Biotronik, Inc. et al v. St. Jude Medical S.C., Inc.

Filing 31

ORDER: Denying Plaintiff's Motion to Remand Case to State Court 4 ; Granting Defendant's Motion to Dismiss 8 . Signed on 8/5/2012 by Chief Judge Ann L. Aiken. (lg)

UNITED STATES DISTRICT COURT
DISTRICT OF OREGON

BIOTRONIK, INC., an Oregon
Corporation; and PAUL V.
WOODSTOCK,

Case No. 3:12-cv-445-AA
OPINION AND ORDER

Plaintiffs,

v.
ST. JUDE MEDICAL S.C., INC.,
a Minnesota corporation,
Defendant.

AIKEN, Chief Judge:
Plaintiffs filed suit in state court seeking a declaration
regarding

the

scope

of

plaintiff

Paul

Woodstock's

post-

termination obligations to defendant St. Jude Medical S.C.,
(St.

Jude), his former employer.

St.

federal court pursuant to 28 U.S.C.

Inc.

Jude removed the action to
§§

1332 and 1441,

alleging

jurisdiction based on diversity of citizenship and the amount in
controversy.

Plaintiffs

OPINION AND ORDER

now

move

for

remand

pursuant

to

28

U. S. c.

§

1447,

arguing that they seek only declaratory relief

and do not allege the threshold amount in controversy necessary
to establish diversity jurisdiction. St. Jude opposes the motion
for remand and moves to dismiss or to transfer the case to the
District of Minnesota on grounds of improper venue. The motion
to remand is denied and the motion to dismiss is granted.
BACKGROUND
Plaintiff

Biotronik,

Inc.

(Biontronik)

is

an

Oregon

corporation doing business in the State of Oregon, and Woodstock
is a resident of the State of New York. St. Jude is a Minnesota
corporation with its principal place of business in Texas.
Biotronik and
marketing

of

St.

cardiac

Jude

are

rhythm

competitors

management

in the

(CRM)

sale

devices.

and
CRM

devices use electrical pulses to treat improperly beating hearts
and

other

complaint,

cardiac

conditions.

According

to

Biotronik's

the market for CRM devices is very competitive and

the devices are technologically complex. As such, the people who
sell

and

manage

the

sale

of

these

devices

must

be

skilled

salespeople and managers with technical and clinical knowledge
of the devices. Accordingly, both Biotronik and St. Jude require
their

sales

agreements

representatives

and

that

post-termination

confidentiality,

include
and

Termination Obligations) .

2

OPINION AND ORDER

managers

non-solicitation

to

sign

employment

noncompetition,

obligations

(Post-

In 2007,

Biotronik and St.

Jude entered into a Settlement

Agreement that required the parties to provide forty-eight hours
wri tten notice of any intended lawsuit or claim "against each
other

or

their

representatives."
resol ve

the

respective
'II

CompI.

dispute

employees,
10.

wi thin

If

agents,

the

or

parties

forty-eight

independent

are

hours,

unable
"the

to

party

providing notice of the claim shall file the action necessary to
resolve the claim if so desired." Id.
Plaintiffs also allege that Biotronik and St.

Jude entered

into an "informal agreement" regarding noncompeti tion disputes.
Under this alleged agreement,
employee

called

upon

or

"only those

supported

four

[accounts]
or

more

which the

times

during

their last year of employment will be included as non-compete
accounts."

See

Compl.

Ex.

1

(email

communications

between

Biotronik and St. Jude representatives).
Woodstock was one of St.

Jude's highest-ranking executives

and one of four Division Vice Presidents. During his employment
with

St.

included

Jude,

Woodstock

Post-Termination

signed

an

Obligations

Employee
regarding

Agreement

solicitation.

Specifically, Woodstock's Employee Agreement provided:
7.1 For a period of one year (which I agree is a
reasonable period of time) after my employment
ends for any reason, I will not in any direct or
indirect way, for myself or on behalf or along
with any third party, do any of the following:

3

OPINION AND ORDER

that

7.1.1
Directly or indirectly compete with
you or your affiliates in the Territory;
7.1.2
Sell, demonstrate, promote solicit or
support the sale of, support or supervise
the implantation of or other use of, or
otherwise have any involvement with, the
sale,
delivery,
manufacture,
research,
development, design, marketing, monitoring,
tracking, or any other business aspect of
any Competitive Product in the Territory.
7.1.3
Sell, demonstrate, promote, solicit
or support the sale of, support or supervise
the
implantation
or
other
use
of,
or
otherwise have any involvement with, the
sale or use of any product"
which competes
with any product I sold, solicited the sale
of,
delivered,
manufactured,
researched,
developed, designed, marketed, monitored, or
tracked, during the term of my employment,
to or with any Customer upon whom I called
during the last year of my employment.
7.1.4.
Influence or attempt to Influence
any Customer, upon whom I called during the
last year of my employment, to direct their
business to any Competitor.
7.1.5.
Induce, attempt to induce, entice,
or hire, or attempt to hire or employ any of
your
or
your
Affiliates I
employees
or
representatives.
7.2. My promises in this Section 7 are of the
essence of this agreement,
and they will be
construed as independent of any other parts of
this agreement. Any claims or causes of action I
may have against you, even if they arise under
this agreement, will not be a defense to your
enforcement of this Section 7.
Fox

Decl.

Ex.

1

at

31-32.

~Territoryff

is

defined

as

~the

geographical area and accounts that I called upon, were assigned
to me,

4

worked in or with,

OPINION AND ORDER

or supported at any time during the

last twelve months of my employment H with St. Jude. Id. Ex. 1 at

30.
The

Employment

Agreement

contained

also

provisions

regarding choice of law, forum selection, and jurisdiction:
15.1 This Agreement will be interpreted under the
laws of the State of Minnesota without regard to the
principles of conflict of laws.
15.2 You and I agree that all actions or
proceedings relating to or arising from this Agreement
will be tried and litigated only in the Minnesota
State or Federal Courts located in Ramsey County,
Minnesota. I submit to the exclusive jurisdiction of
these courts for the purpose of any such action or
proceeding, and this submission cannot be revoked. I
understand that I
am surrendering and expressly
waiving the right to bring litigation against you
outside the State of Minnesota.
Fox Decl. Ex. 1 at 34.
On February 27, 2012, Woodstock left St. Jude and accepted
a position with Biotronik.

Shortly thereafter,

five additional

employees announced that they were resigning from St.
accepting
compensation

employment
contracts.

with

Biotronik

Subsequently,

Jude with a list of accounts

under

Biotronik

(the List)

Jude and

guaranteedprovided

St.

subject to Woodstock's

Post-Termination Obligations.
St. Jude disputes the accuracy of the List and asserts that
addi tional accounts are subj ect to Woodstock's Post-Termination
Obligations.

5

Specifically,

OPINION AND ORDER

St.

Jude

contends

that

Woodstock's

non-solicitation

restrictions

apply

in

four

states

not

identified in the List. 1
After the parties could not resolve their disagreement over
the List, plaintiffs filed suit in Circuit Court for Clackamas
County seeking a declaration that Woodstock's "Post-Termination
Obligations relating to noncompetition . . . are as described in
the List." CompI. at 4.
St.

Jude

removed

the

diversity jurisdiction.
lack

of

subject

case

to

federal

court

based

on

Plaintiffs move to remand the case for

matter

dismiss or transfer this

jurisdiction,

and

St.

Jude

moves

to

action to the District of Minnesota

pursuant to the forum selection clause in Woodstock's Employment
Agreement.'
DISCUSSION
A. Subject Matter Jurisdiction
A

party

asserting

complete diversity of

diversity

jurisdiction

citizenship between the

must

allege

parties and an

IThe parties initially disputed woodstock's ability to solicit in
six states. Plaintiffs have since conceded that two states are
within Woodstock's Post-Termination Obligations. See Def.'s
Reply at 11, n. 2.
20n March 27, 2012, St. Jude filed suit against Biotronik and
several former st. Jude employees, including Woodstock, alleging
violations of restrictive covenants contained in the relevant
Employment Agreements. On May 29, 2012, St. Jude amended the
complaint and added another former employee as a defendant. The
Minnesota state court recently denied Biotronik's motions to
stay and granted St. Jude's motions for temporary injunctive
relief. Notice of Filing in Related Case (doc. 29) Ex. A.
6

OPINION AND ORDER

amount in controversy of at least $75,000. 28 U.S.C. § 1332(a);
Caterpillar Inc.
requirements

v.

Lewis,

diversity

of

519 U.S.
to

61,

68

(1996)

establish

(discussing

subject

matter

jurisdiction). Here, the parties are of diverse citizenship, and
the only issue is the amount in controversy.
To warrant dismissal or remand, "'it must appear to a legal
certainty

that

the

claim

is

really

for

less

than

the

jurisdictional amount.'" Budget Rent-A-Car Inc. v. Higashiguchi,
109 F.3d 1471,

1473

(9th Cir.

Cab

this

'legal certainty'

1997)

(quoting St.

303 U.S.

Co.

standard,

283,

289

Paul Mercury

(1938)).

"Under

the federal court has subj ect

matter jurisdiction unless upon the face of the complaint, it is
obvious

that

the

suit

cannot

involve

the

necessary

amount."
2012 WL

3042993,

at

*1

(D.

Ariz.

July

25,

2012)

(internal

quotation

marks and citation omitted) .
On the

face

of plaintiffs'

damages or monies owed by St.
declaration

that

Woodstock's

complaint,

Jude.

Rather,

they do

solicit

plaintiffs

Post-Termination

accounts

accordance

with

within
the

Employment Agreement.

7

OPINION AND ORDER

seek a
the

claim

plaintiffs seek a
Obligations

reflected accurately in the List provided to St.
another way,

not

Jude.

are

Stated

declaration that Woodstock may

disputed

geographical

Post-Termination

regions

Obligations

of

in
his

~it

When declaratory relief is sought,

is well established

that the amount in controversy is measured by the value of the
obj ect

of

Comm'n,

the

litigation."

432 U.S.

333,

347

Hunt

(1977).

v.

Wash.

State

Apple

Adver.

st. Jude bears the burden of

establishing by a preponderance of the evidence that the value
in this case exceeds $75,000.
837, 839 (9th Cir. 2002)
jurisdiction,

(~To

Cohn v.

Inc.,

281 F. 3d

support removal based on diversity

[the defendant]

preponderance of the evidence,
exceeds $75,000.").

Petsmart,

has

the burden of proving,

that

the

amount

by a

in controversy

A court may consider supplemental evidence

provided by the removing defendant,

even if such evidence was

not included in the removal notice. Id. at 840.
Contrary

to

plaintiffs'

assertion,

the

object

of

the

litigation is not the accuracy of the List or the terms of the
Settlement Agreement between Biotronik and St. Jude. Rather, the
obj ect of the litigation is Woodstock's ability to solicit

st.

Jude accounts in the disputed geographical areas.

432

U.S. at 347

See Hunt,

(finding that the object of the litigation was

~the

right of the individual Washington apple growers and dealers to
conduct their business affairs in the North Carolina market free
from the interference of the challenged statute" and that

~[t]he

value of that right is measured by the losses that will follow
from

the

Tech.,

8

statute's

Inc.,

enforcement");

2007 WL 1302736,

OPINION AND ORDER

at

cf.
*2

Davis
(E.D.

v.

Cal.

Advanced Care
May 02,

2007)

("Where

the

of

designed

agreement

obj ect

to

information,

the

the

litigation

protect

value

to

the

a

is

a

noncompetition

company's

company

of

confidential

protecting

that

information is the amount in controversy.").
St.

Jude

argues

that

in

determining

Woodstock's solicitation of accounts,
value of the disputed accounts,
compensation,

2007

value

of

the court may look to the

sales revenues,

and Woodstock's

and that based on such evidence, this case easily

meets the threshold amount.
Inc.,

the

WL

3341389,
to

Depuy Orthopaedics,

See Mahoney v.

at

*5-6

prohibit

(E.D.

Cal.

enforcement

Nov.
of

8,

2007)

(in

action

seeking

clause,

court looked to the plaintiff's compensation and sales

revenue to determine amount in controversy);

non-competition

see also Luna v.

Kemira Specialty, Inc., 575 F. Supp. 2d 1166,1172-73 (C.D. Cal.
2008)

1286

(accord); Basicomputer Corp. v. Scott,
(N.D.

Ohio 1991),

aff'd 973 F.2d 507

action seeking enforcement

791 F.

Supp. 1280,

(6th Cir.

1992)

of non-competition covenants,

(in

court

looked to commission statements, profits from sales revenue, and
estimated lost revenue to determine the amount in controversy) .
For example,
four

Division

St.

Vice

Jude emphasizes that Woodstock was one of
Presidents

marketing and sale of St.
cardiovascular
maintains

9

products

Jude's CRM,
in

that Woodstock also

OPINION AND ORDER

and

the

was

for

the

atrial fibrillation,

and

North

"had access

responsible

Di vision.

St.

Jude

to highly propriety

key

account

information,

marketing

and

sales

data

and

strategies." Def.' s Mem. in Opp' n to Remand at 6. St. Jude's CRM
devices

cost

approximately $3,400

to

$18,000

each,

and annual

CRM sales revenues in the four disputed states totaled millions

st.

of dollars at the time Woodstock left his employment with

Jude. See Arancio Decl. at 2; Selskey Decl. at 2. Thus, St. Jude
maintains that Woodstock's ability to solicit St.
within

the

disputed

revenue for St.
far

exceed

areas

Jude,

the

could

result

in

Jude accounts

losses

of

sales

and gains in revenue for Biotronik,

jurisdictional

amount.

Further,

St.

Jude

emphasizes that Woodstock's compensation package with St.
totaled over
value

of

$1,500, 000,

Woodstock's

providing

services

additional

and

ability

evidence
to

that

of

solicit

Jude
the
the

disputed accounts. See Hawks Decl. at 2.
Plaintiffs argue that

st. Jude's assertions regarding the

amount in controversy are conclusory and speculative. Plaintiffs
maintain

that

St.

Jude

presents

no

evidence

to

establish

a

direct link between Woodstock's ability to solicit the disputed
accounts
U.S.

and the potential

Bank Nat'l Ass'n,

479

losses

to

F.3d 994,

St.
1002

Jude.

Lowdermilk v.

(9th Cir.

2007)

(a

court cannot base jurisdiction on a defendant's ·speculation and
conjecture"); Biotronik v. ELA Med., Inc., Case No. BC 357665 at
3

(C.D.

show a

10

Cal. Nov.
direct

21,

2006)

link between

OPINION AND ORDER

(finding that defendant ·failed to
its proj ected loss

of revenue and

non-enforcement of the Agreement H ).3 Plaintiffs further contend
that a declaration regarding the accuracy of the List results in
no "pecuniary result

to either party.

H

Co./Citibank (South Dakota), N.A.,
2001)

("Under

the

'either

See

In re

264 F.3d 952,

viewpoint'

rule,

Ford Motor

958
the

(9th Cir.
test

for

determining the amount in controversy is the pecuniary result to
either party which the judgment would directly produce. H).
Importantly, St. Jude need only show by a preponderance of
the evidence that the value of Woodstock's ability to solicit
the disputed accounts exceeds $75,000.

Cohn,

281 F.3d at 839.

Plaintiffs do not dispute that Woodstock received a very high
level

of

compensation

in

exchange

for

his

services

acceptance of the Post-Termination Obligations,

and

his

which were the

"essence H of Woodstock's Employment Agreement with St. Jude. Fox
Decl.

Ex.

1

at

32.

While

evidence

of

woodstock's

total

compensation may not establish a specific dollar value for his
ability to solicit the disputed accounts, such evidence renders
the

court

hard-pressed

to

find

that

Woodstock's

ability

to

solicit accounts in four states is valued at less than $75,000

Plaintiffs and St. Jude also cite Judge Simon's ruling in
Biotronik, Inc. v. Medtronic USA, Inc., 840 F. Supp. 2d 1251 (D.
Or. Jan, 4, 2012) to support their respective arguments.
However, that case did not involve a claim asserted by a former
employee to resolve the scope of existing non-competition
obligations. Thus, while informative, I do not find the case
particularly supportive of the parties' positions in this case.

3

11 -

OPINION AND ORDER

by Biotronik or by Woodstock himself. See Luna,

575 F. Supp. 2d

at 1172-73; Mahoney, 2007 WL 3341389, at *5-6.
Further,
Woodstock

a

to

declaration

solicit

in

plaintiffs'

accounts

in

the

favor

four

would

disputed

allow

states,

resulting in potential sales revenue to Biotronik and potential
sales

losses

exceed

the

to

St.

revenues

Jude

jurisdictional

amount

and

given

losses

the

that

value

of

easily
the

devices and the amount of sales revenue at stake. Mahoney,
WL 3341389,
plaintiffs

at *5-6;
do

not

Davis,

dispute

2007
that

WL 1302736,
the

sales

at

*1-2.

revenue

CRM
2007

Again,

from

the

disputed accounts extends into the millions of dollars. Thus,
cannot

find

to

a

"legal

certainty"

that

the

amount

I
in

controversy is less than $75,000.
In

sum,

preponderance
ability
gains

to
and

I

find

of

the

solicit
losses

jurisdictional

that

St.

evidence

the

that

disputed

resulting

threshold of

Jude

has

the

value

accounts,

from

that

$75,000.

established
of

and

Therefore,

a

Woodstock's

the

ability,

by

potential

exceed

the

the motion to

remand is denied.
B. Forum Selection Clause and venue
St.
based

on

Jude moves
the

forum

for

dismissal

selection

Employment Agreement with
unambiguously

12 -

provides

OPINION AND ORDER

or

clause

transfer

of

this

action

contained

in

Woodstock's

st. Jude. The forum selection clause

that

any

action

brought

by

Woodstock

"relating to or arising from this Agreement will be tried and
litigated only in the Minnesota State or Federal Courts located
in Ramsey County, Minnesota." Fox Declo Ex. 1 at 34.
In the Ninth Circuit,
"presumptively
compelling
Nat'l,

and

Inc.,

Bremen v.

valid"

forum selection clauses

and

"should

countervailing

362 F.3d 1133,

be

honored

reason.'"

1140

Zapata Off-Shore Co.,

'absent

Murphy

(9th Cir.

v.

2004)

404 U.S. 1, 12

are deemed
some

Schneider

(quoting MIS

(1972)). A forum

selection clause generally is upheld unless:
(1) its incorporation into the contract was the result
of fraud, undue influence, or overweening bargaining
power; (2) the selected forum is so gravely difficult
and inconvenient that the complaining party will for
all practical purposes be deprived of its day in
court;
or
(3)
enforcement
of
the
clause
would
contravene a strong public policy of the forum in
which the suit is brought.
87 F.3d 320, 325 (9th Cir.
1996)

(internal

quotation

marks

and

party challenging the clause bears a

citations

omitted).

"The

'heavy burden of proof.'"

Murphy, 362 F.3d at 1140 (quoting MIS Bremen, 407 U.S. at 17).
Plaintiffs do not argue that the forum selection provision
resulted

from

fraud

or

undue

influence.

Rather,

plaintiffs

contend that the forum selection clause does not apply because
the declaratory

relief

sought

implicates

only the accuracy of

the List pursuant to the terms of the Settlement Agreement and
informal agreement between Biotronik and St.

13

OPINION AND ORDER

Jude. Accordingly,

plaintiffs argue that this dispute does not involve Woodstock's
obligations under the Employment Agreement. I disagree.
Granted,

the

which

Biotronik

terms

of

Jude.

However,

complied

the

wit~

parties

dispute

purportedly

Settlement

the

provided

Agreement

accuracy
in

of

the

accordance

between

List,

with
and

Biotronik

the
St.

the crux of this case is not whether Biotronik
the Settlement Agreement but whether Woodstock may

solicit accounts in certain states in accordance with his PostTermination Obligations set forth
Indeed,

in

support

of

their

in the Employment Agreement.

motion

for

remand,

specifically assert that this case "focuses
of

Woodstock's

post-termination

plaintiffs

. on the scope

obligations"

and

seeks

a

declaration "that Woodstock is properly performing all of his
enforceable

post-termination

Reply Mem. at 2,

obligations

to

St.

Jude."

pIs.'

8. Thus, contrary to plaintiffs' assertions in

opposing dismissal,

the court must analyze whether Woodstock's

solicitation

of

disputed

Termination

Obligations.

accounts
See

complies

with

Mem.

PIs. '

his

Post-

Opp'n

in

to

Dismiss/Transfer at 7.
Plaintiffs also argue that Biotronik cannot be bound by the
forum

selection

clause

because

Employment Agreement. However,
a

forum

when the

14 -

OPINION AND ORDER

was

not

a

party

to

the

the Ninth Circuit has ruled that

selection clause may be
conduct of the

it

enforced against

non-party is

a

non-party

"closely related to

the

contractual relationship" between the signatory parties. Holland
Am.

Line,

Inc. v. Wartsila N. Am.,

Cir. 2007)
F.2d 509

Inc.,

(citing Manetti-Farrow
(9th Cir.

1988)).

Here,

485 F.3d 450,

"closely

Absent

the

for

declaration

a

related"

to

that

Employment Agreement,
that

the

858

Biotronik's claim arises from

the Employment Agreement between Woodstock and St.
therefore

(9th

Inc.

Inc. v. Gucci Am.

456

contractual

Jude and is
relationship.

Biotronik would have no

List

reflects

Woodstock's

need
Post-

Termination Obligations.
Accordingly,

I find that plaintiffs are bound by the forum

selection clause in Woodstock's
venue is

improper in this

Employment Agreement,

District.

and that

Rather than transfer this

case, I find dismissal appropriate in light of the pending state
court action in Minnesota.
CONCLUSION
Plaintiffs'

Motion

to

Remand

(doc.

4)

is

DENIED,

and

defendant's Motion to Dismiss and Alternative Motion to Transfer
(doc. 8) is GRANTED. This action is DISMISSED without prejudice.
IT IS SO ORDERED.
Dated this $/;ty-Of

Auq,

2012.

Ann Aiken
United States District Judge

15

OPINION AND ORDER