Vapotherm, Inc. v. Santiago

38 F.4th 252
Court of Appeals for the First Circuit·Decided June 28, 2022·No. 21-1567P·Published·Cited by 57 cases

Opinion

United States Court of Appeals For the First Circuit

No. 21-1567 VAPOTHERM, INC.,

Plaintiff, Appellant,

v.

CLAYTON SANTIAGO,

Defendant, Appellee,

VERO BIOTECH, LLC,

Defendant.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

[Hon. Steven J. McAuliffe, U.S. District Judge]

Before

Thompson, Howard, and Gelpí, Circuit Judges.

Michael S. Lewis, with whom Michael K. O'Neil and Rath, Young and Pignatelli, P.C. were on brief, for appellant.

Brett Walker, with whom Jay Gregory and Gordon Rees Scully Mansukhani, LLP were on brief, for appellee.

June 28, 2022

GELPÍ, Circuit Judge. This is an appeal from the district court's dismissal for lack of personal jurisdiction over the Defendant-Appellee, Clayton Santiago ("Santiago"), who was previously employed by the Plaintiff-Appellant, Vapotherm, Inc. ("Vapotherm"). Vapotherm brought suit against Santiago in the District of New Hampshire, alleging that he breached his employment contract and violated a Non-Solicitation of Employees Clause by encouraging three Vapotherm employees to leave the company and join him at his new employment, Vero Biotech, LLC ("Vero"). We affirm. I. Background Santiago was employed by Vapotherm for approximately four years, beginning in January 2016 and ending in February 2020. Vapotherm is a publicly traded medical device manufacturing company. It is a Delaware corporation with its principal place of business in New Hampshire. Santiago was employed primarily as an account manager for Vapotherm, and was specifically assigned to the territory within the State of Georgia.1 Throughout the entirety of his employment with Vapotherm and at all other relevant

1 Santiago held various roles at Vapotherm, including account manager, principal account manager, sales director, regional business director, and account executive. In these roles, he focused on selling Vapotherm's product, the Precision Flow, within Florida and Georgia. He also supervised employees on both the sales team, which sold the product, and the clinical team, which expanded its use in hospitals.

times, Santiago resided in Georgia. In February 2020, Santiago left Vapotherm to work for Vero, and continues to work there as a Regional Engagement Director.

Prior to beginning his employment with Vapotherm, Santiago signed a "Confidentiality, Non-Compete, and Assignment of Inventions Agreement" ("Agreement"). The Agreement included a choice-of-law clause for the State of Maryland but did not include a forum selection clause. Among other things, the Agreement contained a Non-Solicitation of Employees Clause, which prohibited Santiago from "solicit[ing] or encourag[ing] any employee of the Company to terminate his or her employment with the Company or to accept employment with any subsequent employer with whom Employee is affiliated in any way" throughout his employment and for one year thereafter. The Agreement was signed by Santiago and John Landry, Vapotherm's Chief Financial Officer ("CFO").

Vapotherm alleges in its complaint that Santiago violated the non-solicitation clause of the Agreement by encouraging three of its former employees to join him at Vero after he left Vapotherm. These three employees -- Benjamin Lonsway ("Lonsway"), Ryan Philpot ("Philpot"), and Kurt Wong ("Wong") -- were all clinical managers for Vapotherm during their employment.2 Lonsway was based in Georgia, while Wong and Philpot were both

2 As clinical mangers, Lonsway, Philpot, and Wong provided training and support to hospitals that use Vapotherm's product.

based in Florida. Santiago knew all three employees, and indeed supervised Lonsway and Wong for a few months. He later worked in an oversight role with all three. On November 24, 2020, Lonsway, Philpot, and Wong all submitted their letters of resignation to Vapotherm and subsequently began working for Vero as clinical educators.3 Vapotherm alleges that Santiago solicited these employees to leave the company and join him at Vero in violation of the Agreement.

During the course of his employment with Vapotherm, Santiago had limited contact with the State of New Hampshire, primarily arising from his communications with the company's headquarters in Exeter. Santiago testified in his deposition that during his four-year period of employment with Vapotherm, he visited New Hampshire five to seven times to attend corporate events, and in total spent approximately two weeks there. Santiago communicated with Vapotherm's customer service representative, located in New Hampshire, about once a month to process purchase orders and other paperwork. He also communicated infrequently with Vapotherm's technical support as well as its human resources department. The product which Santiago sold, the Precision Flow, was manufactured in New Hampshire. He was paid via direct deposit

3 As clinical educators, the three install Vero's product in hospitals and provide education and training to the hospital's employees.

by Vapotherm, and stated in his deposition that he was unsure where Vapotherm's banks were located.

Apart from these contacts, Santiago's work for Vapotherm was primarily focused in the Southeast of the United States. During the hiring process, after being contacted by a recruiter, Santiago was interviewed in Atlanta, Georgia and Chicago, Illinois. Throughout his employment, his direct supervisors were located in Charleston, South Carolina. Santiago oversaw the company's operations and employees located in Georgia and Florida.

Vapotherm originally filed suit against both Vero4 and Santiago in the District of New Hampshire, alleging that Santiago had violated the Agreement's non-solicitation clause, and brought claims against him for breach of contract, intentional interference with contractual relations, and unjust enrichment, as well as requests for injunctive relief, specific performance, and a declaratory judgment that Santiago breached the Agreement. Following Santiago's challenge to personal jurisdiction over him, the district court ordered limited jurisdictional discovery.5 Upon

4 Vapotherm voluntarily dismissed Vero following a motion to dismiss for lack of subject matter jurisdiction that contended that both Vapotherm and Vero were New Hampshire citizens.

5 Though Santiago did not file a motion to dismiss for lack of personal jurisdiction, the district court construed his "Motion to Stay Proceeding on Preliminary Injunction Until the Existence of Personal Jurisdiction of the Court Can Be Determined" as a challenge to personal jurisdiction. The court ordered briefing and discovery on the jurisdictional issue, and stated it would resolve said issue first. Following the district court's

conclusion thereof, the district court agreed with Santiago. This appeal followed. II. Discussion A. Standard of Review "When a court's personal jurisdiction over a defendant is contested, the plaintiff has the ultimate burden of showing by a preponderance of the evidence that jurisdiction exists." Adams v. Adams, 601 F.3d 1, 4 (1st Cir. 2010) (citing Ealing Corp. v. Harrods Ltd., 790 F.2d 978, 979 & n.1 (1st Cir. 1986)). "Faced with a motion to dismiss for lack of personal jurisdiction, a district court 'may choose from among several methods for determining whether the plaintiff has met [its] burden.'" Adelson v. Hananel, 510 F.3d 43, 48 (1st Cir. 2007) (alteration in original) (quoting Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 50-51 (1st Cir. 2002)). Here, the district court applied the prima facie method, using the parties' proffered evidence to determine whether personal jurisdiction over Santiago was proper. The parties engaged in limited discovery as to the jurisdictional issue. We review both the use of the prima facie method and the decision to grant the motion to dismiss de novo. Id.

example, we refer to the proceedings as the court's action on a motion to dismiss.

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Vapotherm, Inc. v. Santiago, 38 F.4th 252 (1st Cir. 2022).

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