ANN D. MONTGOMERY, District Judge.
This matter is before the undersigned United States District Judge for a ruling on Plaintiff St. Jude Medical, S.C., Inc.'s ("St. Jude") Objection [Docket No. 89] ("Objection") to Magistrate Judge Arthur J. Boylan's June 17, 2013 Order [Docket No. 86].
St. Jude markets and sells lines of cardiac care medical devices, including devices designed to diagnose and treat atrial fibrillation ("AF"), a type of cardiac arrhythmia. In support of its efforts to sell AF devices, St. Jude trains and employs technical personnel it refers to as Field Clinical Engineers ("FCEs"). Biosense, owned by J&J, directly competes with St. Jude in the area of AF diagnosis systems. Am. Compl. [Docket No. 43] ¶¶ 10-13.
In 2006, de Castro began working for St. Jude as a senior FCE. At the start of his employment, de Castro entered into a term-of-years agreement (the "Agreement") lasting one year. In the Agreement, de Castro agreed not to compete with St. Jude during his term of employment, and further agreed not to share St. Jude's confidential information.
On March 6, 2012, de Castro notified St. Jude of his intent to resign from the company and begin employment with Biosense.
On April 30, 2013, Defendants moved to compel the production of documents responsive to several discovery requests, including the production of documents related to St. Jude's "business purposes" for the Agreement. Disc. Order 5. Judge Boylan granted Defendants' motion to compel in part, and ordered St. Jude to respond to Defendants' request regarding the Agreement's business purposes.
A district court judge will not modify or set aside a magistrate judge's ruling on a nondispositive matter unless the ruling is clearly erroneous or contrary to law. D. Minn. LR 72.2(a);
St. Jude argues Judge Boylan improperly allowed Defendants' to seek discovery regarding the business purposes of de Castro's Agreement. Because the Agreement is an unambiguous contract, St. Jude argues, the parol evidence rule precludes Defendants from introducing extrinsic evidence to challenge the contract's purpose or validity. As a result, Defendants should not be allowed to discover such extrinsic evidence because it will not lead to the discovery of evidence admissible at trial.
St. Jude also argues the merits of the Agreement's validity. St. Jude cites a Ramsey County District Court decision in which the court granted an order upholding the enforceability of an identical term-of-years agreement in a challenge brought by Biosense and J&J in an action with a different employee but the same corporate parties.
Defendants respond that St. Jude has prematurely entered into a debate on the merits and the admissibility of evidence. With the discovery request at issue, Defendants argue, they seek evidence which does not vary the terms of the Agreement, but rather challenges the enforceability of the Agreement as an invalid restrictive covenant. To pose such an argument, Defendants require factual evidence regarding St. Jude's business interests and whether the Agreement is necessary to protect those interests. Defendants also contend St. Jude's arguments on the merits of the Agreement, including the applicability of collateral estoppel, is premature; the Court should resolve these arguments at the dispositive motion stage.
Judge Boylan allowed Defendants some discovery regarding the nature of the Agreement. St. Jude's argument regarding the enforceability of the Agreement, Judge Boylan held, was a dispositive contract interpretation issue properly reserved for dispositive motion practice. As a result, Judge Boylan acknowledged St. Jude's challenge under the parol evidence rule, but held he would not "foreclose all discovery related to Defendants' attacks on the validity and enforceability of the agreement simply because the defense has been challenged as insufficient." Disc. Order 4.
Judge Boylan committed no clear error, as St. Jude's arguments do indeed attempt to prematurely resolve dispositive issues. Generally, parties may seek discovery so long as the information sought is "relevant to any party's claim or defense." Fed. R. Civ. P. 26(b). Defendants argue de Castro's Agreement includes unenforceable restrictive covenants. As a result, Defendants should have the ability, under Rule 26, to pursue discovery regarding the business interests behind the Agreement, as such evidence is necessary for Defendants' theory of defense.
St. Jude's arguments against such discovery implicitly require the resolution of dispositive issues before any dispositive motions have been heard. St. Jude argues the parol evidence rule precludes the discovery Defendants seek, and thus the requested discovery should not be allowed. However, the application of the parol evidence rule is premised on the assumption that the Agreement is unambiguous.
Even if the parol evidence rule were to apply in this case, the rule would not necessarily preclude the evidence Defendants request. By their own admission, Defendants do not seek to vary the terms of the Agreement. Instead, Defendants request information related to the "business purposes" of St. Jude's term-of-years agreements, seeking to challenge the Agreement as including unenforceable restrictive covenants. In evaluating the validity of a restrictive covenant, Minnesota courts have long considered whether an employer's "legitimate business interests" justify such a restriction. Where an otherwise unambiguous employment contract has included a restrictive covenant, courts have routinely considered factual evidence regarding the employer's justifications.
St. Jude attempts to pre-empt this conclusion by arguing Minnesota courts have generally found term-of-year contracts valid and enforceable. St. Jude believes Defendants have made a losing argument, and thus should not be entitled to pursue discovery. Again, while Minnesota law may indeed find term-of-years contracts generally enforceable, St. Jude's argument necessarily requires a ruling regarding the overall enforceability of de Castro's Agreement. Rule 26(b) does not limit discovery to information "relevant to any party's
Finally, St. Jude argues Defendants are collaterally estopped from challenging the enforceability of de Castro's Agreement due to the Ramsey County District Court's decision in
Based on the foregoing, and all the files, records and proceedings herein,