arbitration could continue.
Plaintiffs also cite Airtel Wireless, LLC as support, but it too fails to buttress the concept that a
second-filed federal court can enjoin a first-filed sister court proceeding. In Airtel Wireless,
LLC, the first-filed Montana federal action had already been transferred to Minnesota, and the
Minnesota district court merely stayed its own litigation pending resolution of an arbitration
proceeding. Id. at 788.
Plaintiff also cites Medtronic, Inc. v. Advanced Bionics Corp., 630 N.W.2d 438 (Minn.
Ct. App. 2001). In that case, the Minnesota Court of Appeals affirmed a state district court’s
injunction of a preemptive declaratory judgment action filed in a California state court. Id. at
445. The court reasoned that when a party acts “in a calculated and systematic manner . . . to
deprive the [Minnesota] court of its jurisdiction, issuing an injunction to stop the action in
another jurisdiction is appropriate.” Id. at 449–50 (internal quotation omitted). The Minnesota
Court of Appeals also determined that “when an anticipatory declaratory judgment action is
brought for the purpose of denying the natural plaintiff of its choice of forum, the court need not
and should not blindly defer to the other jurisdiction by applying the first-filed principle.” Id. at
449. Although persuasive where, as here, Defendants appear to have strategically attempted to
maneuver out of a forum selection clause, this case involves a state court enjoining a state court
and therefore is not binding here.
Between federal sister courts, however, numerous cases have held that the “compelling
circumstances” determination is appropriately made by the first-filed court. See AnheuserBusch, Inc. v. Supreme Int’l Corp., 167 F.3d 417, 419 n.3 (8th Cir. 1999); Nw. Airlines, 989
F.2d at 1004; Fed. Cartridge Co., 2003 WL 23101805, at *3. This Court will not enjoin the
California proceeding in its sister court so that the federal court in California can make the
“compelling circumstances” determination. Even though the Minnesota and California lawsuits
will run parallel for a brief time, any discovery conducted will be applicable in both cases.
Moreover, dispositive motions have been filed in both cases for June 2012, so the duplicative
nature of the two lawsuits will be short-lived. Accordingly, preliminary injunction is an
inappropriate remedy and is denied.
Based upon all the files, records, and proceedings herein, IT IS HEREBY ORDERED
that Plaintiff’s Motion for Injunctive Relief to Enjoin Preemptive Action and For Expedited
Hearing [Docket No. 5] is DENIED as to injunctive relief and GRANTED as to the expedited
BY THE COURT:
s/Ann D. Montgomery
ANN D. MONTGOMERY
U.S. DISTRICT JUDGE
Dated: May 4, 2012.
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