By Lauren Berg

Law360 (January 21, 2021, 8:40 PM EST ) Medical device company Vapotherm Inc. sued Vero Biotech LLC in New Hampshire federal court Thursday alleging its rival has been using a former Vapotherm employee to lure away other workers, causing it to struggle to make life-saving equipment needed to fight COVID-19.

After Clayton Santiago left his four-year employment with Vapotherm, he then joined Vero and started to solicit at least three other Vapotherm employees to quit and join him at the rival company, the complaint said.

Vapotherm said Santiago breached his confidentiality, noncompete and assignment of inventions agreement, for which he was paid "substantial sums" in exchange for commitments not to undermine Vapotherm.

By encouraging Santiago to solicit his former co-workers, Vero intentionally and improperly interfered with Vapotherm's contractual and economic relations with third parties, according to the suit. Vero caused Santiago to breach his agreement with Vapotherm and caused the other employees to leave the company, the suit said.

"As a result of Santiago and Vero's actions, Vapotherm's staff has been depleted and its ability to make, sell and distribute life-saving equipment to treat symptoms related to COVID-19 has been harmed in the middle of a pandemic caused by the novel coronavirus," Vapotherm said.

Vapotherm, which makes noninvasive breathing aids to treat respiratory distress, went public in November 2018, raising $56 million through an initial public offering of 4 million shares at $14 each. In August 2019, the company had a $45 million follow-on offering selling more than 3 million shares at $14.50 each. And in May, the company made an $87 million offering to boost its research and development.

According to the suit, Santiago started working at Vapotherm in January 2016, where he eventually became regional business director. At the time of his employment, Santiago signed an agreement that during his time at the company and for one year afterward, he would not encourage any employee to leave their job at Vapotherm.

As the regional business director, Santiago hired and developed sales managers and clinical managers, who then interfaced with health care providers in hospitals where Vapotherm products might be used in respiratory care, the company said.

Santiago voluntarily resigned from Vapotherm in February 2020 to accept a position as regional sales director with Vero, according to the suit. The next month, Vapotherm sent a letter to Vero expressing concern about Santiago's position and whether it might cause him to breach noncompete and nondisclosure provisions in his former employment agreement, the complaint said.

In November, three Vapotherm employees who used to work under Santiago resigned on the same day, then started working at Vero as clinical educators, according to the suit. Vapotherm said it believes the three employees are once again working with Santiago and that Santiago was involved in the process to poach them from Vapotherm.

The suit includes claims of breach of contract, intentional interference with existing and prospective contractual relations and unjust enrichment. It seeks injunctive relief barring Vero and Santiago from soliciting or hiring Vapotherm employees during the remaining term of his agreement, as well as damages, litigation costs and attorney fees.

Representatives for the parties did not immediately respond to requests for comment Thursday.

Vapotherm is represented by Michael S. Lewis, Michael K. O'Neil and Kevin P. Scura of Rath Young and Pignatelli PC.

Counsel information for Vero and Santiago was not immediately available.

The case is Vapotherm Inc. v. Vero Biotech LLC et al., case number 1:21-cv-00058, in the U.S. District Court for the District of New Hampshire.

--Additional reporting by Tom Zanki and McCord Pagan. Editing by Haylee Pearl

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