Rao v. St. Jude Medical S.C., Inc.

Background

Thomas Rao worked for St. Jude and later Abbott Laboratories as a cardiac rhythm management sales representative. Abbott acquired St. Jude in 2017. Rao’s 2016 employment agreement, governed by Minnesota law, allowed termination for cause and included non-compete and confidentiality provisions. A later agreement documented a commission-sharing arrangement involving Rao, Brian Giuliano, and Bob Souder.

Rao’s claims arose from his December 2018 termination. Abbott asserted that Rao violated restrictions imposed after complaints by Dr. Daniel Friedman, including restrictions concerning communications with physicians associated with Friedman’s practice. Rao argued that the restrictions were vague and that his termination was instead connected to his participation in an Abbott investigation into Giuliano’s conduct. That conduct included alleged age-based insults, abusive communications, and retaliation against team members who complained. Rao also alleged that his termination violated his employment agreement, that Abbott failed to pay commissions owed to him, and that Abbott violated federal and Florida laws prohibiting retaliation and age discrimination.

St. Jude asserted counterclaims alleging that Rao violated the employment agreement’s non-compete, non-solicitation, and confidentiality provisions after joining Biotronik. Rao sought summary judgment on the non-compete and confidentiality portions of the counterclaims. Abbott also sought sanctions based on alleged destruction of electronic evidence, sanctions or exclusion of testimony from Rao’s damages expert, and summary judgment on all of Rao’s claims. Rao separately sought to divide the trial into separate proceedings for his claims and St. Jude’s counterclaims.

Summary-Judgment Rulings on Rao’s Claims

The court denied summary judgment on Rao’s breach-of-contract claim insofar as it alleged improper termination. The employment agreement defined cause to include negligence or willful misconduct involving customers and failure to perform duties as reasonably directed after notice and an opportunity to cure. The court concluded that a reasonable jury could find that Rao did not violate Giuliano’s warnings by attending the lunch with Dr. Moretta or arranging the later dinner, and that the warnings were vague. Material factual disputes therefore prevented judgment as a matter of law on the improper-termination theory.

The court granted summary judgment to Abbott on Rao’s claim for unpaid commissions from the period when he was employed. Rao did not know how much he was allegedly owed and offered no evidence beyond his belief that Souder received more commission. The court found that a jury could not award damages based only on that speculation.

The court denied summary judgment on Rao’s retaliation claims under Title VII of the Civil Rights Act of 1964 and the Florida Civil Rights Act. It found that Rao had presented enough evidence to establish the initial elements of retaliation, including his participation in Abbott’s investigation of Giuliano, the close timing between that activity and his suspension, and evidence supporting his theory that Giuliano influenced others to cause Rao’s termination. Abbott identified an asserted legitimate reason—Rao’s alleged violation of the warnings—but factual disputes remained about whether that reason was genuine or a pretext for retaliation.

The court also denied summary judgment on Rao’s age-discrimination claims under the federal Age Discrimination in Employment Act and the Florida Civil Rights Act. Rao was 59 when terminated and was replaced by a 54-year-old employee. The court held that, in the circumstances of this case, the five-year age difference was not legally insufficient at the initial stage, particularly given Giuliano’s alleged repeated age-based insults and evidence that Giuliano wanted to rebuild the sales team. The court found triable issues about whether the stated reason for termination concealed age discrimination.

The Florida Whistleblower Act claim received a partial ruling. The court granted summary judgment to Abbott to the extent the claim was based on Rao’s involvement in the investigation of Ware’s complaints. The court found insufficient evidence that Rao engaged in protected whistleblowing concerning a legal violation or that this conduct caused his termination. The court denied summary judgment on the other aspects of the Florida whistleblower claim for the same reasons that it denied summary judgment on the other retaliation claims.

The court denied summary judgment on Rao’s claim for declaratory relief concerning the enforceability of the non-compete provisions. Because factual disputes remained about whether Rao’s termination was wrongful, the court did not resolve that issue at summary judgment.

St. Jude’s Counterclaims

The court granted Rao’s motion for summary judgment in part on St. Jude’s non-compete counterclaim. St. Jude sought damages for alleged lost sales involving five doctors, but the court dismissed the counterclaim to the extent it relied on alleged lost sales involving doctors other than Drs. Bala Nandigam and Anthony Pizzo. The court found that the evidence concerning Drs. Martin Aldrich, Dilip Mathew, and Sydney Peykar was insufficient to show both a breach and non-speculative damages caused by Rao’s conduct.

The court denied summary judgment as to the non-compete allegations involving Drs. Nandigam and Pizzo. Evidence about Rao’s contacts with those doctors, meals charged to Biotronik, calendar entries, device-related activity, and changes in Biotronik sales was sufficient to create factual questions for trial. The court also declined to limit St. Jude’s possible damages categorically to losses incurred during the one-year restricted period. Whether later losses were foreseeable consequential damages presented disputed factual questions.

The court granted summary judgment to Rao on St. Jude’s confidentiality counterclaim and dismissed that counterclaim. St. Jude did not provide sufficient evidence that information about Abbott’s investigations was confidential or proprietary, and the record indicated that the information was known from multiple outside sources. St. Jude also presented evidence that Roscoe, rather than Rao, shared information about physician preferences with Biotronik.

Sanctions, Expert Testimony, and Trial Structure

Judge Michael J. Davis denied Abbott’s motion for sanctions in its entirety. Abbott alleged that Rao intentionally destroyed recordings and text messages. The court found insufficient evidence that Rao intended to deprive Abbott of information for the litigation, that relevant recordings were actually lost, or that relevant text messages with Dr. Pizzo had existed and been deleted. The court also denied Abbott’s request for attorney’s fees and costs connected to the sanctions motion.

The court denied Abbott’s motion to exclude the testimony of Rao’s damages expert, David D. Jones, Ph.D., and denied the related sanctions requests. The court concluded that Jones’s later reports were proper supplements correcting or updating calculations and reflecting reductions or withdrawals of damages categories. Even if the reports were untimely, the court found no meaningful prejudice to Abbott, noting that the reports substantially reduced the damages Rao sought. The court stated that Abbott could seek limited additional expert discovery through a separate motion if necessary.

Finally, the court denied Rao’s motion to bifurcate the trial. It found significant overlap between the evidence relevant to Rao’s claims and the evidence relevant to St. Jude’s counterclaims. The order therefore granted and denied the summary-judgment motions in part, denied both defense motions seeking sanctions or expert exclusion, and denied the request for separate trials.