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St. Jude Med. S.C., Inc. v. Tormey

United States Court of Appeals, Eighth Circuit

March 11, 2015

St. Jude Medical S.C., Inc., a Minnesota corporation, Plaintiff - Appellee
v.
Thomas M. Tormey, Jr., Defendant - Appellant, Tormedco, Inc., a New York corporation, Counter plaintiff - Appellant

Submitted October 8, 2014

Page 895

Appeal from United States District Court for the District of Minnesota - Minneapolis.

For St. Jude Medical S.C., Inc., a Minnesota corporation, Plaintiff - Appellee: Edward F. Fox, Peter Gregory, Carrie L. Hund, Bassford & Remele, Minneapolis, MN.

For Thomas M. Tormey, Jr., Defendant - Appellant: Erin E. Neils, Dwight Rabuse, Rabuse Law Firm, Minneapolis, MN.

For Tormedco, Inc., a New York corporation, Counter plaintiff - Appellant: Erin E. Neils, Dwight Rabuse, Rabuse Law Firm, Minneapolis, MN.

Before RILEY, Chief Judge, WOLLMAN and BYE, Circuit Judges.

OPINION

Page 896

BYE, Circuit Judge.

St. Jude Medical Center, Inc. (" St. Jude" ), sued Thomas M. Tormey, Jr., its former employee, to recover $650,000 plus statutory interest owed on a promissory note. Tormey disputed his liability on the note and filed counterclaims arguing St. Jude breached Tormey's employment contract. Tormey also added his company, Tormedco, Inc., as a plaintiff to the counterclaims and asserted an additional claim on behalf of Tormedco against St. Jude. The district court[1] granted judgment as a matter of law to St. Jude on its collection claim, on the counterclaims, and on Tormedco's claim after a jury was unable to reach a verdict. Tormey and Tormedco appeal, and we affirm.

I

In 2001, St. Jude hired Tormey to work as an independent sales representative, selling its cardiac-related medical devices such as pacemakers and defibrillators. Tormey previously worked for Medtronic in this same capacity for fifteen years. To initiate his employment with St. Jude, Tormey entered into several agreements including a representative agreement, a separate letter agreement, an asset purchase agreement, and a loan agreement.

The representative agreement provided the length of Tormey's contract with St. Jude, his salary, his sales territory, his commission rate, and a procedure for setting his sales quotas. It also detailed that for the first year of Tormey's contract, his sales quota would be set at zero due to a noncompete agreement he held with Medtronic. The representative agreement further provided that St. Jude would hire a " technical support specialist (TSS) as soon as practicable" to assist Tormey with his work and that St. Jude could terminate Tormey if he failed to meet sales quotas in three out of any twelve consecutive months.

In the separate letter agreement and asset purchase agreement, Tormey agreed to form a corporation through which he would conduct his business for St. Jude. Then, on October 3, 2006, the corporation would have the option to sell itself to St. Jude at a price derived from a formula contained in the agreements. The option, however, was contingent on the representative agreement being in full force at that time. Pursuant to these agreements, Tormey thereafter created Tormedco, Inc., in January 2002 and assigned the representative agreement he had with St. Jude to it.

St. Jude and Tormey also entered into a loan agreement, which was referenced by the separate letter agreement. The loan agreement entailed St. Jude making a $650,000 interest-free loan to Tormey. In exchange for the loan, Tormey executed a promissory note which required him to repay the loan on October 3, 2008, or upon the sale of Tormedco to St. Jude, whichever occurred earlier. The separate letter agreement indicated St. Jude would deduct the amount ...


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