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

Filing 31

ORDER: Granting Defendant's Motion to Dismiss 5 ; Denying Plaintiff's Motion to Remand Case to State Court 9 . 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 MICHAEL JUE,

Case No. 3:12-cv-1057-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 Michael Jue's post-termination
obligations to defendant St. Jude Medical S.C., Inc.

(St. Jude),

his former employer. St. Jude removed the case to federal court
pursuant to 28 U.S.C.

§§

1332 and 1441,

alleging jurisdiction

based on diversity of citizenship and the amount in controversy.
Plaintiffs now move for remand pursuant to 28 U.S.C.

- OPINION AND ORDER

§

1447,

arguing that they seek only declaratory relief and do not allege
the

threshold

amount

di versi ty jurisdiction.

in

controversy

St.

necessary

to

establish

Jude opposes the motion for remand

and moves to dismiss or to stay this action pending resolution
of a Minnesota state court action involving the same parties.
The motion

to

remand

is

denied and

the motion

to

dismiss

is

granted.
BACKGROUND
Plaintiff

Biotronik,

(Biontronik)

Inc.

is

an

Oregon

corporation doing business in the State of Oregon, and Jue is a
resident

of

the

State

of

New

York.

St.

Jude

is

a

Minnesota

corporation with its principal place of business in Texas.
Biotronik
marketing

of

and

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.

the market for

According

to

Biotronik's

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

salespeople and managers with technical and clinical

skilled
knowledge

of the devices. Accordingly, both Biotronik and St. Jude require
their

sales

agreements

2

representatives

and

that

post-termination

include

- OPINION AND ORDER

managers

to

sign

employment

noncompetition,

confidentiality,

and

obligations

non-solicitation

(Post-

Termination Obligations) .
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

respective

employees,

agents,

or

independent

representatives." Donahue Decl. Ex. 1 at 2-3. If the parties are
unable
party

to

resolve

providing

the

dispute

notice

of

wi thin

the

forty-eight

claim

shall

hours,

file

the

"the
action

necessary to resolve the claim if so desired." Id. Ex. 1 at 3.
Plaintiffs allege that Biotronik and St.

Jude also entered

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

called

upon

or

"only those

supported

four

[accounts]
or more

times

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

See

Compl.

Ex.

1

(email

which the
during

non-compete

communications

between

Biotronik and St. Jude representatives).
Jue was employed as a sales representative at St. Jude and
was responsible for selling and marketing CRM and other medical
device products in the Long Island, New York area. Jue signed an
Employee Agreement with St.
Obligations

regarding

Jude that included Post-Termination
competition

and

Specifically, his Employee Agreement provided:

III

3

OPINION AND ORDER

solicitation.

7.

***
. Employee will not disclose to a third party or
use for Employee's benefit Confidential Information of
[St. Jude Medical S.C., Inc., "SJMSC"]. "Confidential
Information" means any information used or useful in
SJMSC's business that is not generally known outside
of SJMSC and that is proprietary to SJMSC relating to
any
aspect
of
SJMSC's
existing
or
reasonably
foreseeable business which is disclosed to Employee or
concei ved,
discovered
or
developed
by
Employee.
Confidential Information includes but is not limited
to: product designs, including drawings and sketches;
marketing materials; marketing plans or proposals;
customer information; manufacturing processes; price,
account~ng
and
cost
information;
clinical
data;
administrative
techniques
and
documents;
and
information designated by SJMSC as "Confidential."

***
8. Non-Competition. During Employee's employment and
for a period of one (1) year after the date of
termination of employment with SJMSC for any reason,
Employee will not directly or indirectly engage as a
consultant,
independent
contractor,
proprietor,
stockho~der,
partner, co-venturer, officer, director,
employee, or in any other capacity with any business
which designs, manufactures or sells products which
compete with products, now or later during Employee's
employment, that are designed, manufactured or sold by
SJMSC or any of its affiliates in the territory
assigned
to
Employee
during
the
last
year
of
Employee's employment.
For a period of one (1)
year after the date of termination of employment with
SJMSC for any reason, Employee will not directly or
indirectly sell,
demonstrate,
promote,
solicit or
support
the
sale of,
support
of
supervise
the
implantation or other use of, or otherwise have any
involvement with the sale or use of any product which
competes with any products which Employee sold or
solicited the sale of during Employee's
employment,
to or with any customer upon whom Employee called
during the last year of Employee's employment. For a
period of one (1) year after the date of termination

4

- OPINION AND ORDER

of employment with SJMSC for any reason, Employee will
not directly or indirectly influence or attempt to
influence such customers to direct their business
involving products sold by Employee to any competitor
of SJMSC.
9. Non-Solicitation. During Employee's employment and
for a period of one (1) year after termination of
Employee's employment with SJMSC for any reason,
Employee will not, directly or indirectly, solicit on
Employee's own behalf or on behalf of another person
or entity, the services of any person who is an
employee or sales representative of SJMSC or any of
its affiliates, or solicit any of SJMSC's or its
affiliates'
employees or sales representati ves to
terminate their employment in order to compete with
St.
Jude Medical,
Inc. ,
SJMSC or any of their
affiliates.
Hickey Decl. Ex. A at 6-8.
The

Employment

Agreement

also

contained

provisions

governing choice of law, forum selection, and jurisdiction:
10. Miscellaneous

***
G. Governing Law. This Agreement will be governed
by the laws of the state of Minnesota without
giving effect to the principles of conflict of
laws of any jurisdiction.
H.
Exclusive
Jurisdiction.
All
actions
or
proceeding 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
cannot be revoked.
Employee understands that
Employee is surrendering the right to bring
litigation against SJMSC outside the State of
Minnesota.
Hickey Decl. Ex. A at 9.

5 - OPINION AND ORDER

On

or

about

May

18,

2012,

Jue

accepted

Biotronik and left his employment with st.

an

Jude.

offer

from

Subsequently,

Biotronik provided St. Jude with a list of accounts

(the List)

subject to Jue's Post-Termination Obligations. St. Jude disputes
the

accuracy

hospital

and

of

the

physician

List

and

accounts

asserts
are

that

subject

numerous
to

Jue's

other
Post-

Termination Obligations.
After the parties could not resolve their disagreement over
the List, plaintiffs filed suit in Circuit Court for Clackamas
County

seeking

a

declaration

that

"Jue's

Post-Termination

Obligations to [St. Jude] relating to noncompetition .

. are

as described in the List." Compl. at 3.
St.

Jude

removed

diversity jurisdiction.
state court for

the

case

to

federal

court

based

on

Plaintiffs move to remand the cases to

lack of subj ect matter

jurisdiction,

and st.

Jude moves to dismiss for improper venue or to stay the action
pending resolution of a case brought by st.

Jude in Minnesota

state court. 1

III

IOn March 27/ 2012, St. Jude filed suit against Biotronik and
several former St. Jude employees, alleging violations of
restrictive covenants contained in the relevant Employment
Agreements. On May 29, 2012, St. Jude amended the complaint and
added Jue 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. 30) Ex. A.
6 - OPINION AND ORDER

A. Subject Matter Jurisdiction
A

party

complete

asserting

di versi ty

of

di versi ty

jurisdiction

citizenship

between

the

must

parties

allege
and

an

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

v.

519 U.S.

diversity

of

Lewis,

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.,n Budget Rent-A-Car Inc. v. Higashiguchi,
109 F.3d 1471,
Indem.
this

Co.

1473

(9th Cir.

v.

1997)

303 U.S.

'legal certainty'

standard,

matter jurisdiction unless

(quoting St.
283,

289

Paul Mercury

(1938)).

"Under

the federal court has subj ect

'upon the face of the complaint,

it

is obvious that the suit cannot involve the necessary amount. n
Travelers Prop. Cas. Co. of Am. v.
3042993,

at

*1

(D.

Ariz.

July

Zurich Am.

25,

2012)

Ins. Co.,

(internal

2012 WL

quotation

marks and citation omitted).
On the face

of plaintiffs'

damages or monies owed by St.
declaration

that

Jue's

complaints,
Jude.

Rather,

Post-Termination

they do not claim
plaintiffs seek a
Obligations

reflected accurately in the List provided to St.

7

- OPINION AND ORDER

Jude.

are
Stated

another way, plaintiffs seek a declaration that Jue may solicit
the

disputed accounts

in

accordance

with

the

Post-Termination

Obligations of his Employment Agreement.
When declaratory relief is sought,

~it

is well established

that the amount in controversy is measured by the value of the
obj ect
Comm'n,

of
432

the

litigation."

u.s.

333,

347

Hunt

(1977).

v.

Wash.

St.

State

Apple

Adver.

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,

Cohn v.

[the defendant]

$ 7 5,000. ").

provided by the

Inc.,

281 F.3d

("To support removal based on diversity
has the burden of proving,

preponderance of the evidence,
exceeds

Petsmart,

that

the

amount

by a

in controversy

A court may consider supplemental evidence

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
object

of

the

litigation

disputed accounts.
object

of

the

See Hunt,

litigation

is

Jue's

ability

432 U.S.
was

"the

at 347
right

to

solicit

the

(finding that the
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

8

- OPINION AND ORDER

~[t]he

value of that right

is measured by the losses that will follow from the statute's
enforcement");
1302736,

cf.

at *2

Davis v.

(E.D.

Cal.

Inc.,

Advanced Care Tech.,
May 02,

2007)

2007 WL

("Where the object of

the litigation is a noncompetition agreement designed to protect
a company's confidential information,

the value to the company

of protecting that information is the amount in controversy.").

st.

Jude

argues

that

in

ability to solicit accounts,

determining

the

value

of

Jue's

the court may look to the value of

the disputed accounts and Jue's compensation,

and that based on

such evidence, this case easily meets the threshold amount.
Mahoney v.
(E.D.

Depuy Orthopaedics,

Cal.

Nov.

enforcement

of

8,

2007)

Inc.,
(in

non-competition

2007 WL 3341389,

action
clause,

seeking
court

to

at

See
*5-6

prohibit

looked

to

the

plaintiff's compensation and sales revenue to determine amount
in controversy); see also Luna v. Kemira Specialty, Inc., 575 F.
Supp.

2d 1166,

Corp. v. Scott,
973 F.2d 507

1172-73

Cal.

2008)

(accord);

Basicomputer

791 F. Supp. 1280, 1286 (N.D. Ohio 1991), aff'd

(6th Cir.

non-competition
statements,

(C. D.

1992)

(in action seeking enforcement of
court

covenants,

profits

from

sales

looked

revenue,

to

and

commission

estimated

lost

revenue to determine the amount in controversy).
For example,
physician

and

St.

Jude emphasizes that Jue managed numerous

hospital

accounts

"key" hospital account with St.

9

- OPINION AND ORDER

for

St.

Jude,

Francis Hospital,

including

the

an account in

dispute.
busiest

St.

Jude

CRM

maintains

hospital

in

that

the

"St.

Francis

country

and

dollar source of annual revenue" for St.

is

is
a

one

of

the

multi-million

Jude. Arancio Decl. at

12. Further, St. Jude's CRM devices cost approximately $3,400 to
$18,000

each,

accounts

and annual

totaled

over

maintains

accounts

could

$20

Jue's
in

ability

time

solicit

losses

St.

totaled

the

to

potential

Further,

2011

at

the

far

Jue

disputed

St.

result

million

for

his

that

for

revenues

left

jurisdictional amount.
compensation

sales

Jude. See Arancio Decl. at 2, 12. Thus,

employment with St.
Jude

CRM

the

disputed

exceeding

Jude emphasizes that

over

$200,000,

thus

the

Jue's

providing

additional evidence of the value of his ability to solicit 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 any

direct link between Jue's ability to solicit and the potential
losses

to st.

Jude.

Lowdermilk v.

F.3d 994, 1002 (9th Cir. 2007)

U.S.

Bank Nat'l Ass'n,

(a court cannot base jurisdiction

on a defendant's "speculation and conjecture");
Med.,

Inc.,

Case No.

BC 357665

479

(C. D.

Cal.

2006)

k v. ELA
(finding that

defendant "failed to show a direct link between its proj ected

10 -

OPINION AND ORDER

loss

of

Plaintiffs

revenue

and

further

non-enforcement

contend

that

a

of

the

declaration

Agreement"). 2
regarding

the

accuracy of the List results in no "pecuniary result" to either
party. See In re Ford Motor Co. ICi tibank (South Dakota), N. A. ,
264 F.3d 952, 958 (9th Cir. 2001)

("Under the 'either viewpoint'

rule, the test for determining the amount in controversy is the
pecuniary

result

to

either

party

which

the

judgment

would

directly produce.") .
Importantly, St. Jude need only show by a preponderance of
the evidence that the value
disputed

accounts

exceeds

Plaintiffs do not dispute

of Jue's

$75,000.
that

ability to

Cohn,

281

solicit the

F.3d

at

839.

Jue received a high level of

compensation in exchange for his services and his acceptance of
the Post-Termination Obligations. While evidence of Jue's total
compensation may not establish the specific dollar value of his
ability to solicit the disputed accounts, such evidence renders
the court hard-pressed to find that Jue's services are valued at
less than $75,000 by Biotronik or by Jue himself. See Luna, 575
F. Supp. 2d at 1172-73; Mahoney, 2007 WL 3341389, at *5-6.

2Plaintiffs 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.
11

OPINION AND ORDER

Further, a declaration in plaintiffs' favor would allow Jue
to

solicit

accounts

in

the

disputed

areas,

resulting

in

potential sales revenue to Biotronik and potential sales losses
to

St.

revenues

Jude

and

losses

that

easily

exceed

the

jurisdictional amount given the value of the CRM devices and the
amount of sales revenue at stake. Davis, 2007 WL 1302736, at *12. Again, plaintiffs do not dispute that the sales revenue from
the

disputed

Thus,

I

accounts

extends

into

the

millions

of

dollars.

cannot find to a nlegal certainty" that the amount in

controversy is less than $75,000.
In

sum,

I

find

that

St.

Jude

has

established

by

a

preponderance of the evidence that the value of Jue's ability to
solicit

the

losses

disputed

resulting

accounts,

from

that

and

the

ability,

potential

exceed the

gains

and

jurisdictional

threshold of $75,000. Therefore, the motion to remand is denied.
B. Forum Selection Clause and Venue
St.
based

on

Jude moves
the

for

forum

dismissal
selection

Employment Agreement with St.
unambiguously

provides

that

or transfer
clause

Jude.

of this

contained

in

action
Jue's

The forum selection clause

n [alII

actions

or

proceeding

relating to this Agreement will be tried and litigated only in
the Minnesota State or Federal Courts located in Ramsey County,
Minnesota." Hickey Decl. Ex. A at 9.

12 -

OPINION AND ORDER

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.
R.A. Argueta v. Banco Mexicano, S.A.,
1996)

(internal

quotation

marks

87 F.3d 320, 325 (9th Cir.

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
the

List

provided by

Settlement
and St.
does

Agreement

Jude.

not

sought

Biotronik pursuant
and

Accordingly,

involve

Jue's

Agreements. I disagree.

13 - OPINION AND ORDER

implicates

informal

only the accuracy of
to

the

agreement

plaintiffs
obligations

argue

terms

between
that

under

the

of

the

Biotronik

this dispute
Employment

Granted,

the

parties

dispute

which Biotronik provided in
Settlement Agreement

the

accuracy

of

However,

the crux of this case is not whether Biotronik or St.

Jude has

complied

with

Jue

solicit

disputed

Settlement
accounts

Agreement
in

in

support

of

their

but

accordance

Termination Obligations set forth
Indeed,

st.

of the

Jude.

the

between Biotronik and

Lists,

terms

accordance with the

the

whether
wi th

his

may
Post-

in his Employment Agreement.

motion

for

remand,

specifically assert that this case "focuses

plaintiffs

. on the scope

of Jue's post-termination obligations" and seeks a

declaration

"that Jue is properly performing all of his enforceable posttermination obligations to St.
Thus,

contrary to plaintiffs'

the court must
accounts

Jude." PIs.' Reply Mem. at 3,

assertions in opposing dismissal,

analyze whether

complies

with

his

8.

Jue's

solicitation of disputed

Post-Termination

Obligations.

See

PIs.' Mem. in Opp'n to Dismiss/Transfer at 2, 7.
Plaintiffs also argue that Biotronik cannot be bound by the
forum

selection

clause

because

Employment Agreement. However,
a

forum

conduct

contractual
Am.

Line

Cir. 2007)

14 -

of the

~elationship"

not

a

party

enforced against

non-party is

to

the

a

non-party

"closely related to

the

between the signatory parties. Holland

Inc. v
(citing Manetti-Farrow,

OPINION AND ORDER

was

the Ninth Circuit has ruled that

selection clause may be

when the

it

485 F.3d 450,
Inc. v. Gucci Am.,

456

(9th

Inc.,

858

F.2d 509
the

(9th Cir.

Employment

therefore
Absent

Agreement

~closely

the

1988)). Here,

Biotronik's claim arises from

between

related"

to

Jue

that

Employment Agreement,

and

St.

Jude

contractual

and

is

relationship.

Biotronik would have

no need

for a declaration that the List reflects Jue's Post-Termination
Obligations.
Accordingly,

I find that plaintiffs are bound by the forum

selection clause in Jue's Employment Agreement,

and that venue

is improper in this District. Rather than a stay of this case, I
find dismissal appropriate in light of the pending state court
action in Minnesota.
ION
Plaintiffs'

Motion

to

Remand

(doc.

9)

is

DENIED,

and

defendant's Motion to Dismiss and Alternative Motion to Transfer
(doc. 5) is GRANTED. This action is DISMISSED without prejudice.
IT IS SO ORDERED.
Dated this

~f ~u.q,

2012.

Ann Aiken
United States District Judge

15 - OPINION AND ORDER