Exhibit 99.2
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STATE OF MINNESOTA
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DISTRICT COURT
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COUNTY OF RAMSEY
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SECOND JUDICIAL DISTRICT
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ev3 Inc., a Delaware corporation, ev3 Endovascular, Inc., a
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Case Type: Other Civil
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Delaware corporation, and FoxHollow Technologies, Inc., a
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Court File No. 62-CV-07-5977
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Delaware corporation,
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Judicial Officer: Judge Steven D. Wheeler
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Plaintiffs,
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ORDER AND
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v.
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MEMORANDUM
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Sean Collins, an individual, Aaron Lew, an Individual,
Cardiovascular Systems, Inc., a Minnesota corporation, and
John Does 1-10,
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Defendants.
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The above-entitled matter came before the Honorable Steven D. Wheeler on January 8, 2008 on
Plaintiffs motion for a temporary restraining order. Jeffrey J. Bouslog, Kathy S. Kimmel, and
Dennis E. Hansen appeared on behalf of the Plaintiffs. Craig A. Brandt and Dean A. LeDoux appeared
on behalf of Defendants.
Based on the files, records, and proceedings herein:
IT IS HEREBY ORDERED
that:
1. Plaintiffs request for a Temporary Restraining Order restricting use of confidential
information from ev3, Inc and/or FoxHollow Technologies, Inc. (hereinafter ev3/FoxHollow) is
GRANTED
, as set forth in subparagraphs 1a and 1b.
1a. All former ev3/FoxHollow employees who have been hired by Cardiovascular Systems, Inc.
(hereinafter CSI) and who are subject to nondisclosure requirements in employee agreements may
not disclose the identity of ev3/FoxHollows Key Opinion Leaders and Thought Leaders to anyone,
specifically personnel at CSI. They may not use this information to aid their
new employer CSI. The Court defines disclose or use to include to mention the name of a Key
Opinion Leader or Thought Leader in any way which would suggest that they would be a good sales
prospect or a person who might be interested in using the Diamondback device. If these former
ev3/FoxHollow employees have already disclosed or used the identity of Key Opinion Leaders or
Thought Leaders they shall advise persons to whom they made the disclosure (in writing) that this
information is confidential and may not be used by them or disclosed to anyone. Such writings will
be disclosed to Plaintiffs.
1b. Plaintiffs request for a Temporary Restraining Order prohibiting CSI employees from
contacting ev3/FoxHollows Key Opinion Leaders and Thought Leaders is
DENIED
. If CSI employees,
who were former ev3/FoxHollow employees, contact such persons they must be able to trace, document,
and account, with specificity, how they were able to identify such prospect through information,
records, or documents obtained outside their employment with ev3/FoxHollow. They may not maintain,
use, or disclose any information they received about such physicians while employed by
ev3/FoxHollow. In other words, whatever they know or learned about these physicians while at
ev3/FoxHollow must be relearned and reacquired and the employee must be able to fully document the
steps taken to identify sales prospects. Essentially the Court is ordering former ev3/FoxHollow
employees subject to the nondisclosure and nonuse provisions of the ev3/FoxHollow employment
agreement to set aside information they learned about ev3/FoxHollows customers and start over at
CSI.
2. Plaintiffs request for a Temporary Restraining Order preventing the continued employment
of approximately nine (9) former ev3/FoxHollow employees who were hired by CSI in early 2008 is
DENIED
.
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3. Plaintiffs request for a Temporary Restraining Order preventing the continued employment
by CSI of Defendants Sean Collins and Aaron Lew is
DENIED
.
4. Plaintiffs request for a Temporary Restraining Order prohibiting former ev3/FoxHollow
employees who are now CSI employees from disclosing trade secrets of ev3/FoxHollow is
GRANTED
.
This prohibition includes a prohibition from disclosing to prospective customers for CSIs
Diamondback device, directly or indirectly, any confidential information obtained while at
ev3/FoxHollow about any shortcomings or deficiencies of the SilverHawk product, or any confidential
information concerning any problems in the operation of the ev3/FoxHollow company following the
merger. If asked for information about the SilverHawk product by prospective customers of the
Diamondback product, CSI employees may not provide any information which they obtained while
employed at ev3/FoxHollow.
5. Plaintiffs request for a Temporary Restraining Order prohibiting former ev3/FoxHollow
employees currently employed by CSI from soliciting or recruiting, directly or indirectly, current
ev3/FoxHollow employees to leave their positions and accept employment at CSI is
GRANTED
. This
prohibition includes answering in a positive or encouraging manner, unsolicited calls or requests
from current ev3/FoxHollow employees asking for information concerning CSI as a prospective
employer. Such calls may, however, be referred to a CSI employee who is not subject to a
non-solicitation agreement.
6. Plaintiffs request for expedited discovery by access to Defendants computer files,
communications, etc. is
DENIED
. Defendants were previously ordered to maintain all such records.
The Court will issue a Scheduling Order establishing a discovery deadline as soon as the Defendants
have filed their Answer(s) and the parties have filed Informational Statements.
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7. Plaintiffs shall post a $2,000 bond or deposit $2,000 with the Clerk of the Court within
three (3) business days of the date of this Order.
8. The attached Memorandum is incorporated by reference.
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BY THE COURT:
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January 10, 2008
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/s/ Steven D. Wheeler
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Steven D. Wheeler
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Ramsey County District Court Judge
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MEMORANDUM
The Court adopts the following basic facts for the purposes of considering the motion for
injunctive relief.
FoxHollow Technologies manufactured a device used by cardiologists and vascular surgeons to
treat patients with peripheral artery disease (hereinafter PAD) by scraping away blockage. This
product is tradenamed SilverHawk. In October 2007, FoxHollow was purchased/merged with ev3
Endovascular, Inc., a company which manufactures and sells other medical devices. CSI recently
received FDA approval to market a vascular scraping device, tradenamed Diamondback. It is to be
used to treat PAD and will be a direct competitor of the SilverHawk device. Diamondback is the
only device made by CSI.
Some of the employees of CSI were former employees of FoxHollow, including its president David
L. Martin. Defendant Sean Collins (hereinafter Collins) left FoxHollow in March 2007 and was
employed by CSI on May 16, 2007. Defendant Aaron Lew (hereinafter Lew) left FoxHollow on July
17, 2007 and started work for CSI on August 1, 2007. Both were part of the FoxHollow sales force.
Both Collins and Lew, like all FoxHollow employees, were subject to an employment agreement which
provided that they would not directly or indirectly
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use or disclose, either during or after termination of my employment with the Company, any
Confidential Information I obtain...during the period of my employment... (Paragraph 6, Employee
Agreement, Exhibit E to Affidavit of Jeffrey J. Bouslog of December 28, 2007). The employee
agreement defined confidential information as information pertaining to any aspect of the
Companys business which is either information not known by actual or potential competitors of the
Company or is proprietary information of the Company...
Id.
at ¶4. In addition, the
FoxHollow Employee Agreement provided that for a period of one year following termination the
employee would not either directly or indirectly solicit, induce, recruit, or encourage any of the
Companys employees to leave their employment...
Id.
at ¶8.
Following the merger/acquisition of ev3/FoxHollow there was some concern by sales personnel
for the new entity about the stability of their sales jobs. Several of the same FoxHollow sales
personnel also expressed concerns about their benefits and working conditions under the combined
companies. As a result, some indicated that they contacted personnel at CSI regarding employment
opportunities. A number of them, approximately nine, accepted employment with CSI during the first
week of January 2008.
TEMPORARY RESTRAINING ORDER STANDARD
Rule 65 of the Minnesota Rules of Civil Procedure governs injunctive relief. Under Minn. R.
Civ. P. 65.01, a court may grant a temporary restraining order if ...it appears from specific
facts shown by affidavit or by the verified complaint that immediate and irreparable injury, loss,
or damage will result... Injunctive relief should only be granted when it is clear that the
rights of a party will be irreparably injured before a trial on the merits can be held.
Webb
Publishing Company v. Fosshage
, 426 N.W.2d 445, 448 (Minn. App. 1988).
The party seeking injunctive relief must first establish that the particular relief requested
will prevent the certain occurrence of an event that will cause significant injury or harm that
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cannot be redressed by a legal remedy.
City of Mounds View v. Metropolitan Airports
Commission
, 590 N.W.2d 355, 357 (Minn. App. 1999). The injury must be of such a nature that
money alone could not suffice.
Morse v. City of Waterville
, 458 N.W.2d 728, 729-30 (Minn.
App. 1990). The issue is not whether there will be harm, the issue is whether there is irreparable
harm such that legal remedies would not provide him with adequate relief and the extraordinary
relief of a temporary restraining order is warranted before the case is adjudicated on the merits.
Haley v. Forcelle
, 669 N.W.2d 48, 56-57 (Minn. App. 2003)
review denied
2003.
If the threshold showing of irreparable harm is met, then the court must consider the five
factors that were enumerated in
Dahlberg Bros., Inc. v. Ford Motor Co.
, 137 N.W.2d 314,
321-322 (1965): (1) the parties relationship prior to the dispute; (2) the weight of the
irreparable harm alleged by the party seeking the injunction compared to the weight of the harm
suffered by the other party if the injunction is granted; (3) the likelihood that the party seeking
the injunction will prevail on the merits; (4) public policy considerations; and (5) the
administrative burden on the court.
1.
Key Opinion Leaders and Thought Leaders
Plaintiffs claim the identity of Key Opinion Leaders and Thought Leaders is confidential
information and subject to non-disclosure or use pursuant to the employment agreements covering
Collins, Lew, and all former ev3/FoxHollow employees, including those recently hired by CSI. The
Defendants contend that the identity of Key Opinion Leaders and Thought Leaders is public
information, ascertainable from other sources. The Court finds that, based on the evidence
provided at this point, while the identity of at least some of the physicians who use the
Silverhawk may be available from sources outside of ev3/FoxHollow, the specific identity of the
physicians that are Key Opinion Leaders and Thought Leaders is closely held by ev3/FoxHollow and
only available to persons employed by ev3/FoxHollow. Therefore, the identities of the
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physicians who have used the SilverHawk device and are ev3/FoxHollow Key Opinion Leaders and
Thought Leaders is confidential information and subject to nondisclosure and may not be disclosed
or used by persons subject to the FoxHollow employee agreements.
As a result, any disclosure or use of the identity of the Key Opinion Leaders or Thought
Leaders would be in direct violation of the prohibitions in the ev3/FoxHollow employment agreement.
Such disclosure would cause irreparable harm to ev3/FoxHollow. Consideration of the five
Dahlberg
factors leads to the conclusion that violation of the employment agreement should
be restrained because: (1) the Plaintiffs and the Defendants are direct competitors; (2) the harm
suffered by the Plaintiff if the employment agreements were permitted to be violated out weighs the
Defendants concerns about marketing its product; (3) the Plaintiff is certain to be successful in
its suit if Defendants were permitted to violate the employment agreements; (4) public policy
favors enforcement of the employment agreements; and (5) there is little administrative burden on
the Court in supervising and enforcing the temporary restraining order.
2.
Termination of Recently Hired ev3/FoxHollow Employees by CSI
In early January 2008, CSI hired approximately nine (9) former ev3/FoxHollow sales persons.
The affidavits from Plaintiffs suggest that several of those persons may have been recruited by
former ev3/FoxHollow employees in violation of their employment agreements. The newly hired former
ev3/FoxHollow employees, however, have provided declarations that they were not recruited by CSI,
but approached CSI because they were concerned about various problems at ev3/FoxHollow attendant to
upheavals resulting from the merger of the ev3 and FoxHollow sales forces.
There is little evidence of any harm resulting from the possible recruitment of former
disgruntled or anxious sales personnel. If any damages can be shown, they can be covered by
monetary payments and there is no irreparable harm to Plaintiffs. In addition, the likelihood of
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success on the merits of the claim based on the hiring of these persons is suspect. As well,
the employment agreements do not prohibit these sales persons from leaving ev3/FoxHollow and
beginning to work for its competitor CSI. The interests of the Plaintiffs are adequately protected
by the Courts restrictions on these persons ability to use any information they obtained while
working for Plaintiffs. As detailed in the Courts Order, the employees shall be required to start
fresh at CSI and must be able to document that they did not take any short cuts in marketing the
CSI Diamondback product by using information obtained while at ev3/FoxHollow. If they do not
follow the Courts restrictions, they and CSIs violations of the Order and agreements can be
remedied by monetary damages.
3.
Termination of Sean Collins and Aaron Lew
Plaintiffs claim Collins violated the employment agreement by taking confidential information,
sales records, which were then used to assist CSI in identifying and subsequently recruiting three
(3) of the top five (5) ev3/FoxHollow salespersons. The Plaintiffs claim Lew violated his duty of
loyalty to ev3/FoxHollow by approaching physicians to solicit use of CSIs Diamondback device while
still employed at ev3/FoxHollow.
a.
Sean Collins
It is clear, by Collins admissions, that he took confidential sales information with him
just
prior to his departure from FoxHollow. Any damages flowing from this violation of the
employment agreement does not constitute irreparable harm. If Plaintiffs show any damage from the
breach, it can be adequately compensated by money damages. As a result, temporary relief in the
nature of termination of Collins employment with CSI would not be appropriate. Collins is required
by the terms of the agreement to return all such documents to Plaintiffs. The Court assumes this
will be accomplished without Court Order as Collins has indicated a willingness to do so
voluntarily.
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b.
Aaron Lew
Lew sent some e-mails which suggested that he may have contacted ev3/FoxHollow SilverHawk
customers to obtain their endorsement of him as a salesperson for a PAD treatment device like
SilverHawk or Diamondback. While these e-mails may suggest an improper solicitation of sales of
the Diamondback product before he joined CSI, they may only be an attempt to alert potential
references that they may be contacted by CSI during the employment process. Further discovery may
shed additional light on what Lew was attempting to accomplish.
In any event, even if Lew violated his duty of loyalty any damages could be adequately covered
by monetary damages and the Plaintiffs were not irreparably harmed. His termination from CSI would
not remedy his prior actions. In addition, there is no evidence that Lew is yet a party to this
suit.
4.
Trade Secrets
If Plaintiffs trade secrets are transferred by former ev3/FoxHollow employees to CSI or are
used by the former employees or CSI to market CSIs Diamondback product, it would be a violation of
the FoxHollow employment agreement. Such violation would cause irreparable harm to Plaintiffs and
the five
Dahlberg
factors would be resolved in favor of a restraining order.
5.
Future Recruitment of ev3/FoxHollow Employees by CSI
If current CSI employees who are subject to the FoxHollow employment agreements directly or
indirectly solicit other ev3/FoxHollow employees it would be a violation of the FoxHollow employee
agreement. Such conduct shall be prohibited because it would cause irreparable harm and the five
Dahlberg
factors would be satisfied. There is little burden on CSI to simply prohibit such
conduct and have all recruitment, if any, handled by persons not covered by the ev3/FoxHollow
agreements.
SDW
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