Waguespack v. Medtronic, Inc.

185 F.Supp.3d 916

Robby Waguespack

v.Medtronic, Inc., et al.andStephen Powell

v.Medtronic, Inc., et al.andLloyd Lile Lindsey, III

v.Medtronic, Inc., et al.

CIVIL ACTION NO. 16-241-JJB-RLB

CIVIL ACTION NO. 16-242-JJB-EWD

CIVIL ACTION NO. 16-243-JJB-RLB

United States District Court, M.D. Louisiana.

Signed May 5, 2016

Filed May 6, 2016

Lloyd Lile Lindsey, III, pro se.

Matthew W. Bailey, Irwin Fritchie Urquhart & Moore LLC, Baton Rouge, LA, Medtronic, Inc., et al.

RULING

JAMES J. BRADY, UNITED STATES DISTRICT COURT, MIDDLE DISTRICT OF LOUISIANA

These matters are before the Court on two motions. The first is a Motion for Preliminary Injunction (Doc. 4) brought by the Plaintiffs.¹ The Defendants² have filed an Opposition (Doc. 22). The second motion is a Motion to Transfer (Doc. 17) brought by Defendants, to which Plaintiffs filed an Opposition (Doc. 31). Pursuant to this Court's Order, the parties filed Supplemental Memoranda (Docs. 32 & 37). The Court previously issued a Temporary Restraining Order (Doc. 18), and held a hearing on the matter on May 4, 2016. After the presentation of arguments, the Court took the matter under advisement. Jurisdiction exists pursuant to 28 U.S.C. § 1332. For the reasons stated herein, Plaintiffs' Motion for Preliminary Injunction (16-cv-241: Doc. 4; 16-cv-242: Doc. 5; 16-cv-243: Doc. 5) is GRANTED , and Defendants' Motion to Transfer (16-cv-241: Doc. 17; 16-cv-242: Doc. 10; 16-cv-243: Doc. 19) is DENIED .

I. BACKGROUND

Plaintiffs Robby J. Waguespack ("Waguespack"), Stephen Powell ("Powell"), and Lloyd Lile Lindsey, III ("Lindsey") (collectively, "Plaintiffs" or "Louisiana Representatives") were sales employees for MSDU. MSDU—a Medtronic subsidiary—is a medical device company based out of Memphis, Tennessee, that operates Medtronic's spine business in Louisiana. While working for MSDU, Waguespack was a District Sales Manager with responsibility for all of Louisiana (except the Shreveport area), the southern one-third of Mississippi, and Beaumont, Texas. Powell and Lindsey were Sales Representatives in Baton Rouge, Louisiana.

As a condition of employment, Medtronic required Plaintiffs to sign Employment Agreements. The Employment Agreements contains a variety of restrictive covenants, including provisions that purport to prohibit Plaintiffs from competing with "MEDTRONIC" or soliciting its customers for a period of one year after the termination of their employment. The Employment Agreements also contain choice of law, choice of forum, and related clauses that essentially require the Employment Agreements to be interpreted under Minnesota law and that any litigation related to the agreement be prosecuted in a state court in Minnesota.³

On March 28, 2016, Plaintiffs resigned from their positions with Medtronic, and accepted employment with K2M, Inc. ("K2M"), a competing medical device company that sells spinal products and surgical implants in Louisiana. After Plaintiffs left Medtronic, they filed suit in the 19th Judicial District Court for the Parish of East Baton Rouge seeking a declaratory judgment that the choice of forum, choice of law, non-competition, and non-solicitation provisions in their Employment Agreements (the "Employment Agreements") are , void, and unenforceable.⁴

A week after being served with this suit, the defendants filed a second lawsuit ("the Minnesota Action") in Minnesota state court naming Waguespack, K2M, Lindsey, and Powell as defendants. In the Minnesota Action, Medtronic asserted claims for declaratory relief and breach of contract. The Minnesota Action has been removed to federal court,⁵ and Medtronic has moved to remand that case to Minnesota state court.

II. FIRST-FILED RULE

Because the first-filed rule gives the court discretion to dismiss a case in its entirety, and thus be dispositive of the remaining issues presented in these motions, it is logical to address the this issue first.⁶ This Court adequately summarized the law relating to the first-filed rule in a recent case:

The Fifth Circuit has "long advocated that district courts exercise their discretion to avoid duplication of proceedings where related claims are being litigated in different districts." Marks v. Mackey , No. 6:14–CV–00441, 2014 WL 3530137, at *2 (W.D.La. July 15, 2014) (quoting Schauss v. Metals Depository Corp. , 757 F.2d 649, 654 (5th Cir.1985) ). Accordingly, "the court with prior jurisdiction over the common subject matter should resolve all issues presented in related actions." W. Gulf Mar. Ass'n v. ILA Deep Sea Local 24, S. Atl. & Gulf Coast Dist. of ILA; AFL – CIO , 751 F.2d 721, 730 (5th Cir.1985) (internal quotation omitted). As a matter of federal comity, the first-filed rule provides that "where two actions involving overlapping issues and parties are pending in two federal courts, there is a strong presumption across the federal circuits that favors the forum of the first-filed suit [.]" Manuel v. Convergys Corp. , 430 F.3d 1132, 1135 (11th Cir.2005) ; Cadle Co. v. Whataburger of Alice, Inc. , 174 F.3d 599, 603 (5th Cir.1999) ("Under the first-to-file rule, when related cases are pending before two federal courts, the court in which the case was last filed may refuse to hear it if the issues raised by the cases substantially overlap."). A decision to apply the first-filed rule rests on two questions: "(1) whether the two pending actions are so duplicative that they involve substantially overlapping issues such that one court should decide both, and if so, (2) which of the two courts should take the case." Mackey , 2014 WL 3530137 at *3.

InforMD, L.L.C. v. DocRx, Inc. et al. , Civil Action No. 13–533–JJB–SCR, Doc. 73 at *3 (M.D. La. Aug. 31, 2015). In the instant case, the parties do not dispute that the action filed in this Court substantially overlaps with the Minnesota Action. It is also undisputed that Plaintiffs filed the declaratory judgment suit in Louisiana before the defendants filed their complaint in the Minnesota case.⁷ The Court agrees that the substantive issues and parties are nearly identical and that this Court was seized of the action over a week before the Minnesota Action commenced. The parties dispute, however, which court should "take the case."

In answering which Court should take the case, "[t]he Fifth Circuit adheres to the general rule that the court in which the action is first filed is the appropriate court to determine whether subsequently filed cases involving substantially similar issues should proceed." Save Power Ltd. v. Syntek Fin. Corp. , 121 F.3d 947, 950 (5th Cir.1997). The first-filed rule does not apply, however, when it appears the earlier filed anticipatory suit was merely a forum-shopping maneuver. Fl. Marine Transporters v. Lawson & Lawson Towing Co. , No. 00–2602, 2001 WL 1018364, at *3 (E.D.La. Aug. 31, 2001). However, the cases cited by Defendants in support of this exception are factually distinguishable—the party seeking a declaratory judgment in those cases were provided notice of litigation from the opposing party.⁸ Here, Plaintiffs were not provided notice of Defendants' intent to file suit, and therefore the exception relied on by Defendants does not apply. Accordingly, as the first-filed court, the Middle District of Louisiana will not dismiss or stay the pending case.

III. MOTION FOR PRELIMINARY INJUNCTION

In order to be entitled to injunctive relief, a party must demonstrate: (1) a substantial likelihood of success on the merits; (2) that it will suffer irreparable injury if the injunction is not granted; (3) that the irreparable injury outweighs the harm to the defendant; and (4) that granting the preliminary injunction will not disserve the public interest. Cardoni v. Prosperity Bank , 805 F.3d 573, 579 (5th Cir.2015).

A. Likelihood of Success on the Merits

Plaintiffs argue that they have a likelihood of success on the merits of their declaratory judgment claims because: (1) the choice of forum and choice of law clauses in the Employment Agreements are and void pursuant to La. R.S. § 23:921(A)(2) ; and (2) the Employment Agreements' non-competition clauses are unenforceable because they fail to comply with the requirements of La. R.S. § 23:921(C).

Defendants make three independent arguments as to why Plaintiffs are unlikely to succeed on the merits: (1) as applied, § 921 prohibits Defendants from prosecuting the Minnesota Action, which violates their First Amendment rights under the Noerr-Pennington doctrine; (2) as applied, § 921 violates the Dormant Commerce Clause because the statute constitutes an impermissible burden on interstate commerce; and (3) the non-competition clauses are valid and enforceable under § 921(C).

The likelihood of success on the merits centrally turns on which states' law applies—if Louisiana's law applies regarding the enforceability of the non-competition agreements, then Plaintiffs may have a chance of success on the merits. On the other hand, both parties seem to agree that if Minnesota law applies, Defendants will win because the non-competition agreements will be deemed enforceable according to Minnesota law. With the importance of this determination in mind, it is logical to first address the choice of law issue that is central to this case before addressing the other issues raised.

1. Choice of Law and Choice of Forum Clauses

Because this is a diversity case, the forum state of Louisiana provides the law that governs this choice-of-law analysis. See Klaxon Co. v. Stentor Elec. Mfg. Co. , 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941) ; Cardoni , 805 F.3d at 573. Louisiana law permits parties to stipulate in their contracts which state's laws are to govern them. NCH Corp. v. Broyles , 749 F.2d 247, 250 (5th Cir.1985) (summarizing Louisiana choice of law provisions as interpreted by Louisiana courts). Such contractual stipulations are not honored, however, when doing so would "contravene a strong public policy of the state whose law would otherwise be applicable."⁹ La. Civ. Code art....