A year after trying to fire a well-known medical inventor who heads one of its divisions, Boston Scientific Corp. finds itself going to court against Alfred Mann today, appealing a judge's order keeping him in his position against the will of his bosses in Natick.
In a federal appeals court in New York this morning, Boston Scientific's lawyers are scheduled to face off against attorneys for Mann , hoping a three-judge panel will overturn an earlier injunction that stopped the company from pushing him out the door.
At stake is the management of Advanced Bionics , a California-based division of Boston Scientific that makes implantable electronic devices to restore the hearing of deaf people, treat chronic pain, and pump drugs within the body. Though the division has lost money so far, its devices are often cited by Boston Scientific executives as an engine of potential growth for the company.
The case centers on Mann, the 81-year-old billionaire and founder of several medical-device companies. In 2004 , he sold Advanced Bionics to Boston Scientific for $742 million , plus potentially billions of dollars in future payments. As part of the deal, the companies signed an unusual agreement that kept Mann aboard and gave him shared control of Advanced Bionics, even after it became a subsidiary of the medical-device giant.
The merger went sour quickly. Advanced Bionics struggled with expensive quality-control problems, and Boston Scientific faced new issues of its own: As it was stretching financially to buy Guidant Corp. , it also got word from the Food and Drug Administration that it faced quality-management issues across the entire company.
Boston Scientific executives began discussing a plan to replace Mann and take tighter control of Advanced Bionics. Last July, two company officials met with Mann and told him he and his top lieutenant Jeffrey Greiner needed to resign or they would be forced out. Mann promptly sued, claiming the company was plotting behind his back to violate their agreement to share control.
A rapid-fire court case followed, with Boston Scientific executives accusing Mann of wasting their money and managing Advanced Bionics incompetently. Mann, in turn, said he was getting the division on track, and that the parent company was deliberately violating his right to be consulted on any leadership changes, including his own replacement.
In April, federal judge Alvin Hellerstein of the Southern District of New York agreed with Mann, saying that Boston Scientific had acted in "bad faith" when it tried to remove him. One key piece of evidence was a letter sent to Mann last summer by Boston Scientific chief executive Jim Tobin, in which Tobin said he had discussed the situation with other company executives before concluding Mann should leave. Later testimony revealed the letter had been drafted by lawyers prior to Tobin holding the meeting.
Hellerstein acknowledged Boston Scientific ultimately had the right to fire Mann and Greiner, but first must comply with the dispute process dictated in the companies' 2004 merger agreement.
Boston Scientific appealed to the US Court of Appeals for the Second Circuit, asking it to overturn Hellerstein's injunction. The court is scheduled to hear arguments from both sides today.
For now, Mann and Greiner are in charge of Advanced Bionics.
A Boston Scientific spokesman declined to comment yesterday. An attorney for Mann, Mark Samuels , said Hellerstein "got it exactly right" in April, and that the injunction should stand.
Stephen Heuser can be reached at firstname.lastname@example.org.