Pending - Other Pending
Contract - Business
Walsh, Brian C
Covidien Holding Inc.
Superior Court of California
Thacker, Jon Mark
Verrier, Lita Monique
Jon Mark Thacker
Lita Monique Verrier
Sauer, Christine Yun
Christine Yun Sauer
Superior Court of CA, County of Santa Clara
Order re Motion to Consolidate and Stay: Stipulation and Appointment of Official Reporter Pro Tem: Judicial Officer: Kuhnle, Thomas; Hearing Time: 1:30 PM; Result: Held; Comment: Motion by Defendants Covidien LP and Covidien Holding Inc. to Consolidate and Stay Actions
Stipulation and Appointment of Official Reporter Pro Tem: Comment: Katherine Chok (CSR #9209) for 8/30/18 - signed/TEK
COS on REPLY on Motion to Consolidate and Stay.pdf: Comment: HRG 8/30/2018 Proof of Service
2018.08.23 CYS Decl ISO Reply.pdf: Comment: HRG 8/30/2018 Declaration of Yun sauer ISO Mot. Consolidate and Stay
2018.08.23 Reply .pdf: Comment: HRG 8/30/2018 Reply ISO Mot Consolidate and Stay
Venclose RJN.pdf: Comment: Request
Venclose Dec of Suess.pdf: Comment: Declaration
Venclose Opposition.pdf: Comment: HRG 8/30/18 Opposition
Proposed ORder Coversheet.pdf: Comment: Proposed Order
DocketReserved - Judicial Officer: Kuhnle, Thomas; Hearing Time: 9:00 AM; Cancel Reason: Vacated; Comment: PHV ApplicationRead MoreRead Less
DocketOrder - Order re Motion to Consolidate and Stay: Comment: Order re Motion to Consolidate and Stay - signed/TEKRead MoreRead Less
DocketConference: Case Management - Stipulation and Appointment of Official Reporter Pro Tem: Judicial Officer: Kuhnle, Thomas; Hearing Time: 1:30 PM; Result: Held; Comment: (2nd CMC) Discovery and responsive pleading deadline stayed, as of 5/8/18, when the case was deemed complex. Patrick Arenz admitted pro hac vice on 7/24/18, on behalf of the Covidien Defendants.Read MoreRead Less
DocketMotion: Consolidate - Order re Motion to Consolidate and Stay: Stipulation and Appointment of Official Reporter Pro Tem: Judicial Officer: Kuhnle, Thomas; Hearing Time: 1:30 PM; Result: Held; Comment: Motion by Defendants Covidien LP and Covidien Holding Inc. to Consolidate and Stay ActionsRead MoreRead Less
DocketStipulation and Appointment of Official Reporter Pro Tempore - Stipulation and Appointment of Official Reporter Pro Tem: Comment: Katherine Chok (CSR #9209) for 8/30/18 - signed/TEKRead MoreRead Less
DocketMinute OrderRead MoreRead Less
DocketMinute OrderRead MoreRead Less
DocketProof of Service - COS on REPLY on Motion to Consolidate and Stay.pdf: Comment: HRG 8/30/2018 Proof of ServiceRead MoreRead Less
DocketDeclaration - 2018.08.23 CYS Decl ISO Reply.pdf: Comment: HRG 8/30/2018 Declaration of Yun sauer ISO Mot. Consolidate and StayRead MoreRead Less
DocketResponse/Reply - 2018.08.23 Reply .pdf: Comment: HRG 8/30/2018 Reply ISO Mot Consolidate and StayRead MoreRead Less
DocketNotice: Appearance - Notice Appearance: Comment: HRG 7/20/2018 Notice of Appearancy by Christine Yun Sauer/POSRead MoreRead Less
DocketStatement: Case Management Conference - HRG 7-20-18 Venclose 2 JCMS - 7-13-18.pdf: Comment: Joint Case Management StatementRead MoreRead Less
DocketNotice - Comment: Of Undocumented Action Re: Complex Fees Payment.Read MoreRead Less
DocketProof of Service - Venclose 2 - POS - Order - 5-18-18.pdf: Comment: Re: order deeming case complexRead MoreRead Less
DocketNotice: Appearance - Notice Appearance Atty Sauer: Comment: Notice of Appearance of Atty Christine Yun SauerRead MoreRead Less
DocketOrder: Deeming Case Complex - Order Deeming Case Complex and Staying Discovery and Responsive Pleading: Comment: Order Deeming Case Complex and Staying Discovery and Responsive Pleading Deadline signed/TEKRead MoreRead Less
DocketOrder - Order and Notice of Reassignment to D5 (TEK) and CMC reset to 7-20-18: Comment: Order and Notice of Reassignment of Case to D5 (Hon. Thomas E. Kuhnle); CMC reset from 8/10/18 to 7/20/18 at 10am in D5 - signed/BCWRead MoreRead Less
DocketComplaint (Unlimited) (Fee Applies) - Complaint (Unlimited) (Fee Applies):Read MoreRead Less
DocketCivil Case Cover Sheet - Venclose - CCCS - 4-27-18.pdf:Read MoreRead Less
DocketSummons: Issued/Filed - Venclose - Summons - 4-27-18.pdf:Read MoreRead Less
4/27/2018 5:25 PM
LITA M. VERRIER (SBN 181183) Clerk Qf Court
J. MARK THACKER (SBN 157182) Superior Court of CA, MARIE E. SOBIESKI (SBN 278008) County of Santa Clara ROPERS, MAJESKI, KOHN & BENTLEY 18CV 327382
50 W. San Fernando Street, Suite 1400 - :
San Jose, CA 95113 Reviewed By: A. Hwang
Telephone: (408) 287-6262
Facsimile: (408) 918-4501
Email: email@example.com; firstname.lastname@example.org; email@example.com
Attorneys for Plaintiff VENCLOSE, INC.
VENCLOSE, INC., a Delaware CASENO. 18CV327382 Corporation, COMPLAINT FOR: Plaintiff, 1. NEGLIGENT INTERFERENCE WITH V. PROSPECTIVE ECONOMIC ADVANTAGE; COVIDIEN LP, COVIDIEN HOLDING INC., and DOES 1 through 20, inclusive, 2. INTENTIONAL INTERFERENCE
3. UNFAIR BUSINESS PRACTICES AND COMPETITION [CAL. BUS. & PROF. CODE § 17200, ET. SEQ.
Plaintiff VENCLOSE, INC. ("Venclose") hereby files this Complaint against Defendants COVIDIEN LP, COVIDIEN HOLDING INC. (collectively, "Defendants" or "Covidien"), and Does 1 through 20, inclusive, seeking damages for Covidien's illegal interference with Venclose's business, as well as restitution and injunctive relief for Covidien's unfair business practices and unfair competition pursuant to California Business and Professions Code §17200, ef seq. Plaintiff L. PARTIES
1. Plaintiff Venclose is a Delaware corporation with its place of business and headquarters at 2570 N. First Street, San Jose, California. Venclose is a startup company formed in early 2014. Venclose has more than 70 small shareholders, most of whom are natural individuals or individual self-directed retirement accounts.
2. Most Venclose employees, both current and former, live in California. This includes over ten contractors who have worked on Venclose's product development, manufacturing, regulatory issues, and marketing.
3. On information and belief, Covidien LP is a Delaware limited partnership with its principal place of business located at 15 Hampshire Street, Mansfield, Massachusetts.
4, On information and belief, Covidien Holdings Inc. is a Delaware corporation with its principal place of business located at 15 Hampshire Street, Mansfield, Massachusetts. Covidien Holding Inc. is the general partner of Covidien LP. On inforrhation and belief, Covidien uses its various holding companies to, among other things, make acquisitions of smaller companies, and subsequently coerces employees to sign restrictive covenants containing forum selection clauses set in states favorable to such provisions. Defendants are hereby referred to as “Covidien.”
5. On information and belief, non-party Medtronic Inc. acquired Covidien on January 26, 2015, for a purchase price of $42.9 billion. Medtronic is a Delaware corporation with its United States principal place of business in Minneapolis, Minnesota, where Covidien's lawyers in this and the related actions are located. Although not a party, on information and belief, and thereon alleged, Venclose believes this action is driven by Medtronic through its subsidiaries and affiliates to illegally and improperly quash new and upcoming technology by and through various anti-competitive and unfair business tactics.
6. Venclose is ignorant of the true names and capacities of the defendants sued herein as Does 1 through 20, inclusive, and therefore sues said defendants by fictitious names, and asks that when their true names are discovered, this complaint be amended by inserting their true
names in lieu of the fictitious names, together with apt and proper words to charge them.
4828-8194-3395.1 -2 - 7. On information and belief, Venclose alleges that the fictitious defendants, Does 1 through 20, and each of them, were and/or are agents, servants, employees, partners, alter egos, and/or joint-venturers of the other defendants, and in engaging in the conduct alleged herein, were acting with the course and scope of such agency and employment with the consent and permission of their co-defendants.
II. JURISDICTION AND VENUE 8. This Court has jurisdiction over all causes of action asserted herein, as the causes |
of action asserted herein arise out of the actions undertaken by Covidien in this county.
Jurisdiction is proper because, among other reasons, the harm and damage caused by Covidien as against Venclose has occurred here.
9. This Court further has jurisdiction over Covidien because Covidien has sufficient minimum contacts with the State of California, and specifically this county, such that the exercise ! |
of both general and specific jurisdiction over Covidien is proper.
10. General jurisdiction over Covidien in this county is proper because Covidien has engaged in systematic and continuous business operations throughout this county for several years, including acquiring various companies in Santa Clara County.
11. For example, Covidien acquired San Jose-based VNUS Medical Technologies ("VNUS") in 2009, Sunnyvale-based BARRX Medical in 2011, and Campbell-based Maya Medical in 2012. It also acquired additional companies in California in recent years, including Reverse Medical in Irvine and Newport Medical in Costa Mesa. This does not include the many California companies purchased by Covidien's parent, Medtronic.
12. On information and belief, Covidien currently maintains offices at various locations in Santa Clara County, including 540 Oakmead Parkway in Sunnyvale, California, and 173 Jefterson Drive in Menlo Park, California.
13. In addition to general and personal jurisdiction, specific personal jurisdiction over Covidien in this county is also proper because Covidien has purposefully directed activities into this county that relate to the claims in this dispute, including violations of California Business and
Professions Code §17200, ef seq., as part of its strategy to eliminate Venclose as a competitor in
4828-8194-3395.1 -3 - the radio frequency venous ablation market.
14. Venue is proper in this Court under California Code of Civil Procedure §§395 and 395.5 for at least the reasons set forth above, and because the injury to Venclose occurred, and is occurring, in Santa Clara County, and the liabilities which Covidien is subject to arise in Santa Clara County.
15. Venue 1s further proper as Venclose is located in Santa Clara County and does business from its office in in Santa Clara County, and this is the location of the facilities where
Venclose alleges that harm and damage are being done. III. FACTUAL BACKGROUND
A. Summary of Issues
16. This action arises from Covidien's improper and illegal attempts to put a start-up competitor out of business by and through interfering with Venclose's contracts and potential contracts, as well as economic and business relationships through coercion of Covidien's existing customers 1n violation of California law. On information and belief, Covidien is engaged in activities that include informing potential Venclose customers that Covidien will put Venclose out of business and threatening customers with penalties, monetary and otherwise if they do business with Venclose. Further, Covidien has warned potential Venclose employees, predominantly sales representatives, that they may be dragged into litigation if they work for
Venclose or become affiliated with Venclose, in further violation of California law.
B. Venclose's Business 17. Venclose was formed on February 26, 2014, to research and develop innovative
products in the field of radiofrequency ("RF") medical devices. Venclose has since developed a next generation RF device for treating vein disease, more colloquially referred to as "varicose veins," a condition from which it is estimated over 28 million Americans suffer.
18. Venclose filed its '338 non-provisional utility patent application and the '849 PCT application (collectively the "Venclose Patent Applications") on March 26, 2015. Both non- provisional applications were published on October 1, 2015, making them available in full to the
public as of that date.
4828-8194-3395.1 -4 - 19. Venclose has spent millions of dollars to develop a product and bring it to market. Venclose's current flagship product is an endovenous device which works on veins (which return blood to the heart) by heating targeted faulty veins from inside. With treatment, the faulty veins shrink closed and no longer cause painful symptoms of venous reflux, such as varicose veins, skin changes, and painful and often infected sores.
20. In September of 2016, the FDA gave clearance for Venclose to commercially distribute its product in the United States. Doctors using or trying the Venclose product have reported good quality of treatment with the Venclose system, as well as several significant clinical and procedural improvements over current available systems, including Covidien's
ClosureFast system. Doctors have actively approached Venclose seeking to purchase Venclose's
product. C. Covidien's Business 21. Medtronic is the parent company of Covidien and directs the activities of
Covidien. Of relevance to this dispute is Covidien's ClosureFast product. ClosureFast is also used to treat varicose veins, and has been on the market since 2006, having been developed beginning in 2004. ClosureFast is an older product that has remained relatively staid and unchanged for more than 10 years. As of at least through 2015, it had the majority of the market in RF venous ablation in the United States.
22. On information and belief, Covidien's global revenue for ClosureFast is between $200-$300 million each year. |
23. On information and belief, and thereon alleged, Covidien determined that Venclose’s development of a new competitive RF venous ablation product would undermine Covidien's existing ClosureFast pricing and market share and decided to illegally and intentionally insure that the Venclose product never gained traction by and through anti- competitive threats, intimidation and other wrongful acts.
24. On information and belief, near the time Venclose publicly disclosed its new medical device technology, Covidien routinely held internal events called "war games," in which one of these war games targeted Venclose and the Venclose product.
D. Covidien's Unfair Business Practices
25. On information and belief, through the words and actions of its employees and
agents, Defendants have engaged in wrongful conduct to dissuade doctors and other medical professionals from using Venclose's product, forcing them away from the new technology for fear of reprisal from Covidien. Covidien is a large medical device manufacturer which makes
numerous medical devices in many different specialty areas, and an increase of Covidien's prices
to those providers, or a limitation on their supply of necessary medical supplies, could clearly easily impact their medical practices.
26. On information and belief, Covidien has also threatened to withhold its other (non- \ ClosureFast) medical device products if a clinic/physician purchases the Venclose product or purchases the Venclose product in lieu of the Covidien product. |
27. Oninformation and belief, Defendants have engaged in price manipulation including selling its ClosureFast product below cost in an attempt to eliminate Venclose as a competitor.
28. On information and belief, Covidien has also threatened to withhold its ClosureFast product if a clinic/physician also purchases the Venclose product or purchases the Venclose product in lieu of the Covidien product.
29. On information and belief, Defendants have also acted intentionally to dissuade doctors and other medical professionals that using the Venclose product will subject them to legal repercussions from Covidien.
30. On information and belief, and thereon alleged, those tactics include but are not limited to, coercing a physician to cancel a contract with Venclose upon the threat that Covidien would cease to provide its ClosureFast product to said physician, informing potential Venclose customers that it was suing Venclose and that they would soon "run out of money" and not to bother purchasing from them), and otherwise attempting to prevent Venclose from establishing any leverage with physicians and potential customers in the open market. relationships with potential investors by spreading claims that it would sue Venclose into bankruptcy or otherwise eliminate Venclose's ability to do business on the open market.
32. On information and belief, Covidien has also shipped ClosureFast product to at least one physician without any order in an attempt to "cram the ship" and thereby prevent the physician from ordering the Venclose product, in violation of the Physician Payments Sunshine Act.
33. Oninformation and belief, a Covidien Regional Sales Director approached at least one physician regarding the Venclose product. Venclose has been informed, and on that basis believes, that at this meeting, this Regional Sales Director asked the physician's opinion of the Venclose product, whether that individual looked favorably on it, and whether or not the physician was likely to use the Venclose product over Covidien's ClosureFast. Upon the physician's favorable review of the Venclose product, the Covidien employee indicated that the physician's preference did not really matter anyway, as Covidien intended to sue Venclosebusiness, and that the Venclose product would not be available.
34. Venclose has spent more than $6 million in development, research, and regulatory filings to bring its venous ablation product to market. On information and belief, Covidien, now realizing that Venclose's product poses a threat to the decade-old ClosureFast system, has chosen
to employ unfair and illegal tactics to try and save its market share for this product.
UNFAIR BUSINESS PRACTICES UNDER CAL. BUS. & PROF. CODE §17200, ef seq. (Against All Defendants)
35. Venclose repeats and re-alleges the allegations of the preceding paragraphs in this Complaint as if fully set forth herein.
36. Venclose is informed and believes, and thereupon alleges, that Defendants have engaged in unfair business practices and unfair competition in violation of California Business and Professions Code §17200, ef seq., by, among other things: b. disparaging Venclose to third parties and internally strategizing to put competitors, including Venclose, out of business;
G. using illegal anti-competitive activities, such as adjusting prices of their ClosureFast product if it discovers a customer is considering use of the Venclose
d. intimidating physicians by and through threats of loss of business if they contract with Venclose. 37. Defendants' acts and unfair tactics as described herein constitute unfair business
practices and/or unfair competition in violation of Business and Professions Code §17200, ef seq.
38. Defendants' acts complained of herein significantly threaten or harm competition. Among other things, these acts were undertaken with the intention of harming competition, as well as harming Venclose's competitive position or potential competitive position in the venous closure industry.
39. Asadirect and proximate result of Defendants' unfair competition and violations of California Business and Professions Code §17200, et seq., Venclose has suffered and will continue to suffer irreparable harm, including, but not limited to, harm to its business reputation and goodwill unless Defendants' bad acts and false statements to Venclose's customers and potential customers are enjoined by this Court. Venclose is being irreparably harmed by Defendants' unfair business practices and unfair competition. There is no adequate remedy at law, thereby justifying preliminary and injunctive relief under California Business and Professions Code §17203. |
40. Asadirect and proximate cause of Defendants' conduct, Venclose has been injured in an amount to be proven at trial and seeks restitution, disgorgement, and injunctive relief.
(Against All Defendants) 41. Venclose repeats and re-alleges the allegations of the preceding paragraphs in this
Complaint as if fully set forth herein.
4828-8194-3395.1 . -8 -
42. Prior to engaging in the aforementioned conduct, Defendants were fully aware that Venclose had business relationships with physicians in California and throughout the United States which were very likely to result in economically-advantageous contractual relationships between Venclose and said physicians now and in the future, as Venclose's product is introduced into the marketplace. Covidien knew this, in part, as they attended more than 17 trade shows together before the end of 2016, and because they sought to obtain confidential and secret documents related to the Venclose product from the FDA through a FOIA request.
43. Venclose had and has a reasonable probability of future business opportunities and economic benefit in connection with both: (i) its relationships with its customers; (i1) its relationship with other related potential customers; and (iii) with its investors.
44. Defendants knew or should have known of such opportunities and knew or should have known thatwith due care that its actions, including disparaging and untrue statements by its sales persons and upper management to third parties, would interfere with such opportunities and cause Venclose to lose all or part of the economic benefit of such relationships, as Venclose is competing with Covidien's customers who purchase and/or use its ClosureFast product, but nevertheless proceeded with their conduct and actions.
45. Defendants have acted negligently disrupted Venclose's relationships and business opportunities with customers, potential customers, and investors in violation of, among others, California Business and Professions Code §17200, ef seq. by intimidating physicians and deliberately altering prices of its ClosureFast product, all with the improper purpose of reducing Venclose's ability to fairly compete in the marketplace.
46. Defendants intended to disrupt the performance of relationships with physicians established by Venclose.
47. As a direct and proximate cause of Defendants' conduct, Venclose has been injured in an amount to be proven at trial. Defendants' conduct was a substantial factor in causing Venclose's harm.
(Against All Defendants)
48. Venclose repeats and re-alleges the allegations of the preceding paragraphs in this Complaint as if fully set forth herein. ‘
49. Prior to engaging in the aforementioned conduct, Defendants had knowledge that Venclose had business relationships with physicians in California and throughout the United States which were very likely to result in economically advantageous contractual relationships between Venclose and said physicians, as Venclose is competing with customers, including Covidien's customers who may also purchase and/or use its ClosureFast product.
50. Venclose had and has a reasonable probability of future business opportunities and economic benefit in connection with both: (i) its relationships with its customers; and (ii) its relationship with other related potential customers. Covidien knew this, in part, as they attended more than 17 trade shows together before the end of 2016 and because they sought to obtain confidential and secret documents related to the Venclose product from the FDA via a FOIA request.
51. Defendants knew of such opportunities and intentionally, willfully, and with an improper purpose interfered with such opportunities in violation of, among other laws, California Business and Professions Code §17200, ef seq., by intimidating physicians and by altering prices for its ClosureFast product. This was done for an improper purpose and as part of a strategy to eliminate Venclose as a competitor. Further, Covidien has made disparaging and untrue statements to third parties.
52. Defendants' actions have disrupted Venclose's relationships and business opportunities with its customers and potential customers.
53. Asadirect and proximate cause of Defendants' conduct, Venclose has been injured in an amount to be proven at trial.
54, Defendants committed these tortious acts with deliberate and actual malice, ill-will,
and oppression in conscious disregard of Venclose's rights and, therefore, Venclose is entitled to
4828-8194-3395.1 - 10 - punitive damages.
55. Defendants have acted with malice, oppression, and fraud and engaged in wrongful conduct through its tortious interference with Venclose's relationships with doctors and other medical professionals. As a result of Defendants' actions, Venclose has been harmed, and Defendants' wrongful conduct was a substantial factor in causing that harm.
56. Accordingly, Venclose is entitled to an award of punitive damages against Defendants in an amount to be proven at trial.
WHEREFORE, Venclose prays for judgment and relief as follows:
Venclose, Inc. hereby demands a trial by jury.
Dated: April 27, 2018 ROPERS, MAJESKI, KOHN & BENTLEY
J.MARK THACKER MARIE E. SOBIESKI Attorneys for Plaintiff VENCLOSE, INC.
4828-8194-3395.1 -12 -
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