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The long arms of the law in California and Minnesota are wrestling over the application of a noncompete employment contract, and the California Supreme Court will have to decide who has the bigger biceps. The outcome could have far-reaching consequences for businesses that operate — and recruit employees — across state lines. The bottom line is: Can courts in California, which doesn’t allow noncompetes, override courts in states that do? Justice Joyce Kennard seemed to think that would be a problem. “In my view, this would do serious damage to the relationships between states. This would be the height of judicial arrogance,” Kennard said. Advanced Bionics Corp. v. Medtronic Inc., S097308, began when Mark Stultz left his high-level marketing job with Minneapolis-based biotech employer Medtronic Inc. for a job in California with one of its competitors, Sylmar-based Advanced Bionics Corp. The day Stultz joined Advanced Bionics, he and his new employer sought — and eventually won — an order in California to prevent Medtronic from enforcing the noncompete agreement Stultz signed when he joined the company in 1995. The next day, Medtronic sought an order in Minnesota restraining the California action. The 2nd District Court of Appeal upheld the California injunction, citing the state’s policy against enforcement of noncompetes, California’s greater interest in Stultz’s employment here — and the fact the California suit was filed first. Although Kennard led the questioning during the arguments in Fresno on Wednesday, other justices also focused on the relationship between the states, but indicated a narrow decision one way or the other would limit any fallout. Advanced Bionics attorney, Robin Meadow of Beverly Hills’ Greines, Martin, Stein & Richland, asked them not to narrow anything, saying the case was an opportunity for the court to make a strong statement about California’s stance on noncompetes. Chief Justice Ronald George seemed wary of the invitation, suggesting that a decision to overturn the injunction might not be the end of the world. “Is this really going to subvert [Business and Professions Code �] 16600 and comity among states?” George asked. Medtronic’s lawyer, David Axelrad of Encino, Calif.’s Horvitz & Levy, also pushed for a broad ruling, asking the court to declare anti-suit injunctions unconstitutional. “There are much better tools to do this than restraining orders,” he said. That didn’t seem to sit well with Justices Ming Chin and Carlos Moreno. “If we do as you say and lift the restraining order, aren’t we likely to see this case again?” Chin said. Axelrad responded: “I’m not sure, but it wouldn’t be a question of comity. It would only come up again on issues of California law.” On the flip side, Meadow argued that a restraining order is the only way for California law to protect the interests of an employer trying to hire an employee in the state. The battle between Medtronic and Advanced Bionics highlights the competitive practices of companies that depend on technological advantage. They deal in medical technology that is implanted in the human body, including devices that relieve pain by directly stimulating the spinal cord. The field is fiercely competitive. Stultz was employed as a senior product manager at Medtronic when Advanced Bionics snatched him away in June 2000. The noncompete agreement he’d signed said that if he went over to a competitor, such as Advanced Bionics, he would be barred for two years from working on products that were similar to those he handled at Medtronic. A choice-of-law provision in the contract said disputes would be handled under Minnesota law. Because of the litigation, Stultz went to work in Advanced Bionics’ human resources department, where he couldn’t be accused of using stolen trade secrets. In January, he left the company altogether. The disagreement now before the California Supreme Court has essentially killed Stultz’s career, said Todd Malynn of Loeb & Loeb, which also worked on the case. Outside court Wednesday, Malynn declined to say where Stultz works now. If the California Supreme Court decides to lift the California injunction, more litigation could move through each state’s system. A decision is due within 90 days.

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