The Minnesota Court of Appeals recently issued a remarkable decision clarifying the rights of parties seeking to enforce non-competition agreements under Minnesota law. Long story short, contractual language dictating the right to injunctive relief will be enforced automatically in the event of a breach, regardless of whether the criteria for injunctive relief under Minnesota law are met. In fact, even if the lower court judicially determines, following a review of the facts, that they are not! The case, entitled St. Jude Medical, Inc. v. Heath Carter et al., A16-2015 (Minn. Ct. App. July 10, 2017) involved a dispute between two prominent medical tech firms which design, manufacture and sell competing electrophysiology (“EP”) products, used to evaluate heart rhythm disorders. Defendant Heath Carter was employed for Plaintiff St. Jude in various positions over eight years, including R&D work involving EP design. While still employed there, Carter was recruited by Boston Scientific Corp. to join its EP design team. He accepted the position in spite of having signed an employment agreement with St. Jude containing non-compete provisions, on the basis that the new job involved a different class of products than those he’d worked on at St. Jude. Accordingly, in his and Boston Scientific’s view, no non-compete concerns were implicated. St. Jude disagreed and commenced litigation against both, seeking injunctive relief only, foregoing any claim for monetary damages.
At trial, the jury found that Heath had violated the non-compete and that Boston Scientific aided and abetted the breach. The trial court, however, declined to issue an injunction ordering that Heath be prohibited from working at Boston Scientific because St. Jude failed to demonstrate “irreparable” injury. (Under Minnesota law, a party is only entitled to an injunction only after the court considers (1) the balance of harms between the parties, (2) the public interest, and (3) the threat of irreparable injury to the party seeking an injunction.) On appeal, the Minnesota Court of Appeals overturned the lower court, and ruled that St. Jude was entitled to the requested injunction. It did so in reliance on a clause in the employment stating that any breach of the contract’s non-competition clauses would result in irreparable harm to St. Jude. Acknowledging that this clause in question was standard, boilerplate language, the Court of Appeals opined that lower court’s failure to give effect to the contractual presumption of harm and independent review of the facts and circumstances to determine the presence irreparable harm would render the language of the clause “meaningless.”
What is meaningless is the logic underlying the opinion: “It is because the parties say it is.” One might reasonably ask, would a court be obligated to enforce contract language stipulating that the moon is made of blue cheese or that the sun rises in the west? Worse, the decision undermines Minnesota’s longstanding public policy disfavoring post-employment restrictive covenants as being partial restraints of trade. Except in the rarest of circumstances, prospective employees lack bargaining power to negotiate away the presumptions of irreparable harm and other standard non-compete language. The ruling, unless overturned by the Minnesota Supreme Court, presents a dangerous precedent that will invite employers to overreach in their enforcement of non-competes by seeking court orders barring employment where the standards for such relief don’t exist.