Advanced Bionics Corp v. Medtronic Inc

In Advanced Bionics Corp. v. Medtronic, Inc. (2002) 29 Cal.4th 697, an employee for a Minnesota-based company signed, as a condition of employment, an agreement that contained a covenant not to compete and required that all claims regarding the agreement be decided under Minnesota law. Later, the employee left his employer and accepted employment with a California company. The new California employer immediately filed a complaint for declaratory relief in a California trial court, alleging the Minnesota contract's noncompetition clause violated California law and public policy and was therefore void. Two days later, the Minnesota company responded with a breach of contract and tortious interference suit in Minnesota state court against the former employee and his new California employer. A California trial court issued a temporary restraining order (TRO) in the California lawsuit, compelling the Minnesota company not to undertake any litigation whatsoever, other than in the California action, to enforce its covenant not to compete. The Supreme Court ruled that the trial court had improperly issued the TRO. The Supreme Court explained that an anti-suit injunction may be issued to prevent conflicts between different California courts in multiple cases, but the situation becomes more difficult, and requires additional "judicial restraint," when a second case is filed in another state's courts, and each state's "sovereignty concerns" are implicated. (Advanced Bionics, supra, at pp. 705-707.) The court cited with approval cases from other states holding that a difference in substantive law does not justify an injunction compelling a party not to litigate a proceeding in another state, nor does the potential that inconsistent judgments may be rendered, nor that a judgment in one action may have a preclusive effect on the other action. (Ibid.) In addition to highlighting the importance of judicial restraint in the context of a motion for anti-suit injunction, the court also noted that the principle of comity must be considered when determining whether such an injunction should be issued. (Advanced Bionics, supra, at p. 707.) As the court explained, California courts should not, as a matter of courtesy or comity, and as a matter of mutual utility and advantage, interfere with a court action in another state where neither the state nor its citizens will suffer any inconvenience from the operation of the foreign law. The Supreme Court ruled that enjoining a proceeding in another state "requires an exceptional circumstance that outweighs the threat to judicial restraint and comity principles." (Advanced Bionics, supra, at p. 708) In the employment context presented in Advanced Bionics, the court found no such "exceptional circumstance" to justify the anti-suit injunction because, in short, California's "strong interest" in protecting state-based employees from noncompetition agreements did not overcome the principles of judicial restraint and comity governing anti-suit injunctions. (Id. at pp. 706-708.)