Lombard Med. Technologies, Inc. v. Johannessen, Civil Action No. 10cv10995-NG

729 F.Supp.2d 432

LOMBARD MEDICAL TECHNOLOGIES, INC., Plaintiff,

v.Nils JOHANNESSEN, Thomas Sassler, and TriVascular, Inc., Defendants.

Civil Action No. 10cv10995-NG.

United States District Court, D. Massachusetts.

July 2, 2010.

Ariella M. Feingold, Jonathan D. Rosenfeld, Wilmer Hale LLP, Boston, MA, for Plaintiff.

Patrick J. Bannon, Nicholas W. Allen, McCarter & English, LLP, Boston, MA, for Defendants.

MEMORANDUM AND ORDER RE: MOTION FOR A PRELIMINARY INJUNCTION

GERTNER, District Judge:

Lombard Medical Technologies, Inc. ("Lombard") is seeking a preliminary injunction to prohibit its former employees, Nils Johannessen and Thomas Sassler, from working for its competitor, TriVascular Inc., in violation of their non-competition agreements. I find that Lombard has successfully demonstrated a likelihood of success on the breach of contract claim and that without injunctive relief, it will suffer irreparable harm. Accordingly, its motion for a preliminary injunction (document # 2) is GRANTED IN PART AND DENIED IN PART, but only with respect to Johannessen and Sassler.

I. BACKGROUND

A. Johannessen's and Sassler's Employment with Lombard

Lombard Medical Technologies, Inc. is a medical device company that develops products for use in the treatment of vascular disease. Its leading product is Aorfix, an endovascular stent graft that treats abdominal aortic aneurisms ("AAA"). It is designed to treat regular-angled aortas (those with less than 60 degrees of bend) and "high-angled" aortas (those with 60 to 90 degrees of bend). (Phillips Decl. ¶ 4.) Lombard has spent about $85 million dollars and 12 years developing Aorfix. ( Id. ¶ 6.)

In order to receive approval to market a device from the Food and Drug Administration ("FDA"), a company must conduct clinical trials to demonstrate a certain level of safety and effectiveness. In 2005, Lombard began its clinical trials on Aorfix. (Phillips Decl. ¶ 7.) Implementing these clinical trials requires persuading medical centers to participate, apparently a competitive and resource-intensive process.

To aid with the operation and expansion of the Aorfix clinical trials, in 2007, Lombard hired both Nils Johannessen and Thomas Sassler as Investigational Site Specialists.¹ This job entailed identifying medical centers to participate, persuading them to refer patients to the clinical trials, meeting with doctors to discuss Aorfix and to evaluate its strengths and weaknesses, and participating in weekly conference calls with Lombard's business, marketing, regulatory, and clinical personnel, among other responsibilities. Johannessen and Sassler were Lombard's only Investigational Site Specialists, and as such, the public face of Lombard. (Phillips Decl. ¶ 17.)

According to Lombard, as Investigational Site Specialists, Johannessen and Sassler became familiar with Lombard's confidential information, including its technology, trade secrets, marketing plans, pricing data, non-public clinical trial data, information about the strengths and weaknesses of Aorfix, clinical trial design, agreements with medical centers, and contacts with key decisionmakers at medical centers. ( See Compl. Ex. A § 2.) Lombard also trained Johannessen and Sassler about Aorfix, and gave them confidential information about the product. (Phillips Decl. ¶ 16.).² In addition, Lombard invested substantial resources in helping Johannessen and Sassler to develop contactsand relationships with medical centers for the Aorfix clinical trials. (Phillips Decl. ¶ 18.)

B. The Non-Competition Agreement

Before beginning their jobs with Lombard, Johannessen and Sassler each signed the Agreement Regarding Inventions, Confidentiality, and Non-Competition ("Non-Competition Agreement"). (Compl. Exs. A, B.) Section 7 of the Non-Competition Agreement provides that for six months after their departure from Lombard, they will not "directly or indirectly, whether as owner, partner, shareholder, consultant, agent, employee, co-venturer or otherwise, engage, participate or invest in any business activity in the Restricted Region with respect to the Products or Services." (Compl. Exs. A, B § 7.) The "Restricted Region" is defined as "any location in which the Company operates or into which the Company directs the Products or Services." ( Id.) "Products or Services" means:

the manufacture of, and conduct of clinical trials in connection with, the High Angle AORfix Bifurcated Stent Grant, or other products and services that are competitive with or similar to the products or services of the Company, or products of services which the Company has under development of which are the subject of active planning at any time during [the employee's] employment.

(Compl. Exs. A, B § 1(e).)

C. Johannessen's and Sassler's Resignation and Employment with TriVascular

On May 4 and May 7, 2010, respectively, Johannessen and Sassler gave their one-month's notice of resignation. They informed Peter Phillips, the Founder and Chief Technology Officer of Lombard, that they would be working for TriVascular. (Phillips Decl. ¶¶ 30-32.) TriVascular is a competing medical device company that is also developing an endovascular stent graft to treat AAA. Like Lombard, TriVascular is conducting clinical trials for its own stent graft in order to secure FDA approval. (Mann Aff. ¶ 2; Chobotov Aff. ¶¶ 2-9.) Johannessen and Sassler accepted positions as Clinical Field Specialists, whose responsibilities include managing clinical trials at various hospitals. (Mann Aff. ¶ 2.)

On May 14, John Rush, Lombard's Chief Executive Officer, met with Johannessen and Sassler to inform them that their employment with TriVascular would violate their Non-Competition Agreements. He also asked them to reconsider. (Rush Decl. ¶¶ 4-5.) They rejected Rush's offer. Lombard then contacted TriVascular to inform them that Johannessen and Sassler would be in violation of their Agreements and that its employment of them would interfere with the Non-Competition Agreements. (Rush Decl. ¶ 6; Rosenfeld Decl. ¶ 5; Exs. B, C.) TriVascular disputed this assessment and affirmed it would be hiring Johannessen and Sassler. Lombard filed this suit soon thereafter.

II. PROCEDURAL HISTORY

Plaintiffs brought suit on June 15, 2010, alleging breach of contract by Johannessen and Sassler and tortious interference with contractual relations by TriVascular. On the same day, they filed a motion for a temporary restraining order ("TRO"), seeking to enjoin Johannessen and Sassler from working at TriVascular and TriVascular from hiring Johannessen and Sassler. Judge Stearns held a hearing on June 18, 2010, and found there to be a likelihood of success based upon the Non-Competition Agreements. He granted the TRO, but only against Johannessen and Sassler, not TriVascular. On June 29, 2010, this Court held a hearing on the motion for a preliminary injunction.

III. DISCUSSION

A. Personal Jurisdiction

Defendants argue that this Court does not have personal jurisdiction over them because they do not have sufficient contacts with Massachusetts. I will examine these issues in the context of this motion for a preliminary injunction, bearing in mind that the issues may be more fully briefed at a later time. To establish personal jurisdiction, Lombard must satisfy both the forum's long-arm statute and the Due Process Clause of the Constitution. Because "the Supreme Judicial Court of Massachusetts has interpreted the state's long-arm statute as an assertion of jurisdiction over the person to the limits allowed by the Constitution of the United States," Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 52 (1st Cir.2002), I need only address the constitutional analysis.

For a Massachusetts court to exercise personal jurisdiction over out-of-state defendants, the defendants must have sufficient minimum contacts "such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (internal quotations omitted). The First Circuit has created a three-part due process analysis:

First, the claim underlying the litigation must directly arise out of, or relate to, the defendant's forum-state activities. Second, the defendant's in-state contacts must represent a purposeful availment of the privilege of conducting activities in the forum state, thereby invoking the benefits and protections of that state's laws and making the defendant's involuntary presence before the state's courts foreseeable. Third, the exercise of jurisdiction must, in light of the Gestalt factors, be reasonable.

Adelson v. Hananel, 510 F.3d 43, 49 (1st Cir.2007) (internal quotations omitted).

Until May 1, 2010, Lombard was a Massachusetts company located in Wellesley Hills, Massachusetts. It has since moved to Arizona. In 2007, Johannessen and Sassler signed the Non-Competition Agreements, which contained Massachusetts choice of law provisions, and mailed them back to Lombard in Massachusetts. (Phillips Supp. Decl. ¶ 28.) In addition, Johannessen and Sassler received paychecks from Lombard, sent weekly expense reports and weekly work updates to Lombard, generated clinical trial sales for Lombard and would, from time to time, report in person to Lombard. ( Id.)

These contacts are sufficient to give this Court jurisdiction over Johannessen and Sassler. Since Lombard's claim "arises out of" Johannessen's and Sassler's contracts, the first jurisdictional requirement is met. Second, their contacts were both voluntary and of a nature that they "could reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). They were employed by a Massachusetts' corporation, received paychecks from Massachusetts, and signed a contract with a Massachusetts choice of law provision. Thirdly, the Court's exercise of jurisdiction is reasonable in light of the "Gestalt...