Vapotherm, Inc. v. Santiago

38 F.4th 252
CourtCourt of Appeals for the First Circuit
DecidedJune 28, 2022
Docket21-1567P
StatusPublished
Cited by57 cases

This text of 38 F.4th 252 (Vapotherm, Inc. v. Santiago) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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

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.

- 2 - 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.

- 3 - 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.

- 4 - 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

- 5 - 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.

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Bluebook (online)
38 F.4th 252, Counsel Stack Legal Research, https://law.counselstack.com/opinion/vapotherm-inc-v-santiago-ca1-2022.