This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).

STATE OF MINNESOTA

IN COURT OF APPEALS

C2-96-1598

Michael J. Kallok, et al.,

Appellants,

vs.

Medtronic, Inc.,

Respondent.

Filed January 21, 1997

Affirmed in part and reversed in part

Amundson, Judge

Hennepin County District Court

File No. 9519248

Michael Berens, Wendy A. Snyder, Maret R. Moreland, Kelly & Berens, P.A., 3720 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for Appellants)

William Z. Pentelovitch, Richard G. Wilson, Wayne S. Moskowitz, Maslon, Edelman, Borman & Brand, P.L.L.P., 3300 Norwest Center, 90 South Seventh Street, Minneapolis, MN 55402 (for Respondent)

Considered and decided by Klaphake, Presiding Judge, Schumacher, Judge, Amundson, Judge.

U N P U B L I S H E D O P I N I O N

AMUNDSON, Judge

Appellants challenge the district court's determination to enforce the noncompete agreement and enjoin Kallok from performing services for Angeion Corporation. Appellants also challenge the district court's finding that Angeion tortiously interfered with Kallok's employee contract and the award of attorney fees to Medtronic. We affirm in part and reverse in part.

FACTS

From 1979 to 1995, appellant Michael Kallok was employed by respondent Medtronic, Inc. Kallok signed an employee agreement with Medtronic that contained a confidentiality provision and restrictions on his ability to work for Medtronic's competitors. In consideration of additional compensation, Kallok also signed Medtronic management riders, which contained additional restrictions on his future employment. All restrictions on Kallok's future employment were supported by adequate consideration.

While employed at Medtronic, Kallok, one of the ten most knowledgeable tachyarrhythmia scientists in the world, held various positions and titles, including Senior Staff Engineer, Director of Physiological Research Laboratories, Director of Clinical Research and Regulatory Affairs of the Heart Valve Division, and Senior Fellow of the Promeon Division Center for Biomaterial Research. Through these positions, Kallok had many responsibilities, including involvement in research and products related to tachyarrhythmia.

On September 1, 1995, Kallok met with appellant Angeion Corporation to discuss possible job opportunities. Angeion is a Minnesota development-stage company that manufactures cardiac medical devices, primarily implantable cardioverter defibrillators (ICDs) used to control tachycardia arrhythmia, or excessive heart rate. Angeion and Medtronic are direct competitors. Both companies develop ICDs, and related products for the treatment of tachyarrhythmia.

On October 18, 1995, Angeion offered Kallok the position of Angeion's Vice-President of Research. Kallok accepted the position and gave notice of his resignation to Medtronic. Upon receiving Kallok's resignation, Medtronic informed Kallok that his employment with Angeion would be a violation of his employee agreement and management rider. Kallok then signed an employee agreement to become Angeion's Vice President of Research effective December 1, 1995.

Medtronic sued to enforce Kallok's employment agreement. The district court determined that the employment agreements between Kallok and Medtronic are valid and enforceable. The district court also concluded that by accepting the position at Angeion, Kallok breached his employee agreement and management riders with Medtronic and that Kallok anticipatorily repudiated his noncompete agreement when he notified Medtronic in writing that he was accepting employment at Angeion. The district court determined that based on public policy grounds, the court must "blue pencil" the employment agreement to limit its applicability to one year. Thus, the district court enjoined Kallok from performing any services for Angeion prior to November 21, 1996. Angeion was ordered to pay Medtronic as damages for tortiously interfering with the contracts between Medtronic and Kallok the reasonable attorney fees, costs, and disbursements incurred by Medtronic. This appeal followed.

D E C I S I O N

I. Injunction

Appellants argue that the district court erred in granting an injunction and enforcing the employment agreements between Kallok and Medtronic. Appellants contend that: (1) there is no legitimate interest protected by the restrictive covenants; (2) Kallok did not have knowledge of confidential information; and (3) the findings do not support enforcement of the employment agreements. Appellants claim that the injunction should be dissolved. We disagree.

The granting of an injunction generally rests within the sound discretion of the district court, and its action will not be disturbed on appeal unless, based upon the whole record, it appears that there has been an abuse of that discretion. Cherne Indus., Inc. v. Grounds & Assocs., 278 N.W.2d 81, 91 (Minn. 1979). The party seeking the injunction must establish that his legal remedy is not adequate and that the injunction is necessary to prevent great and irreparable injury. Id. at 92.

The evidence in this case supports an inference of irreparable harm. Medtronic and Angeion are direct competitors in the area of developing ICDs and related products for the treatment of tachyarrhythmia. Kallok was an integral part of Medtronic's operation and research, as evidenced by the positions he has held and his history with Medtronic. Kallok was also privy to confidential information concerning tachyarrhythmia that would be beneficial to Angeion. As the district court duly noted:

[i]f Kallok were permitted to work for Angeion as Angeion's Vice President of Research, he would be working for a Medtronic competitor in an area in which he knew and had access to confidential Medtronic information. As a result, even if Kallock refrained from consciously disclosing confidential Medtronic tachyarhythmia management related information, his decisions as to what matters to research, what matters not to research, and what protocol to establish for research, how to allocate Angeion's research resources, among other things, would all necessarily be made while he possessed confidential Medtronic tachyarrhythmia related information.

Thus, considering its broad discretion, the district court did not abuse its discretion by finding irreparable injury and issuing an injunction in favor of Medtronic.

Appellants also argue that the injunction by the court is overly broad, because it encompasses more than the original employment agreement with Kallok and Medtronic, and thus, it should be dissolved.

Given the district court's discretion, this argument fails. The district court was justified in its conclusion and inference that services rendered by Kallok would be in violation of his employment agreements. This is evidenced by Kallok's expertise and the position Angeion hired Kallok to fill. The district court mitigated any overly broad effect by limiting the agreement's two-year effect to one year.

II. Tortious Interference with a Contract

Appellants argue that the trial court erred in concluding that Angeion tortiously interfered with the employment agreement between Kallok and respondent.

Minnesota courts have been loathe to recognize liability for the tortious interference of a contract in the employment noncompete agreement realm, and we decline to do so now. Minnesota courts have always approached issues regarding restrictive covenants with caution:

Covenants not to compete are agreements in partial restraint of trade, limiting as they do the right of a party to work and earn a livelihood. Courts, including this one, look upon such contracts with disfavor and scrutinize them with care.

Freeman v. Duluth Clinic, Ltd., 334 N.W.2d 626, 630 (Minn. 1983) (citations omitted). In exercising such care, we do not believe that recovery for the tortious interference of an employment noncompete agreement is warranted and thus, we reverse.

III. Attorney Fees

Appellants claim that the district court erred in assessing attorney fees. We agree.

Attorney fees are not recoverable in litigation absent a specific contract or statutory authorization. Langeland v. Farmers State Bank of Trimont, 319 N.W.2d 26, 33 (Minn. 1982). The United States Supreme Court has held that it is not for the courts to invade the legislature's province by awarding attorney fees without statutory authorization. Id. (citing Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 271, 95 S. Ct. 1612, 1628 (1975)). An exception to this rule is presented when the defendant's wrongful act thrusts the plaintiff into litigation with a third person. Id.

Here, there is no specific contract or statutory authorization that permits the recovery of attorney fees. Without a determination that Angeion tortiously interfered with the contract between Kallok and Medtronic, there is also no wrongful conduct on the part of Angeion that thrusted Medtronic into litigation with Kallok. Thus, Medtronic is not entitled to recover attorney fees as a result of this action.

Affirmed in part and reversed in part.