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St. Jude S.C. v. Medtronic: Contract? What contract?

Here’s one from the [Stuff] People Pull department, that is, real-world stories that I collect to tell to my 3L contract-drafting students and maybe someday include in a book:

Annette Cormier worked for medical-device manufacturer St. Jude S.C., Inc. Her husband Joe worked for the same company as a sales representative.

In 2009, Annette left her at-will employment with St. Jude to go to work for Medtronic, a competitor of St. Jude. Curiously, her husband Joe’s sales for St. Jude dropped significantly.

St. Jude sued Medtronic (but not Annette or Joe). The two companies went to private arbitration.

The arbitration panel made some interesting findings about what had transpired behind the scenes before Annette jumped from St. Jude to Medtronic:

… Medtronic management was aware of representations made by Joe Cormier that if Medtronic hired Annette substantial business would follow.

Medtronic knew of Joe’s contractual obligations to St. Jude and they knew Joe was prepared to let the business go with Annette to Medtronic for the right price, an obvious breach of his contract [with St Jude].

Despite knowing of Joe’s term-of-years contract …, Medtronic personnel continue to allow Joe to take part in Annette’s contract negotiations.

[Extra paragraphing added]

The arbitration panel found that Medtronic had tortiously interfered with St. Jude’s contractual and business relationship with Joe. It awarded St. Jude lost profits. See St. Jude Medical S.C., Inc. v. Cormier, No. 13-2147, slip op. at 2, 6 (8th Cir. Mar. 11, 2014) (reversing summary judgment that St. Jude was barred by res judicata from later suing Annette personally). (The factual summary above is adapted from the Eighth Circuit’s opinion.)

Contract-drafting lesson? I’m not sure there’s really a lesson here for contract drafters. The episode does seem to indicate that more employee education about do’s and don’ts of business law might have been in order, for both St. Jude and Medtronic.

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