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UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

St. Jude Medical S.C., Inc., a Minnesota corporation,

Court File No. 14-cv-04418 (PJS/JJK)

Plaintiff, DEFENDANTS’ MEMORANDUM OF LAW IN SUPPORT OF MOTION FOR PARTIAL SUMMARY JUDGMENT

v. Christopher Delgado and Biotronik, Inc., an Oregon corporation, Defendants.

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TABLE OF CONTENTS Page TABLE OF AUTHORITIES ............................................................................................. iii INTRODUCTION .............................................................................................................. 1 FACTUAL BACKGROUND ............................................................................................ 1 LEGAL STANDARD ON SUMMARY JUDGMENT ..................................................... 6 ARGUMENT...................................................................................................................... 6 I.

SJM’s confidentiality allegations fail to rise beyond conjecture ................. 7

II.

SJM cannot establish a genuine issue of material fact as to the “intentional procurement” and “damages” elements of its tortious interference claim ....................................................................................... 11 A. Biotronik did not procure a breach of Delgado’s SJM employment agreement .................................................................. 11 1. Biotronik did not procure a breach of Delgado’s TOY provision ............................................................................... 13 2. Biotronik did not procure a breach of Delgado’s postemployment covenants ......................................................... 15 B. SJM has not established that Biotronik’s alleged conduct caused damages ........................................................................................... 17 1. Biotronik did not cause SJM’s purported lost profits, and SJM seeks impermissible double recovery .......................... 18 2. SJM failed to adduce evidence that Biotronik thrust it into litigation with Delgado......................................................... 20

III.

Delgado did not owe SJM a fiduciary duty, and SJM did not adduce sufficient evidence that Delgado breached a duty of loyalty ..................... 22 A. Delgado did not breach a fiduciary duty or employee duty of loyalty .............................................................................................. 22 1. Delgado did not breach his employee duty of loyalty ................ 23 2. Delgado did not breach a fiduciary duty, if one existed ............. 25 B. Delgado did not owe SJM a fiduciary duty ........................................... 26

IV.

SJM’s unjust enrichment, constructive trust, and accounting “claims” are inapplicable............................................................................ 28

CONCLUSION ................................................................................................................ 29 ii 80340149.8 0047984-00013

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TABLE OF AUTHORITIES Page(s) Cases Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) ....................................................................................................... 6 Benfield, Inc. v. Moline, No. CIV. 04-3513(MJD/SRN), 2006 WL 452903 (D. Minn. Feb. 22, 2006) .......................................................................................................................... 12, 13, 17 Brown & Bins v. Lehman, No. C5-93-415, 1993 WL 377101 (Minn. Ct. App. Sept. 28, 1993) ........................... 23 Caldas v. Affordable Granite & Stone, Inc., 820 N.W.2d 826 (Minn. 2012)..................................................................................... 28 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ....................................................................................................... 6 Cent. Bank v. Rowe Constr., Inc., No. A10-1250, 2011 WL 1119872 (Minn. Ct. App. Mar. 29, 2011) (unpublished) ......................................................................................................... 26, 27 Commerce Nat’l Ins. Servs., Inc. v. Buchler, 120 F. App’x 414 (3d Cir. 2004) ................................................................................. 10 Hart v. Bell, 222 Minn. 69, 23 N.W.2d 375 (1946).......................................................................... 26 Herzog v. Cottingham & Butler Ins. Servs., Inc., No. A14-0528, 2015 WL 134043 (Minn. Ct. App. Jan. 12, 2015) (unpublished) ......................................................................................................... 25, 27 Jensen v. Am. Benefit Plan Adm’rs, Inc., No. C1-94-1149, 1994 WL 714339 (Minn. Ct. App. Dec. 27, 1994) (unpublished) ............................................................................................................... 23 Johnson v. Wells Fargo Bank, N.A., 744 F.3d 539 (8th Cir. 2014) ......................................................................................... 6 Kallok v. Medtronic, Inc., 573 N.W.2d 356 (Minn. 1998)............................................................................... 11, 21 80340149.8 0047984-00013

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Leoni v. Bemis Co., 255 N.W.2d 824 (Minn. 1977)..................................................................................... 19 Luigino’s Inc. v. Societes des Produits Nestle S.A., No. CIV. 03-4186ADM/RLE, 2005 WL 735919 (D. Minn. Mar. 30, 2005) ............................................................................................................................ 14 Manhattan Grp., LLC v. Rizer, No. C5-01-459, 2001 WL 1402693 (Minn. Ct. App. Nov. 13, 2001) (unpublished) ............................................................................................................... 10 Marn v. Fairview Pharm. Servs. LLC, 756 N.W.2d 117 (Minn. Ct. App. 2008) ...................................................................... 23 Matson Logistics, LLC v. Smiens, No. 12-400 ADM/JJK, 2012 WL 2005607 (D. Minn. June 5, 2012) .......................... 12 Minn. Timber Producers v. Am. Mut. Ins. Co., 766 F.2d 1261 (8th Cir. 1985) ............................................................................... 26, 27 MinnComm Util. Constr. Co. v. Yaggy Colby Assocs., Inc., No. A11-1211, 2012 WL 1470191 (Minn. Ct. App. Apr. 30, 2012) (unpublished) ............................................................................................................... 21 Polaris Indus. v. Plastics, Inc., 299 N.W.2d 414 (Minn. 1980)..................................................................................... 19 Prior Lake State Bank v. Groth, 259 Minn. 495, 108 N.W.2d 619 (1961)...................................................................... 21 QFA Royalties, LLC v. A&D Foods, Inc., No. 06-CV-00879–WDM-CBS, 2007 WL 1549039 (D. Colo. May 25, 2007) ............................................................................................................................ 14 Qwest Commc’ns Co. v. Free Conferencing Corp., 990 F. Supp. 2d 953 (D. Minn. 2014) .......................................................................... 28 Qwest Commc’ns Co. v. Free Conferencing Corp., No. CIV. 10-490, 2015 WL 999661 (D. Minn. Mar. 5, 2015) .................................... 12 Reed By and Through Reed v. United States, 717 F. Supp. 1511 (S.D. Fla. 1988) ............................................................................. 14 Rehab. Specialists, Inc. v. Koering, 404 N.W.2d 301 (Minn. Ct. App. 1987) ...................................................................... 23

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Schlief v. Nu-Source, Inc., No. CIV. 10-4477, 2011 WL 1560672 (D. Minn. Apr. 25, 2011) ............................... 23 St. Jude Med., S.C., Inc. v. Biosense Webster, Inc., et al., 994 F. Supp. 2d 1033 (D. Minn. 2014) ................................................ 10, 14, 15, 19, 20 St. Jude Med. S.C., Inc. v. Biosense Webster Inc., No. 62-CV-11-718, 2012 WL 8009745 (Minn. 2d Jud. Dist. Ct. July 16, 2012) ............................................................................................................................ 21 St. Jude Med. S.C., Inc. v. Biosense Webster, Inc., No. A13-0414, 2013 WL 5508389 (Minn. Ct. App. Oct. 7, 2013) (unpublished) ......................................................................................................... 14, 15 St. Jude Med. S.C., Inc. v. Biosense Webster, Inc., No. CIV. 12-621 ADM/TNL, 2014 WL 3573620 (D. Minn. July 18, 2014) ............................................................................................................................ 21 St. Jude Med. S.C., Inc. v. Grubiak, No. CIV. 14-109 JNE/JJK, 2015 WL 5286754 (D. Minn. Sept. 10, 2015) ............................................................................................................................ 27 St. Jude Med. S.C., Inc. v. Hanson, 2012 WL 2101055 ................................................................................................. 15, 28 St. Jude Med. S.C., Inc. v. Hanson, No. CIV. 13-2463, 2015 WL 2101055 (D. Minn. May 6, 2015)..................... 12, 15, 28 Sterling Capital Advisors, Inc. v. Herzog, 575 N.W.2d 121 (Minn. Ct. App. 1998) ...................................................................... 20 Storage Tech. Corp. v. Cisco Sys., Inc., 395 F.3d 921 (8th Cir. 2005) ....................................................................................... 18 Swenson v. Bender, 764 N.W.2d 596 (Minn. Ct. App. 2009) ................................................................ 25, 26 Wright v. Wright, 311 N.W.2d 484 (Minn. 1981)..................................................................................... 28 Yarborough v. DeVilbiss Air Power, Inc., 321 F.3d 728 (8th Cir. 2003) ....................................................................................... 17

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Other Authorities Black’s Law Dictionary 744 (10th ed. 2014) .................................................................... 25 Fed. R. Civ. P. 56(a) ............................................................................................................ 6

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INTRODUCTION After nearly 15 months of litigation, one fact is clear: Plaintiff St. Jude Medical S.C., Inc. (“SJM”) has failed to adduce sufficient admissible evidence to survive summary judgment on nearly all of its claims against Defendants Christopher Delgado and Biotronik, Inc. (“Biotronik”) (collectively, “Defendants”). Indeed, SJM’s “evidence” amounts to little more than conjecture and skewed speculation—not facts. Accordingly, SJM cannot demonstrate a genuine issue of material fact as to its allegations that Delgado breached his contractual confidentiality obligations, his employee duty of loyalty, or a non-existent fiduciary duty; likewise, it cannot establish that Biotronik tortiously interfered with Delgado’s SJM employment agreement. In addition, SJM has no “claim” for constructive trust and accounting, and it abandoned its unjust enrichment claim. As a result, each of these claims is legally unsupportable, and, as discussed more fully below, Defendants respectfully request that the Court grant their Motion for Partial Summary Judgment. FACTUAL BACKGROUND The following facts are relevant to this Motion and undisputed in the record: Delgado’s Employment At SJM And Career Move To Biotronik Delgado has worked in the medical device industry since 1994, and specifically in the cardiac rhythm management (“CRM”) space since 2001. (Pieper Decl.,1 Ex. 1 at 8:22-10:24.) In 2006, SJM hired Delgado as a Regional Sales Director (“RSD”) in 1

“Pieper Decl.” refers to the Declaration of Andrew J. Pieper in Support of Defendants’ Motion for Partial Summary Judgment, filed concurrently herewith.

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Maryland. (Id. at 11:5-16.) In 2009, he was promoted to Area Vice President (“AVP”) for SJM’s North Mid-Atlantic region. (Id. at 13:7-19.) As AVP, Delgado oversaw SJM’s financial performance and sales personnel in that area, supervised five RSDs, and reported to a Divisional Vice President (“DVP”).

(Id. at 13:20-14:11, 31:21-33:6.)

Delgado, along with other SJM management and human resources personnel, also assisted in efforts to recruit and retain employees. (Id. at 39:18-41:25.) Over time, Delgado grew frustrated in his SJM employment. (Id. at 124:10-22.) He did not see himself thriving among SJM’s senior management and saw his opportunities at the company stagnating.

(Id.)

He was disappointed by senior

management’s poor handling of SJM’s Riata lead device recall, among other issues, which injured SJM’s standing in the CRM industry. (Pieper Decl., Ex. 1 at 118:3-20, 124:10-18; Ex. 2 at 17-20.) In the first half of 2013, Delgado began considering leaving SJM, but he still had approximately 18 months remaining on the term-of-years (“TOY”) provision2 in his SJM employment agreement. (Pieper Decl., Ex. 1 at 66:24-67:11, 128:2-22; Ex. 4.) In the first half of 2013, Delgado initiated discussions with Divisional Vice President Peter Spadaro—his immediate supervisor at the time—regarding a possible separation from SJM. (Pieper Decl., Ex. 1 at 135:1-18; Ex. 3 at 52:25-64:20.) By early October 2013, Spadaro and SJM’s U.S. Division President, Joel Becker, approved a

2

A TOY provision commits an employee to employment for a specified period of time. (Pieper Decl., Ex. 3 at 105:15-20.)

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buyout package for Delgado. (Pieper Decl., Ex. 1 at 160:7-25; Ex. 3 at 78:13-80:11.) In November 2013, Delgado received a draft Separation Agreement. (Pieper Decl., Ex. 3 at 81:18-82:2; Ex. 6.) Other than the effective date, no changes were made from that draft to the final version. (Compare Pieper Decl., Ex. 6 with Ex. 7; see also Pieper Decl., Ex. 3 at 81:18-21, 82:25-84:2.) On November 25, 2013, Spadaro emailed more than 100 SJM employees— including Becker and other senior SJM management—announcing Delgado’s impending departure in December 2013, and that Andrew Ayers would replace Delgado as the MidAtlantic AVP. (Pieper Decl., Ex. 20.) At the same time, Delgado explored career opportunities elsewhere. Through the fall and winter of 2013, Delgado engaged in significant discussions with Boston Scientific—an SJM competitor—regarding possible employment. (Pieper Decl., Ex. 5 at 31:1-10, 51:17-52:15, 61:17-64:22.) Delgado eventually received an offer, and Boston Scientific made preparations for his employment immediately following his SJM termination. (Pieper Decl., Ex. 1 at 178:22-25, 179:14-180:25; Ex. 5 at 64:16-24.) Delgado also informed Biotronik—another SJM competitor—that he was negotiating his separation from SJM and inquired about potential employment opportunities there. (Pieper Decl., Ex. 1 at 154:25-158:5; Ex. 8 at 67:1-17; 68:13-69:10.) At the outset, Biotronik informed Delgado that it could not seriously discuss potential employment opportunities until it understood he would no longer be bound by his SJM employment. (Pieper Decl., Ex. 1 at 156:3-157:5; Ex. 8 at 68:13-69:10.) Delgado eventually sent Biotronik a copy of his Separation Agreement—which showed SJM

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would release him from his TOY provision—and discussions regarding potential employment ensued. (Pieper Decl., Ex. 1 at 182:18-183:12, 184:17-186:8; Ex. 8 at 71:571:15; Ex. 9.) As he prepared to depart SJM, Delgado transitioned his AVP role to Ayers, working closely with him on recruiting, retention, and internal promotions, among other tasks. (Pieper Decl., Ex. 10 at 76:24-78:23, 80:22-82:9.) Delgado also took steps to help Ayers and SJM maintain relationships with important customers by educating Ayers on key accounts and physicians in the Mid-Atlantic area.

(Id. at 111:19-112:7.)

On

December 27, 2013—the last day of his TOY provision as modified by the Separation Agreement—Delgado’s SJM employment ceased. Delgado continued to work for SJM up to and including that date. (Pieper Decl., Ex. 1 at 179:23-25; Exs. 11, 12.) Even after departing from SJM, Delgado continued assisting Ayers by, for example, suggesting he help Dr. Rafique Ahmed, an important SJM customer, with a potential device donation to charity. (Pieper Decl., Ex. 10 at 107:17-109:5.) Terms Of Delgado’s SJM Employment Agreements Modified By His Separation Agreement When Delgado first joined SJM, he executed an employment agreement, which was periodically amended. (Pieper Decl., Exs. 4, 13.) His SJM employment agreement contained a confidentiality clause, as well as post-employment restrictive covenants related to non-competition and non-solicitation of SJM customers and employees. (Pieper Decl., Ex. 13 at ¶¶ 7-9.) Those terms were incorporated into his Separation Agreement. (Pieper Decl., Ex. 7 at ¶¶ 1.B., 6.)

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Delgado’s Employment At Biotronik As Delgado’s SJM employment came to an end, Biotronik made an employment offer to Delgado, which Delgado weighed against his Boston Scientific offer. (Pieper Decl., Ex. 1 at 181:4-17, 201:18-203:23.) Ultimately, Delgado signed an employment agreement with Biotronik, which became effective in February 2014 when Delgado began working for Biotronik. (Pieper Decl., Ex. 1 at 201:18-203:23; Ex. 14.) As part of Biotronik’s standard practice with newly hired competitive recruits, Ramon Carrasquillo—Biotronik’s director of field organization development—told Delgado that he needed to abide by the restrictive covenants in his SJM agreements. (Pieper Decl., Ex. 8 at 97:4-14.) To further incentivize Delgado to comply with those obligations—and avoid accusations of tortious interference—Biotronik took several additional measures. For example, Biotronik employed Delgado as the AVP for its Southeast territory, which did not include any accounts in his former SJM area. (Id. at 31:21-32:6, 131:24-132:6; Ex. 14 at ¶ 1; Ex. 28 at 5.) Delgado committed to a four-year TOY provision, and received a guaranteed monthly commission on top of his base salary for the first 18 months of his employment as income security since he could not work in his former SJM accounts. (Pieper Decl., Ex. 8 at 94:1-14; Ex. 14 at ¶ 3(2).) In addition, Biotronik excluded Delgado from competitive recruiting efforts and hiring decisions involving SJM employees. (Pieper Decl., Ex. 8 at 103:14-104:6, 116:6-11, 116:24117:13, 120:1-4, 122:5-9, 125:2-5, 129:21-130:12, 131:10-13.)

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LEGAL STANDARD ON SUMMARY JUDGMENT Summary judgment is appropriate where “the movant shows that there is no genuine dispute as to any material fact and . . . is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A fact is material where its resolution will affect the disposition of the case, and a dispute is genuine where, based on the evidence, a reasonable jury could return a verdict for either party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 252 (1986). “Summary judgment is also appropriate in favor of the moving party ‘where no reasonable jury could find the facts necessary to entitle [the non-moving party] to relief.’” Johnson v. Wells Fargo Bank, N.A., 744 F.3d 539, 541-42 (8th Cir. 2014) (brackets in original; citation omitted). In other words, where a party “fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial,” summary judgment must be granted. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). ARGUMENT The Court should grant Defendants’ Motion for Partial Summary Judgment because SJM failed to adduce sufficient evidence to support several of its claims. First, SJM relies only on suggestions of misuse—not evidence—for its contention that Delgado wrongfully used SJM confidential information in breach of his SJM employment agreement. Second, SJM failed to adduce evidence necessary to support the intent and damages elements of its tortious interference claim. Third, both of SJM’s breach of duty claims fail because: (1) SJM’s theory of liability is unsupported under Minnesota law; (2) the undisputed evidence demonstrates that Delgado did not breach a fiduciary duty or his

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employee duty of loyalty; and (3) Delgado did not owe a fiduciary duty. Finally, SJM’s unjust enrichment and constructive trust and accounting “claims” are inappropriate because imposing a constructive trust and accounting is a remedy—not a claim—and SJM abandoned its legally deficient unjust enrichment theory. I.

SJM’s confidentiality allegations fail to rise beyond conjecture. SJM failed to adduce evidence sufficient to establish a genuine issue of material

fact as to Delgado’s alleged breach of the confidentiality provision in his SJM employment agreement.3

Rather, SJM relies on speculation and conjecture—not

evidence—to support its claim. Delgado is thus entitled to summary judgment as to the confidentiality allegations in Count I of SJM’s Verified Complaint. The express terms of the confidentiality clause in Delgado’s SJM employment agreement provide only two forms of actionable breach: (1) disclosure of SJM confidential information to a third party, and (2) use of SJM confidential information for personal benefit. (Pieper Decl., Ex. 13 at ¶ 7.B.) As part of its breach of contract claim, SJM alleges Delgado “us[ed] or disclos[ed] confidential SJM information to Biotronik including, but not limited to, information regarding SJM’s customers and the employment contract status of SJM’s sales employees.” (Verified Compl. at ¶ 30.) The sum total of SJM’s allegations revolves around two facts: Delgado’s retention of a USB 3

SJM accuses Delgado of breaching the confidentiality, non-competition, and non-solicitation restrictive covenants in his SJM employment agreement. On this Motion, Delgado seeks summary judgment on only the breach allegations concerning confidentiality. Delgado, however, denies that he breached any provision in the agreement, and nothing in this Motion shall be construed as a waiver or concession of any defense to those allegations.

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storage device that he accessed after the start of litigation, and Delgado’s access of a “secure web portal” while still employed by SJM. (Pieper Decl., Ex. 15 at 5.) Neither of these facts shows Delgado used SJM confidential information for his own benefit or disclosed it to Biotronik or any other third party. With respect to the USB device, SJM alleges that “[n]umerous confidential SJM documents were found” on it, and that when Delgado inserted the device into his personal computer on November 3, 2014, he “destroyed” evidence of the “last accessed” date for those files. (Id.) None of these allegations demonstrate that Delgado improperly used or disclosed any SJM confidential information contained on the USB device. Indeed, at SJM’s insistence, Gary Huestis—Defendants’ computer forensics expert—prepared (and later supplemented) an expert report detailing his analysis of the presence or absence of documents from the USB device on both of Delgado’s laptop computers. (Pieper Decl., Exs. 16, 17.) After applying an analysis comparing the unique “hash value” of each document on the USB device with all files on Delgado’s laptop, Huestis found no matches. (Pieper Decl., Ex. 17 at 5-6.) Huestis then applied a list of search terms chosen by SJM to an analysis of all documents and information on Delgado’s laptops; again, Huestis found no matches. (Id.) SJM’s own computer forensics expert, Tim Schirm, does not dispute those conclusions. (Pieper Decl., Ex. 18 at 109:3-19.) That the “last accessed” metadata value changed when Delgado inserted the USB device into his laptop—a fact Schirm admits Delgado would not have been aware of (id. at 76:6-19)—is of no consequence, as there exists no evidence to show Delgado did anything with SJM-

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related files on the device.4

Indeed, Schirm’s analysis demonstrated that the “last

accessed” metadata only changed as to some—but not all—files contained on the USB device and that there was no evidence of insertions of the device into other computers between the time Delgado ceased his SJM employment and November 3, 2014. (Id. at 96:24-99:16, 101:23-102:6.) SJM’s other allegation as to confidentiality is that he “accessed a secure SJM web portal” while still employed by SJM. (Pieper Decl., Ex. 15 at 5.) Simply “accessing” purported SJM confidential information while still employed by SJM is not an actionable breach since Delgado was permitted to access information under the terms of his employment. Further, Delgado unequivocally testified that he only accessed the “secure SJM web portal” for the permissible purpose of estimating his and his wife’s year-end compensation.5 (Pieper Decl., Ex. 1 at 250:12-251:2.) SJM has not—and cannot—dispute these facts.

Indeed, SJM’s corporate

witnesses failed to identify any facts to establish Delgado’s alleged wrongful use or

4

SJM adduced no evidence that any of the files on the USB device contained SJM confidential information under the definition provided in Delgado’s SJM employment agreement. Further, Delgado testified that he inserted the USB device into his computer before turning it over to his counsel in order to secure personal family photos that it indisputably contained. (Pieper Decl., Ex. 1 at 239:19-240:15.) All SJM is able to show with respect to the USB device is that Delgado inserted it into his laptop on November 3, 2014—a fact Delgado admits. (Pieper Decl., Ex. 18 at 65:19-66:8.) Further, because all of the SJM-related data on the USB device was created or last modified between 2009 and 2012, it is simply unbelievable that such information was relevant to “existing or reasonably foreseeable business” in 2014 and beyond. (Pieper Decl., Ex. 13 at ¶ 7.B.) 5 Delgado’s wife, Jamie Stowe, formerly worked as a SJM sales representative. (Pieper Decl., Ex. 1 at 225:7-25.)

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disclosure of SJM confidential information.

(Pieper Decl., Ex. 10 at 294:6-295:1,

296:13-297:5; Ex. 19 at 51:20-52:6, 59:24-60:13.) And SJM elicited no testimony from Delgado or others at Biotronik to support its position that Delgado wrongfully used or disclosed any SJM confidential information. (Pieper Decl., Ex. 1 at 24:2-5, 241:17242:8, 251:20-252:2.) This leaves SJM grasping at the one straw left: mere conjecture. The District of Minnesota, however, recently granted summary judgment against SJM where it sought to rely on exactly that and in a case involving an identical confidentiality clause and nearly identical evidence. There, the SJM employee sent three documents that included SJM customer sales information from his SJM email address to his personal email address. St. Jude Med., S.C., Inc. v. Biosense Webster, Inc., et al., 994 F. Supp. 2d 1033, 1045 (D. Minn. 2014) (“De Castro”). SJM asserted that the information contained useful product pricing data and the timing inferred a use or disclosure of the information. Id. The court dismissed SJM’s breach claim as to confidentiality, stating: “St. Jude has not offered any evidence beyond the mere suggestion of misuse.” Id.; see also Manhattan Grp., LLC v. Rizer, No. C5-01-459, 2001 WL 1402693 *2 (Minn. Ct. App. Nov. 13, 2001) (unpublished); Commerce Nat’l Ins. Servs., Inc. v. Buchler, 120 F. App’x 414, 418 (3d Cir. 2004).

Likewise, SJM’s confidentiality allegations here do not arise above an

unfounded suggestion of misuse. Because SJM’s position rests on conclusory allegations and there exists no material facts to support a claim that Delgado wrongfully used or disclosed SJM

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confidential information, the Court should grant summary judgment in Delgado’s favor accordingly. II.

SJM cannot establish a genuine issue of material fact as to the “intentional procurement” and “damages” elements of its tortious interference claim. SJM also failed to establish a genuine issue of material fact as to its tortious

interference with contract claim against Biotronik. To succeed, SJM bears the burden of proving five elements: “‘(1) the existence of a contract; (2) the alleged wrongdoer’s knowledge of the contract; (3) intentional procurement of its breach; (4) without justification; and (5) damages.’” Kallok v. Medtronic, Inc., 573 N.W.2d 356, 362 (Minn. 1998) (quoting Kjesbo v. Ricks, 517 N.W.2d 585, 588 (Minn. 1994)). SJM’s claim fails as a matter of law on at least the intentional procurement and damages elements.6 Indeed, the undisputed record demonstrates that Biotronik took measures to ensure Delgado would not breach his SJM employment agreement, and that SJM failed to establish any purported damages attributable to Biotronik. Accordingly, the Court should grant summary judgment in Biotronik’s favor as to Count IV of SJM’s Verified Complaint. A.

Biotronik did not procure a breach of Delgado’s SJM employment agreement.

To establish the intentional procurement element of tortious interference, SJM must produce evidence that Biotronik actively and intentionally used Delgado in a 6

This assumes arguendo that SJM can establish a breach of Delgado’s SJM employment agreement in the first instance, which it cannot. Likewise, Biotronik’s conduct was justified under prevailing Minnesota law, which it will establish should tortious interference remain a triable claim.

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manner that caused a violation of his SJM employment agreement. Benfield, Inc. v. Moline, No. CIV. 04-3513(MJD/SRN), 2006 WL 452903, at *10 (D. Minn. Feb. 22, 2006) (“Plaintiffs must produce some evidence that Collins intentionally used Moline to solicit Benfield employees in violation of his contract because there is no liability for merely passively permitting him to do so.”). Further, SJM must show that Biotronik proximately caused Delgado’s breach.

Qwest Commc’ns Co. v. Free Conferencing

Corp., No. CIV. 10-490 (MJD/SER), 2015 WL 999661, at *7 (D. Minn. Mar. 5, 2015). Importantly, an employer cannot intentionally procure an employee’s breach of a TOY provision by offering employment where the employee is released by his former employer. See St. Jude Med. S.C., Inc. v. Hanson, No. CIV. 13-2463 (RHK/BRT), 2015 WL 2101055, at *5 (D. Minn. May 6, 2015) (granting summary judgment on tortious interference claim in Biotronik’s favor after finding no intentional procurement of a breach); see also Matson Logistics, LLC v. Smiens, No. 12-400 ADM/JJK, 2012 WL 2005607, at *10 (D. Minn. June 5, 2012). SJM offers two tortious interference theories. First, it argues Biotronik intended to procure a breach of Delgado’s SJM employment agreement merely by negotiating employment terms while Delgado remained under his TOY provision. (Pieper Decl., Ex. 15 at 11-13.)

Second, SJM asserts that Biotronik intended to procure a breach of

Delgado’s post-employment non-competition and non-solicitation covenants after Delgado began working for Biotronik. (Id.) SJM failed to adduce evidence sufficient to avoid summary judgment under either theory.

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1.

Biotronik did not procure a breach of Delgado’s TOY provision.

As an initial matter, SJM’s first tortious interference theory fails because SJM cannot establish a predicate breach that Biotronik procured. Under Delgado’s Separation Agreement, SJM consented to release Delgado from his employment as of December 27, 2013. (Pieper Decl., Ex. 7.) SJM included an integration clause in the Separation Agreement such that its terms took precedence over any prior agreements. (Id. at ¶ 15.) Abiding by those terms, Delgado worked for SJM up to and including his final day of employment—as modified by the parties’ Separation Agreement—and, as such, never breached his TOY provision. (Pieper Decl., Ex. 1 at 250:8-11; Ex. 7.) Certainly, there can be no procurement of a breach where there is no breach, and Biotronik cannot be liable accordingly. See Benfield, Inc., 2006 WL 452903, at *10. Even if Delgado had breached his TOY provision—and he did not—SJM adduced no evidence to suggest that Biotronik procured any such breach. Delgado requested a separation package to terminate his SJM employment in the first half of 2013 (Pieper Decl., Ex. 1 at 135:1-18); yet, Delgado’s active negotiations with Biotronik regarding potential employment did not begin until November 2013, after he informed Biotronik he had sought a release from his SJM employment agreement. (Pieper Decl., Ex. 8 at 56:364:23, 67:1-17, 68:13-69:10.) Further, Biotronik did not offer Delgado employment until December 2013, after (1) Delgado provided Biotronik with his SJM Separation Agreement, and (2) SJM announced to the entire Mid-Atlantic area that Delgado would

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leave the company in December 2013.7 (Pieper Decl., Ex. 6; Ex. 8 at 71:5-15; Exs. 9, 20.) Moreover, SJM was fully aware that Delgado sought employment elsewhere while he remained under his TOY provision and did not oppose those efforts. (Pieper Decl., Ex. 3 at 43:10-44:15.) As he negotiated his separation, Delgado discussed those efforts with both Spadaro—his immediate supervisor—and Paul Bae, SJM’s Global Human Resources and Chief Compliance Officer. (Pieper Decl., Ex. 1 at 178:2-17; Ex. 21 at 103:11-21.) These facts distinguish this case from others finding tortious interference where an employee became employed elsewhere prior to expiration of a TOY provision. See, e.g., De Castro, 994 F. Supp. 2d at 1048-49; St. Jude Med. S.C., Inc. v. Biosense Webster, Inc., No. A13-0414, 2013 WL 5508389, at *3 (Minn. Ct. App. Oct. 7, 2013) (“Jackson”) (unpublished). In both De Castro and Jackson, the employee at issue was under a TOY provision with SJM; Biosense Webster offered the employee a position before the term expired; the employee accepted the position and terminated employment with SJM, thus

7

Any argument that Biotronik tortiously interfered with Delgado’s TOY provision because his Separation Agreement was not yet signed by both parties does not change the fact that the terms of the agreement were not materially altered after the initial draft. SJM had decided to release Delgado from his TOY provision by at least November 2013, and affixing signatures to the final agreement was a mere ministerial task that had yet to be completed. See Luigino’s Inc. v. Societes des Produits Nestle S.A., No. CIV. 034186ADM/RLE, 2005 WL 735919, at *3 (D. Minn. Mar. 30, 2005); QFA Royalties, LLC v. A&D Foods, Inc., No. 06-CV-00879–WDM-CBS, 2007 WL 1549039, at *2 (D. Colo. May 25, 2007); Reed By and Through Reed v. United States, 717 F. Supp. 1511, 1517 (S.D. Fla. 1988).

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breaching the TOY provision. De Castro, 994 F. Supp. 2d at 1044; Jackson, 2013 WL 5508389, at *3. Unlike De Castro and Jackson, (1) Biotronik did not discuss employment with Delgado until after he had initiated separation negotiations with SJM; (2) Biotronik insisted on seeing the terms of Delgado’s SJM employment agreement and Separation Agreement in order to confirm that it was lawful to hire him; (3) Delgado never hid from SJM the fact that he was seeking other employment; and (4) Delgado never breached the TOY provision in his SJM employment agreement because he fulfilled the term as modified by his Separation Agreement. (Pieper Decl., Ex. 1 at 250:8-11; Ex. 3 at 43:1044:15; Ex. 7; Ex. 8 at 68:13-69:13.) Indeed, these facts are far more analogous to those in St. Jude Medical S.C., Inc. v. Hanson, where Judge Kyle granted summary judgment on SJM’s tortious interference claim and found Biotronik avoided offering employment until after satisfying itself that the employee’s employment had terminated. 2015 WL 2101055, at *5. Because no breach of Delgado’s TOY provision occurred, and Biotronik did not intentionally procure a breach of Delgado’s TOY provision, SJM’s first tortious interference theory fails as a matter of law. 2.

Biotronik did not procure a breach of Delgado’s postemployment covenants.

SJM likewise failed to adduce any evidence—much less substantial admissible evidence—that Biotronik intentionally procured a breach of Delgado’s post-employment restrictive covenants. To the contrary, Biotronik took steps to ensure that Delgado would

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comply with his restrictive covenants, including: (1) informing Delgado that he needed to comply with his post-employment covenants; (2) assigning Delgado to manage sales activity in Biotronik’s Southeast sales division, an entirely different territory from the Mid-Atlantic area he worked in at SJM with no overlapping accounts; (3) excluding Delgado from recruiting and hiring activities involving SJM employees; and (4) guaranteeing Delgado’s commissions for the first 18 months of his Biotronik employment so as to alleviate any economic pressures and discourage Delgado from violating his restrictions. (Pieper Decl., Ex. 8 at 94:1-14, 97:4-14; Ex. 22 at 45:20-46:22, 48:14-49:3.) Further, SJM’s contentions that Biotronik intentionally procured a breach of Delgado’s post-employment covenants consist entirely of conclusory allegations and rank speculation. In its answer to an interrogatory calling for all facts related to its tortious interference claim against Biotronik, SJM merely stated without elaboration: “Biotronik nevertheless employed and retained Delgado knowing that he had and/or would violate the restrictive covenants in his SJM Employment Agreement.” (Pieper Decl., Ex. 15 at 12.) When asked to detail Biotronik’s involvement in Delgado’s alleged breaches, SJM’s corporate representative designated to testify on its tortious interference claim offered nothing more than unintelligible conjecture: Q.:

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So you told me earlier in the context of the discussion that you had with Mr. Ayers about 60 days ago, another thing that you discussed was it appeared that Mr. Delgado was doing these things with Biotronik approval. What did you discuss with Mr. Ayers related to that?

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A.:

Well, I surmised that, you know, to have an area vice president of my—you know, at St. Jude Medical to recruit competitively or to, you know, to—to violate non-competes without—I mean, we are very specific and directed when we hire somebody from a competitor not to violate the non-compete. . . . So, you know, Chris Delgado is not an unintelligent man, so for him to do that so openly without Biotronik’s express consent would seem to be ludicrous.

(Pieper Decl., Ex. 3 at 39:19-40:10.) When asked if he had any other information to offer on the tortious interference claim, SJM’s designee answered no. (Id. at 133:24-134:7.) “‘A case founded on speculation or suspicion is insufficient to survive a motion for summary judgment.’” Yarborough v. DeVilbiss Air Power, Inc., 321 F.3d 728, 730 (8th Cir. 2003) (quoting Nat’l Bank of Commerce v. Dow Chem. Co., 165 F.2d 602, 610 (8th Cir. 1999)). In order to defeat this motion, SJM must present substantial admissible evidence sufficient to establish a genuine issue of material fact that Biotronik actively and intentionally caused Delgado to breach his post-employment restrictive covenants. Benfield, Inc., 2006 WL 452903, at *10. SJM has not adduced such evidence, and, as a result, the Court should grant summary judgment in Biotronik’s favor on SJM’s tortious interference claim. B.

SJM has not established that Biotronik’s alleged conduct caused damages.

Separate from SJM’s failure to establish intentional procurement, SJM’s tortious interference claim also cannot survive summary judgment because it failed to adduce evidence sufficient to support the essential element of damages. SJM seeks two forms of damages for Biotronik’s alleged tortious interference: lost profits and attorneys’ fees.

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SJM, however, has identified no way in which Biotronik caused it to lose profits at any of the 12 customer accounts8 at issue; rather, SJM’s lost profits allegations focus singularly on Delgado’s purported conduct and impermissibly seek double recovery. Separately, in order to recover attorneys’ fees as a form of damages, SJM bears the burden of proving that it would not have had a breach of contract claim against Delgado but for Biotronik’s alleged conduct and that such conduct thrust SJM into litigation with Delgado. No evidence exists to satisfy that burden. Therefore, SJM cannot establish a genuine issue of material fact as to the damages element of tortious interference, and the Court should grant Biotronik’s summary judgment motion accordingly. 1.

Biotronik did not cause SJM’s purported lost profits, and SJM seeks impermissible double recovery.

Failure to prove damages for tortious interference warrants dismissal on summary judgment. See Storage Tech. Corp. v. Cisco Sys., Inc., 395 F.3d 921 (8th Cir. 2005) (affirming district court’s dismissal of tortious interference claim on summary judgment where plaintiff failed to establish damages pursuant to Minnesota law). While courts do not prohibit evidence of damages upon a difficulty in ascertaining the amount, the party bearing the burden to prove damages—SJM—must “furnish a reasonable basis” upon which the trier of fact can approximate damages. Polaris Indus. v. Plastics, Inc., 299 8

SJM argues that it has suffered damages in 12 accounts in Delgado’s former SJM area: Abington Memorial Hospital; Anne Arundel Medical Center; Brandywine Hospital; Bryn Mawr Hospital; Chester County Hospital; Crozer-Chester Medical Center; Cooper University Hospital; Einstein Medical Center-Montgomery; Our Lady of Lourdes Medical Center; Robert Wood Johnson University Hospital; Franklin Square Hospital; and Shady Grove Adventist Hospital. (Pieper Decl., Ex. 15 at 18.)

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N.W.2d 414, 419 (Minn. 1980). To that end, “‘damages which are speculative, remote, or conjectural are not recoverable.’” Leoni v. Bemis Co., 255 N.W.2d 824, 826 (Minn. 1977) (citation omitted).

Further, “when a plaintiff has stated a tort claim that is

independent of its breach of contract claim, the plaintiff has the burden of demonstrating how the damages it seeks for the tort differ from the damages it seeks for the breach of contract. Otherwise, the plaintiff is seeking impermissible double recovery.” De Castro, 994 F. Supp. 2d at 1051-52 (footnote omitted) (citing Brooks v. Doherty, Rumble & Butler, 481 N.W.2d 120, 128 (Minn. Ct. App. 1992)). SJM’s claim for lost profits due to Biotronik’s alleged tortious interference fails for two interrelated reasons: (1) SJM adduced no evidence to support the assertion that the lost profits it attributes to Biotronik differ from the lost profits it attributes to Delgado; and (2) SJM is unable to establish how Biotronik’s alleged conduct caused its alleged damages. It is undisputed that the lost profits SJM seeks for its tortious interference and breach of contract claims are one and the same. David Young—SJM’s corporate witness on damages—testified that SJM seeks to recover approximately $7.1 million in lost profit damages from Delgado and Biotronik collectively; he admitted that SJM makes no distinction as to what amounts of lost profits damages are separately attributable to Delgado and Biotronik. (Pieper Decl., Ex. 23 at 59:21-62:14, 102:11-19.) Indeed, Young unequivocally testified: “I have one lost profits number.” (Id. at 62:5-6.) This is not a case of joint and several liability. SJM’s effort to collect the same purported damages from different defendants for different purported injuries—one of which is

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alleged under a written contract, the other under tort—is thus a textbook example of a plaintiff seeking impermissible double recovery.9 Further, SJM’s inability to establish separate damages is a direct result of its failure to adduce evidence that Biotronik caused its alleged lost profits. None of SJM’s allegations as to why it lost profits at the 12 identified customer accounts concern any conduct by Biotronik; rather, all of the lost profits allegations relate solely to SJM’s contentions against Delgado. (Pieper Decl., Ex. 2 at 49-50; Ex. 15 at 18-24.) Since SJM’s lost profits allegations as to Biotronik are unsupported by the record and represent an unlawful attempt at double recovery, SJM is prohibited from recovering lost profits under this claim as a matter of law. 2.

SJM failed to adduce evidence that Biotronik thrust it into litigation with Delgado.

SJM also claims attorneys’ fees as a form of damages for tortious interference, based on its theory that attorneys’ fees are awarded for successful tortious interference claims as a matter of course. (Pieper Decl., Ex. 23 at 59:21-60:5.) That is not the law. 9

In the De Castro case, the court granted summary judgment on SJM’s breach of contract claim but found that permitting the duty of loyalty claim to go forward would lead to impermissible double recovery. 994 F. Supp. at 1051-52. SJM, however, argued it could alternatively plead breach of contract and duty of loyalty and seek the same damages in De Castro because those claims were predicated on supposedly separate conduct. Id. Here, SJM’s breach of contract claim is a condition precedent to establishing tortious interference; in other words, one cannot establish tortious interference without first establishing breach of contract. Sterling Capital Advisors, Inc. v. Herzog, 575 N.W.2d 121, 127 (Minn. Ct. App. 1998). If SJM is to prevail on tortious interference, it must also—not alternatively—prevail on breach of contract. Because its breach of contract claim against Delgado is not an alternative to its tortious interference claim against Biotronik, it cannot alternatively seek the same damages for both claims without necessarily seeking double recovery.

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Minnesota courts apply the third-party litigation exception in lieu of the American rule that parties typically bear responsibility for their own attorneys’ fees (absent applicable statutory or contract provisions) to certain tortious interference with contract claims, “permit[ting] a court to award attorney fees as damages if the defendant’s tortious act thrusts or projects the plaintiff into litigation with a third party.” Kallok, 573 N.W.2d at 363 (emphasis added); see St. Jude Med. S.C., Inc. v. Biosense Webster Inc., No. 62-CV11-718, 2012 WL 8009745 (Minn. 2d Jud. Dist. Ct. July 16, 2012); St. Jude Med. S.C., Inc. v. Biosense Webster, Inc., No. CIV. 12-621 ADM/TNL, 2014 WL 3573620, at *2 (D. Minn. July 18, 2014). By definition, the third-party litigation exception cannot apply unless SJM first establishes that a tort has been committed, and the tort had a natural and proximate consequence of projecting SJM into litigation with a third person. Prior Lake State Bank v. Groth, 259 Minn. 495, 499, 108 N.W.2d 619, 622 (1961); MinnComm Util. Constr. Co. v. Yaggy Colby Assocs., Inc., No. A11-1211, 2012 WL 1470191, at *3 (Minn. Ct. App. Apr. 30, 2012) (unpublished). To recover fees as a form of damages, SJM bears the burden of proving that, but for Biotronik’s alleged tortious interference, it would not have had to enforce its employment agreement with Delgado. See Kallok, 573 N.W.2d at 363. But SJM has failed to adduce evidence of any Biotronik conduct that thrust SJM into litigation with Delgado.

To the contrary, as detailed above, the undisputed record

establishes instead that Biotronik went to great lengths to ensure it did not induce a breach of Delgado’s SJM employment agreement. (Pieper Decl., Ex. 8 at 97:4-14, 94:114; Ex. 22 at 45:20-46:22, 48:14-49:3.)

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Since SJM has not established any amount of purported lost profits damages separately attributable to Biotronik—and has not adduced any evidence that Biotronik thrust it into litigation with Delgado so as to trigger the third-party litigation exception— the Court should grant summary judgment in favor of Biotronik on SJM’s tortious interference claim. III.

Delgado did not owe SJM a fiduciary duty, and SJM did not adduce sufficient evidence that Delgado breached a duty of loyalty. SJM pleads two duty of loyalty claims under Count III of its Verified Complaint:

(1) that Delgado breached a fiduciary duty and (2) that he breached his employee duty of loyalty.

Although SJM uses the terms “fiduciary duty” and “duty of loyalty”

interchangeably, they represent two separate claims with separate burdens of proof. SJM has not established sufficient evidence to succeed on its employee duty of loyalty claim, as Delgado did not impermissibly compete with SJM prior to his departure. Likewise, SJM failed to adduce evidence sufficient to prove that Delgado was an SJM fiduciary, let alone that he breached a fiduciary duty. Accordingly, the Court should grant summary judgment in Delgado’s favor on SJM’s breach of duty claims. A.

Delgado did not breach a fiduciary duty or employee duty of loyalty.

SJM relies on the same evidence for both of its duty of loyalty claims; it contends Delgado failed to timely negotiate and renew TOY provisions for sales personnel in his former area. (Pieper Decl., Ex. 15 at 9.) Those allegations do not support cognizable claims under Minnesota law and SJM has not adduced evidence sufficient to establish a genuine issue of material fact as to those claims.

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1.

Delgado did not breach his employee duty of loyalty.

In Minnesota, “[a]n employee’s duty of loyalty prohibits her from soliciting the employer’s customers for herself, or from otherwise competing with her employer, while she is employed.” Rehab. Specialists, Inc. v. Koering, 404 N.W.2d 301, 304 (Minn. Ct. App. 1987). Minnesota courts interpret “soliciting business or otherwise competing” to mean conduct such as directly approaching a customer while still employed and marketing a competitive product or urging a customer to terminate their contract with the employer. See, e.g., Marn v. Fairview Pharm. Servs. LLC, 756 N.W.2d 117, 121-22 (Minn. Ct. App. 2008); Jensen v. Am. Benefit Plan Adm’rs, Inc., No. C1-94-1149, 1994 WL 714339, at *2 (Minn. Ct. App. Dec. 27, 1994) (unpublished); see also Schlief v. NuSource, Inc., No. CIV. 10-4477 (DWF/SER), 2011 WL 1560672, at *6 (D. Minn. Apr. 25, 2011) (dismissing duty of loyalty claim on summary judgment where there existed no facts to show solicitation or competition during employment); Brown & Bins v. Lehman, No. C5-93-415, 1993 WL 377101, at *2 (Minn. Ct. App. Sept. 28, 1993) (affirming dismissal of duty of loyalty claim on summary judgment where there existed no evidence of solicitation). Importantly, Minnesota law on the duty of loyalty does not prohibit employees from making preparations for new employment while still employed; rather, employees enjoy a privilege to make such preparations so long as they are not unlawfully competing while still employed. Rehab. Specialists, Inc., 404 N.W.2d at 304. As an initial matter, no evidence exists to suggest Delgado directly competed with SJM while employed by SJM. Without the requisite evidence, SJM instead offers an unsupported theory contrary to Minnesota law governing the employee duty of loyalty.

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An alleged failure to renew the TOY provisions of “key employees” does not equate to soliciting business from existing customers or otherwise directly competing while still employed—nor should it.

If retroactive complaints about an employee’s past job

performance were sufficient to establish a breach of the employee duty of loyalty, employees would routinely expose themselves to potential liability each time they failed to perform tasks to the absolute satisfaction of their employers. The absence of any evidence to support an actual breach of the employee duty of loyalty justifies summary judgment as a matter of law. Even if SJM’s duty of loyalty allegations conformed to operative Minnesota law— and they do not—the undisputed facts undermine SJM’s claim: • SJM had no policy that obligated Delgado to commit employees within his area to TOY provisions, nor was there a uniform process governing the selection and signing of employees to such agreements. (Pieper Decl., Ex. 10 at 31:11-32:10; Ex. 24 at 205:22-206:9.) SJM went through phases during which employees were not signed to TOY provisions as a matter of company policy. (Pieper Decl., Ex. 24 at 223:2-24); Ex. 25 at 50:9-51:6.) Whether a TOY provision was desirable depended on SJM’s business circumstances and individual employee circumstances at any given time. (Pieper Decl., Ex. 10 at 19:18-20:8, 58:3-59:4; Ex. 26 at 15:23-17:14.) • Committing employees to TOY provisions was the result of a collaborative process that originated at the RSD level and ran through several layers of SJM management. (Pieper Decl., Ex. 10 at 53:15-54:16; Ex. 21 at 100:3-20; Ex. 25 at 39:11-41:25.) The process also involved the human resources department, the AVP, and the DVP. (Pieper Decl., Ex. 25 at 40:4-41:21.) Delgado did not have sole or even primary responsibility for renewing employees’ TOY provisions. • Whether an employee agrees to commit to a TOY provision is, ultimately, within the discretion of the individual employee herself, and there are numerous reasons why an individual employee may opt out of a TOY provision. SJM’s witness Jon Kasmir, for example, testified that he preferred to remain at will “in case other opportunities came about from other companies.” (Pieper Decl., Ex. 27 at 51:2352:9.) James Floyd, a former SJM RSD, testified that high-performing employees 80340149.8 0047984-00013

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did not need to sign TOY provisions because their strong numbers were job security enough. (Pieper Decl., Ex. 26 at 16:12-24.) Indeed, Delgado could not force employees to sign TOY provisions if they chose not to accept one, yet SJM would blame him for exactly that. Thus, for all of these reasons, SJM failed to adduce sufficient evidence that would create a genuine issue of material fact as to its employee duty of loyalty claim, and, as such, the Court should grant summary judgment on Count III accordingly. 2.

Delgado did not breach a fiduciary duty, if one existed.

For the same reasons described above, the Court should grant summary judgment as to SJM’s separate claim for breach of fiduciary duty, which relies on identical allegations that Delgado failed to appropriately renew TOY provisions. (Pieper Decl., Ex. 15 at 9-11.) Under Minnesota law, “[t]o recover for breach of fiduciary duty, a claimant must establish that a fiduciary relationship existed and that the fiduciary breached a duty arising from that relationship, causing damages.” Herzog v. Cottingham & Butler Ins. Servs., Inc., No. A14-0528, 2015 WL 134043, at *3 (Minn. Ct. App. Jan. 12, 2015) (unpublished). “The duty imposed on fiduciaries is the highest standard of duty implied by law.” Swenson v. Bender, 764 N.W.2d 596, 601 (Minn. Ct. App. 2009) (internal quotation marks and citation omitted). Accordingly, a fiduciary relationship entails “an unusually high degree of care.” Black’s Law Dictionary 744 (10th ed. 2014). Assuming arguendo that Delgado owed a fiduciary duty to SJM—and, as set forth below, he did not—SJM’s allegations do not support a claim that Delgado breached any such duty, as discussed above.

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B.

Delgado did not owe SJM a fiduciary duty.

SJM further seeks to impose a heightened standard of conduct on Delgado by alleging he owed a fiduciary duty to SJM. Undisputed evidence demonstrates, however, that Delgado did not serve in a fiduciary capacity, and owed no fiduciary duty to SJM beyond his common law employee duty of loyalty. Because SJM cannot establish the existence of a fiduciary relationship—an essential element of its breach of duty claim— the Court should grant summary judgment. Minnesota law recognizes two types of fiduciary relationships: per se and de facto. Swenson, 764 N.W.2d at 601. Per se fiduciary relationships “include trustee-beneficiary, attorney-client, business partnerships, director-corporation, officer-corporation, and husband-wife.” Id.; see also Hart v. Bell, 222 Minn. 69, 81, 23 N.W.2d 375, 382 (1946). De facto fiduciary relationships exist only where one “enjoys a superior position in terms of knowledge and authority and in whom the other party places a high level of trust and confidence.” Cent. Bank v. Rowe Constr., Inc., No. A10-1250, 2011 WL 1119872, at *4 (Minn. Ct. App. Mar. 29, 2011) (unpublished) (internal quotation marks and citation omitted); Minn. Timber Producers v. Am. Mut. Ins. Co., 766 F.2d 1261, 1267 (8th Cir. 1985) (describing other factors that may give rise to a fiduciary relationship, “such as disparity in business experience and greater access to facts and legal resources . . . when combined with a confidential relationship”). The only per se fiduciary duty potentially applicable here is that owed by corporate officers and directors. SJM has not alleged that Delgado was an officer or director of SJM, nor does any record evidence support that determination. Indeed, this

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case is distinguishable from the recent decision in St. Jude Medical v. Grubiak, where the court found fact issues existed because SJM presented evidence that it elected the defendant-employee as an officer of the company, and the defendant-employee testified that he did not consent to becoming an SJM officer. St. Jude Med. S.C., Inc. v. Grubiak, No. CIV. 14-109 JNE/JJK, 2015 WL 5286754, at *4-5 (D. Minn. Sept. 10, 2015). Here, it is undisputed that Delgado was neither elected as nor consented to being an officer or director of SJM; thus, Delgado was not a per se fiduciary. SJM likewise failed to adduce evidence of a de facto fiduciary relationship. Courts may determine as a matter of law that no de facto fiduciary duty exists where, as here, the undisputed facts support that conclusion. Minn. Timber Producers, 766 F.2d at 1267; Cent. Bank, 2011 WL 1119872, at *4. By virtue of his SJM employment, Delgado owed the common law duty of loyalty that all employees owe their employers; no evidence exists, however, to show Delgado was superior to SJM in business experience or financial control or had greater access to facts and legal resources such that he owed a heightened fiduciary duty. SJM employed Delgado as a manager, and, as in the case of virtually all corporate managers, he had access to some financial information and involvement in some business decisions; however, “[r]elationships that give rise to fiduciary duties transcend ordinary business relationships . . . .” Herzog, 2015 WL 134043, at *3. Indeed, to find that Delgado was a de facto fiduciary to SJM would dramatically expand the ranks of corporate fiduciaries under Minnesota law so as to encompass all middle management

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employees with some influence over and knowledge of corporate financial and business matters. That is an untenable proposition. For all these reasons, SJM has not adduced evidence to support its duty of loyalty claims and cannot withstand this summary judgment challenge. The Court should grant Defendants’ motion accordingly. IV.

SJM’s unjust enrichment, constructive trust, and accounting “claims” are inapplicable. Count V of SJM’s Verified Complaint alleges that Defendants were unjustly

enriched by Delgado’s allegedly unlawful conduct, and that SJM is entitled to impose a constructive trust and accounting. These claims are flawed in three respects. First, Minnesota law is clear that a constructive trust and accounting is a remedy—not a claim. Wright v. Wright, 311 N.W.2d 484, 485 (Minn. 1981); St. Jude Med. S.C., Inc. v. Hanson, 2012 WL 2101055, at *6. To the extent SJM is pursuing a constructive trust and accounting as a claim, it fails. Second, unjust enrichment is improper. Unjust enrichment “does not apply when there is an enforceable contract that is applicable.” Caldas v. Affordable Granite & Stone, Inc., 820 N.W.2d 826, 838 (Minn. 2012); see also Qwest Commc’ns Co. v. Free Conferencing Corp., 990 F. Supp. 2d 953, 981 (D. Minn. 2014).

SJM’s unjust

enrichment claim is premised on the justness of behavior by Delgado and Biotronik as it applies to Delgado’s written SJM agreements. As SJM makes no allegation of an implied or quasi-contract, it cannot sustain an unjust enrichment claim. St. Jude Med. S.C., Inc. v. Hanson, 2015 WL 2101055, at *12-13.

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CASE 0:14-cv-04418-PJS-JJK Document 150 Filed 01/22/16 Page 35 of 35

Finally, SJM abandoned its unjust enrichment claim, and SJM’s designated damages witness unequivocally testified to that effect. (Pieper Decl., Ex. 23 at 54:2055:18, 128:8-130:21.) As such, SJM’s unjust enrichment claim is baseless and cannot survive summary judgment. CONCLUSION For the foregoing reasons, Defendants respectfully request the Court grant Defendants’ motion for partial summary judgment. STOEL RIVES LLP

Dated: January 22, 2016

/s/ Andrew J. Pieper Steven R. Kluz (#286588) Margaret E. Dalton (#387357) Andrew J. Pieper (#389262) Todd M. Winter (#390324) 33 South Sixth Street, Suite 4200 Minneapolis, MN 55402 Telephone: 612-373-8800 Facsimile: 612-373-8881 [email protected] [email protected] [email protected] [email protected] Todd A. Hanchett (OR Lic. #992787) (admitted pro hac vice) STOEL RIVES LLP 900 SW Fifth Avenue, Suite 2600 Portland, OR 97204 Telephone: 503-224-3380 Facsimile: 503-220-2480 [email protected] ATTORNEYS FOR DEFENDANTS CHRISTOPHER DELGADO AND BIOTRONIK, INC.

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