Sorin Grp. USA, Inc. v. St. Jude Med., S.C., Inc., Case No. 14-4023 (JRT/JSM)

• Decision Date: 31 March 2016
• Docket Number: Case No. 14-4023 (JRT/JSM)
• Citation: 176 F.Supp.3d 814
• Parties: Sorin Group USA, Inc., Plaintiff, v. St. Jude Medical, S.C., Inc., Defendant.
• Court: U.S. District Court — District of Minnesota

176 F.Supp.3d 814

Sorin Group USA, Inc., Plaintiff,

v.St. Jude Medical, S.C., Inc., Defendant.

Case No. 14-4023 (JRT/JSM)

United States District Court, D. Minnesota.

Signed March 31, 2016

James Poradek and Katherine Razavi, FAEGRE BAKER DANIELS LLP, 90 South Seventh Street, Suite 2200, Minneapolis, MN 55402, Jared B. Briant, FAEGRE BAKER DANIELS LLP, 3200 Wells Fargo Center 1700 Lincoln Street, Denver, CO 80203, for plaintiff.

JoLynn M. Markison and Joseph W. Hammell, DORSEY & WHITNEY LLP, 50 South Sixth Street, Suite 1500, Minneapolis, MN 55402, for defendant.

MEMORANDUM OPINION AND ORDER ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND PLAINTIFF'S MOTION TO EXCLUDE EXPERT TESTIMONY

JOHN R. TUNHEIM, Chief Judge United States District Court

Plaintiff Sorin Group USA, Inc. (“Sorin”) brings this action against Defendant St. Jude Medical, S.C., Inc. (“St. Jude”) based on St. Jude's hiring of two former Sorin employees—a supervisor, Danna Homan, and a salesperson, John Mitch Tracy. Sorin alleges multiple claims, including tortious interference with contract; tortious interference with prospective economic advantage; inducing, aiding, and abetting a breach of legal duties; and promissory estoppel.

St. Jude now moves for summary judgment on all claims, and Sorin moves to exclude testimony from St. Jude's expert witness, Maria Shepherd. The Court concludes that questions of material fact remain, precluding summary judgment for all of Sorin's claims except its promissory estoppel claim. The Court will therefore grant in part and deny in part St. Jude's motion for summary judgment. The Court also finds that Shepherd is qualified to act as an expert witness, her opinions are neither irrelevant nor unfairly prejudicial, and that Sorin's challenges to the factual basis of her opinions are best addressed on cross-examination. Accordingly, the Court will deny Sorin's motion to exclude Shepherd's expert testimony.

BACKGROUND

I. FACTUAL BACKGROUND

A. Heart Valve Market

St. Jude and Sorin are competitors in the heart valve and related products market. (Decl. of Patrick Chuinard (“Chuinard Decl.”) ¶ 3, Oct. 19, 2015, Docket No. 130.) This case involves two former Sorin employees, Homan and Tracy. Homan was employed as a Cardiac Surgery Regional Sales Manager at Sorin. (Decl. of Danna Homan (“Homan Decl.”) ¶ 1, Oct. 19, 2015, Docket No. 131.) She left Sorin to work for St. Jude in January 2014. (Id. ¶ 4.) Tracy worked for Sorin as a sales representative in Central Florida. (Decl. of John Mitch Tracy (“Tracy Decl.”) ¶ 1, Oct. 19, 2015, Docket No. 135; Decl. of Jared B. Briant (“Briant Decl.”), Ex. 3 at 36:2-12, Nov. 9, 2015, Docket No. 150.) In August 2014, Tracy left Sorin to work for St. Jude in Florida. (Tracy Decl. ¶¶ 1, 9.)

Sorin and St. Jude employ sales representatives to sell their medical devices to hospitals and surgeons; these sales representatives are assigned to geographic territories and maintain contact with surgeons and hospital staff within their region. (Decl. of Peter Spadaro (“Spadaro Decl.”) ¶ 2, Oct. 19, 2015, Docket No. 134.) Medical device salespeople typically have close relationships with the many hospital workers involved in heart valve repair or replacement procedures. (Briant Decl., Ex. 8 (“Gorman Report”) at 21.) A salesperson may even be present in the operating room during a procedure. (Id. ) According to an expert report, “purchasing decisions are ordinarily made in close consultation with the cardiac surgeons who use the heart valve devices, who provide significant input into those decisions.” (Id. at 22.) Additionally, “cardiac surgeons develop long-term use patterns with respect to heart valves and repair products.” (Id. at 26.) In addition to the competing heart valve products, St. Jude also sold a heart failure monitoring device, CardioMEMS; it is undisputed that Sorin does not have any product that directly competes with CardioMEMS. (Spadaro Decl. ¶ 2; Decl. of JoLynn M. Markison (“Markison Decl.”), Ex. 43 at 106:8-22, Oct. 19, 2015, Docket No. 133.)

In recent years, Sorin lost overall market share in part because it was a “low market share player,” it did not have a new valve between 2008 and 2014, its competitors offered new types of valves, and it experienced negative press. (Markison Decl., Ex. 1 at 58:19-64:24.) Specifically, Sorin faced negative publicity in early 2014 when its valve showed severe degeneration soon after implantation in a child.¹ (Id. at 64:14-24.) During an April 29, 2014, Sorin conference call, the CEO acknowledged that the company had a “tough quarter” based in part on the negative publicity involving the use of Sorin's valves in young children. (Id. , Ex. 47 at 5-6.) In July 2014, Boston Children's Hospital published findings of a review of Sorin's uncoated valves, which suggested “early” and “rapid calcification” of Sorin's device in children, (id. , Ex. 1 at 64:14-24), and some medical professionals cautioned against implanting the device in young patients.² On August 30, 2014, Sorin's CEO stated that the company faced a “significant challenge” based on the “negative campaign” against the device, called the Mitroflow valve, by competitors trying to discredit it. (Id. , Ex. 48 at 6-7.) Finally, on February 11, 2015, the CEO again explained the challenges the company faced based on bad publicity and stated, “we have not stopped the bleeding in the US.” (Id. , Ex. 49 at 13.)

Testimony from former Sorin employees corroborates a decline in morale caused in part by negative press. (Id. , Ex. 6 at 48:6-15; id. , Ex. 8 at 21:16-22:1, 24:14-24.) Some employees stated that this decline began in 2014 and that the decline made it difficult to reach sales goals. (Id. , Ex. 8 at 15:13-16:25; 37:21-39:25.) Other employees cited similar problems occurring much earlier, ranging from 2011 to mid-2013.³ Email records suggest that as early as summer 2013, Sorin sales representatives faced concern from surgeons about Sorin heart valves. (See id. , Ex. 5.) Several Sorin employees left the company during this time period due to the downturn in sales, lower morale, and questions from surgeons. For example, one employee left Sorin because his “sales were very bad,” he “felt that [he] could no longer sell Mitroflow,” and he did not want to “lose credibility with [his] surgeons.” (Id. , Ex. 8 at 45:18-46:15.) Sorin lost twenty-eight sales representatives between January 1, 2012 and March 20, 2015. (Id. , Ex. 1 at 95:13-16.)

However, with regard to the Florida market in particular, Sorin estimates that it had a higher-than-average market share in the region, and that Tracy's market share at Tampa General Hospital (“Tampa General”), in particular, was about 45%. (Briant Decl., Ex. 16 at 189:23-191:3.) At the same time, St. Jude was underperforming in portions of Florida. (Id. , Ex. 9 at SJM_00002487 (internal email calling North, Central, and Western Florida a “wasteland on THV”).) In June 2014—while Homan worked for St. Jude, and before Tracy left Sorin—Homan stated that some of St. Jude's accounts in Tracy's geographical area were “hemorrhaging,” noting that St. Jude was down 56% at that time at Tampa General. (Id. , Ex. 15.)

B. Homan's Transition to St. Jude

Homan signed an agreement during her employment with Sorin entitled “Inventions, Confidentiality and Non-Compete Agreement,” which prohibited her from “directly or indirectly ... hir[ing] or attempt[ing] to hire any of the Company's employees ... or attempt[ing] to induce or influence any of the Company's employees ... to terminate their relationship with the Company” for one year after leaving the company. (Second Am. Compl. (“Compl.”), Ex. A § 5.01(d), Oct. 5, 2015, Docket No. 120.)

In January 2014, Homan accepted a position as Director of Regional Sales, Structural Heart, with St. Jude. (Homan Decl. ¶ 4.) Her last day of employment at Sorin was February 14, 2014, and she began working at St. Jude on February 17, 2014. (Id. ¶ 5.) As a regional director, she was responsible for the southeastern region of the United States. (Id. )

Before extending offers to a “competitive hire,” St. Jude typically reviews the applicant's employment agreement and considers potential limitations included therein. (Markison Decl., Ex. 11 at 40:18-41:25.) St. Jude's legal and human resources departments reviewed Homan's employment agreement, and Homan's manager, Patrick Chuinard, spoke with St. Jude's managing counsel, Antone Melton-Meaux, and a human resources representative, Jeff Haught, about Homan's restrictions prior to making her an offer. (Chuinard Decl. ¶¶ 11-12; Markison Decl., Ex. 12 at 84:4-20.) Chuinard and Haught talked with Homan and “stressed to her that she must comply completely and in all respects with her obligations to Sorin.” (Chuinard Decl. ¶ 13.) Homan “indicated clearly that she understood her obligations to Sorin and further assured [Chuinard] that she would fully comply with such obligations.” (Id. )

On May 20, 2014, Taylor Pollock, Vice President of Corporate Legal Affairs at Sorin, emailed Melton-Meaux at St. Jude inquiring about Homan. (Markison Decl., Ex. 17.) Pollock described Homan's responsibilities at Sorin and his understanding of her responsibilities at St. Jude, and stated, “It is unclear how, given her noncompete obligations, St. Jude can expect Danna to perform the role of Director, Regional Sales, Structural Heart in what appears to be the same territory she managed for Sorin.” (Id. ) Pollock asked St. Jude to clarify Homan's responsibilities, including her products and territory with St. Jude. (Id. )

In response, on June 2, 2014, Melton-Meaux sent Pollock a letter stating, “I can assure that Danna is aware of and will meet her ongoing obligations to Sorin.” (Compl., Ex. C.) Melton-Meaux noted that Homan's territory included “North Carolina, South Carolina, Georgia, Kentucky, Tennessee, Alabama, and Florida,” and that she was instructed not to service competing products for her prior Sorin accounts, but that she could service...