On brief with my former colleagues from Boies Schiller. This is a major appeal of a preliminary injunction from the United States District Court for the Middle District of Florida to the United States Court of Appeals for the Eleventh Circuit.
Critical issues addressed herein:
1. Enforceability of restrictive covenants under CT law.
2. Application of CT's multi-factor test for reasonableness of restrictive covenants and/or non-compete agreement.
3. The public interest inquiry under FRCP 65.
4. The defense of prior breach under CT law.
5. The concept of irreparable under FRCP 65.
6. Whether protracted delay precludes a finding of irreparable harm and forecloses preliminary injunctive relief.
7. Whether the existence of settlement discussions/negotiations can justify a party's protracted delay in seeking injunctive relief.
Jonathan Pollard
Pollard PLLC
P: 954-332-2380
Special interogatories in California litigationLegalDocsPro
Special interrogatories in Caifornia litigation are the topic of this isssue of the weekly legal newsletter from LegalDocsPro. This is is issue number 2.
Special interogatories in California litigationLegalDocsPro
Special interrogatories in Caifornia litigation are the topic of this isssue of the weekly legal newsletter from LegalDocsPro. This is is issue number 2.
Sample responses to form interrogatories for California divorceLegalDocsPro
These sample responses to form interrogatories for a California divorce can also be used in a legal separation or nullity case as well. They are designed to be used in responding to Judicial Council Form FL-145 Form Interrogatories-Family Law. The sample on which this preview is based is 10 pages and contains brief instructions, a verification and proof of service by mail.
Former state water official files federal civil rights lawsuit against Las Ve...This Is Reno
Robert Coache has applied to receive an official exoneration by the State of Nevada after serving time in prison for crimes the Nevada Supreme Court later dismissed for lack of evidence. Whether he is granted that status, however, remains to be seen.
Coache, who spent 16 months in prison, could be eligible for $50,000 a year for each year served, under a 2019 law passed by the Nevada legislature.
It’s a drop in the bucket compared with the $5 million in damages he is now seeking in a federal civil rights lawsuit filed against Las Vegas Metropolitan Police Department (LVMPD) and the Clark County District Attorney’s Office.
Coache faced 49 charges, “spent over sixteen months in prison and was on parole for conspiracy to commit extortion by public officer or employee, extortion by public officer or employee, conspiracy to commit asking or receiving bribe by public officer, asking, or receiving bribe by public officer, conspiracy to commit money laundering, and forty-four counts of money laundering,” his attorneys said.
The Nevada Supreme Court in 2019 dismissed the 49 charges against him citing lack of evidence.
Sample motion for consolidation in unlawful detainer (eviction) in California LegalDocsPro
This sample motion for consolidation in an unlawful detainer (eviction) in California is filed pursuant to Code of Civil Procedure sections 1048(a) and 1177 and is used by a defendant in an eviction proceeding who wants to request consolidation of the eviction case with another case involving title to the real property such as a fraud or quiet title action on the grounds that the two cases are related and that determination of complex title issues should not be decided in a summary proceeding as that would unfairly prejudice the defendant. The sample is designed to be used by a defendant in an eviction after a foreclosure but can also be easily modified for use in situations such as where the defendant in the eviction case is asserting an interest in the real property. The sample on which this preview is based is 27 pages and includes brief instructions, a table of contents and table of authorities, memorandum of points and authorities with citations to case law and statutory authority, sample declaration, proof of service and proposed order granting motion for consolidation. The author is a freelance paralegal who has worked in California and Federal litigation since 1995 and has created over 250 sample legal documents for sale.
Sample verified statement to disqualify judge in CaliforniaLegalDocsPro
This sample verified statement to disqualify a judge in California is designed to be used pursuant to Code of Civil Procedure section 170.1 to object to any judge on the grounds that the judge has a financial interest in a party to the legal action or has exhibited bias or prejudice such that other persons aware of the facts might reasonably entertain a doubt that the judge would be able to be impartial. The sample on which this preview is based is 12 pages and includes brief instructions, a sample declaration and memorandum of points and authorities with citations to case law and statutory authority and verification.
DEMANDA DE EJECUCIÓN DE TRANSACCIÓN POR OBLIGACIÓN DE HACER: Para iniciar un proceso de ejecución y evitar uno de conocimiento (tedioso y largo) es bueno que realices un documento privado por escrito y le pongas como título transacción extrajudicial, esta se ejecuta en el proceso de ejecución que no requiere de conciliación previa (AUTOR JOSÉ MARÍA PACORI CARI)
Sample California motion to strike for unlawful detainer (eviction) complaintLegalDocsPro
This sample California motion to strike an unlawful detainer (eviction) complaint is used when the plaintiff has not verified the complaint, or is requesting rent or damages they are not entitled to. The sample on which this preview is based is 11 pages and includes brief instructions, a memorandum of points and authorities with citations to case law and statutory authority and a proof of service by mail. The sample document is sold on scribd.com by LegalDocsPro.
“Julia Ticona Ticona, refiere que el día miércoles 20 de abril a las siete y media de la noche, la detienen por la urbanización libertad, conjuntamente con su ahijado Alexander Llanos Ticona, detenidos por el capitán Ivan Tirado Rebaza y un sub oficial, quienes le dicen que suba a un carro de lunas polarizadas color negro, manifestándole que tenia orden de captura preliminar por el delito de extorsión, y que si quería para ayudarla tenía que darle tres manos, ofreciéndole ayudarla pasando sus papeles y si no le pagaba la iba a pasar como autora, ya que la Fiscala está de vacaciones
The City Attorney's office hired counsel James D. Young in February 2018 to research the feasibility of filing a lawsuit to recover damages the City sustained as a result of the ongoing opioid crisis.
Sample responses to form interrogatories for California divorceLegalDocsPro
These sample responses to form interrogatories for a California divorce can also be used in a legal separation or nullity case as well. They are designed to be used in responding to Judicial Council Form FL-145 Form Interrogatories-Family Law. The sample on which this preview is based is 10 pages and contains brief instructions, a verification and proof of service by mail.
Former state water official files federal civil rights lawsuit against Las Ve...This Is Reno
Robert Coache has applied to receive an official exoneration by the State of Nevada after serving time in prison for crimes the Nevada Supreme Court later dismissed for lack of evidence. Whether he is granted that status, however, remains to be seen.
Coache, who spent 16 months in prison, could be eligible for $50,000 a year for each year served, under a 2019 law passed by the Nevada legislature.
It’s a drop in the bucket compared with the $5 million in damages he is now seeking in a federal civil rights lawsuit filed against Las Vegas Metropolitan Police Department (LVMPD) and the Clark County District Attorney’s Office.
Coache faced 49 charges, “spent over sixteen months in prison and was on parole for conspiracy to commit extortion by public officer or employee, extortion by public officer or employee, conspiracy to commit asking or receiving bribe by public officer, asking, or receiving bribe by public officer, conspiracy to commit money laundering, and forty-four counts of money laundering,” his attorneys said.
The Nevada Supreme Court in 2019 dismissed the 49 charges against him citing lack of evidence.
Sample motion for consolidation in unlawful detainer (eviction) in California LegalDocsPro
This sample motion for consolidation in an unlawful detainer (eviction) in California is filed pursuant to Code of Civil Procedure sections 1048(a) and 1177 and is used by a defendant in an eviction proceeding who wants to request consolidation of the eviction case with another case involving title to the real property such as a fraud or quiet title action on the grounds that the two cases are related and that determination of complex title issues should not be decided in a summary proceeding as that would unfairly prejudice the defendant. The sample is designed to be used by a defendant in an eviction after a foreclosure but can also be easily modified for use in situations such as where the defendant in the eviction case is asserting an interest in the real property. The sample on which this preview is based is 27 pages and includes brief instructions, a table of contents and table of authorities, memorandum of points and authorities with citations to case law and statutory authority, sample declaration, proof of service and proposed order granting motion for consolidation. The author is a freelance paralegal who has worked in California and Federal litigation since 1995 and has created over 250 sample legal documents for sale.
Sample verified statement to disqualify judge in CaliforniaLegalDocsPro
This sample verified statement to disqualify a judge in California is designed to be used pursuant to Code of Civil Procedure section 170.1 to object to any judge on the grounds that the judge has a financial interest in a party to the legal action or has exhibited bias or prejudice such that other persons aware of the facts might reasonably entertain a doubt that the judge would be able to be impartial. The sample on which this preview is based is 12 pages and includes brief instructions, a sample declaration and memorandum of points and authorities with citations to case law and statutory authority and verification.
DEMANDA DE EJECUCIÓN DE TRANSACCIÓN POR OBLIGACIÓN DE HACER: Para iniciar un proceso de ejecución y evitar uno de conocimiento (tedioso y largo) es bueno que realices un documento privado por escrito y le pongas como título transacción extrajudicial, esta se ejecuta en el proceso de ejecución que no requiere de conciliación previa (AUTOR JOSÉ MARÍA PACORI CARI)
Sample California motion to strike for unlawful detainer (eviction) complaintLegalDocsPro
This sample California motion to strike an unlawful detainer (eviction) complaint is used when the plaintiff has not verified the complaint, or is requesting rent or damages they are not entitled to. The sample on which this preview is based is 11 pages and includes brief instructions, a memorandum of points and authorities with citations to case law and statutory authority and a proof of service by mail. The sample document is sold on scribd.com by LegalDocsPro.
“Julia Ticona Ticona, refiere que el día miércoles 20 de abril a las siete y media de la noche, la detienen por la urbanización libertad, conjuntamente con su ahijado Alexander Llanos Ticona, detenidos por el capitán Ivan Tirado Rebaza y un sub oficial, quienes le dicen que suba a un carro de lunas polarizadas color negro, manifestándole que tenia orden de captura preliminar por el delito de extorsión, y que si quería para ayudarla tenía que darle tres manos, ofreciéndole ayudarla pasando sus papeles y si no le pagaba la iba a pasar como autora, ya que la Fiscala está de vacaciones
The City Attorney's office hired counsel James D. Young in February 2018 to research the feasibility of filing a lawsuit to recover damages the City sustained as a result of the ongoing opioid crisis.
All product and company names mentioned herein are for identification and educational purposes only and are the property of, and may be trademarks of, their respective owners.
Think of epilepsy as an electrical storm in the brain. This abnormal brain activity causes seizures, unusual behavior or sensations, or a loss of awareness.
Most of the 50 million people who have it can live seizure-free if they take inexpensive, effective medicines. But 80% of people with epilepsy live in low- and middle-income countries, where three-quarters of them lack treatment, according to a new WHO global report on epilepsy.
The report is produced by WHO in collaboration with the International League Against Epilepsy (ILAE) and the International Bureau for Epilepsy (IBE).
Commil v. Cisco: Brief of Biotechnology Industry Organization as Amicus Curi...Gary M. Myles, Ph.D.
Amicus Brief submitted by BIO (Biotechnology Industry Organization) to Supreme Court of the United States in Commil USA, LLC v. Cisco Systems (No. 13-896)
Through the D.C. office of WilmerHale several organizations, ACLU San Diego, Electronic Frontier Foundation, Cato Institute, and more, filed an amicus brief to support Darren Chaker on an important First Amendment issue concerning bloggers right and the right to post about police abuse and conduct.
The following documents were submitted by the Republic of Ecuador to the international arbitration hearing the case between Chevron/Texaco and the Republic. These documents further show the impact of Chevron/Texaco’s decades’ long oil pollution on the people of Ecuador.
Pollard PLLC lawsuit seeking (a) declaratory judgment holding a non-compete agreement unenforceable and damages for (b) unpaid wages under the Fair Labor Standards Act (c) defamation per se and (d) tortious interference.
Pollard PLLC represents 7 real estate brokers and their new company KD Premier Realty against their former employer, Properties of the Villages. In the attached document, the Magistrate Judge has recommended that Plaintiff's Motion for Preliminary Injunction be denied. The case is pending in the United States District Court for the Middle District of Florida. The Firm can be reached at 954-332-2380.
Complaint - Bartender Non-Compete Case - Tampa Federal CourtPollard PLLC
This Complaint arises out of a hospitality and staffing company's assertion that several bartenders are subject to non-compete restrictions. The at issue non-compete agreements were never signed.
Pollard PLLC has initiated a lawsuit against the company WTS International, Inc. for tortious interference, defamation, and a declaratory judgment holding that no such non-compete agreements exist, or, that such restrictions are not enforceable.
The plaintiff in this case runs a janitorial service that primarily cleans restaurants. They have sued a former employee, Altman, for breach of a non-compete agreement and theft of trade secrets.
To state the obvious: The identity and contact information of the Cheesecake Factory is not a trade secret. Knowing how to clean a restaurant is not a trade secret. Quoting a price for cleaning services is not a trade secret.
Pollard PLLC represents Altman and has countersued for the following:
1. Declaratory judgment holding the non-compete agreement unenforceable.
2. False advertising under the Lanham Act.
3. Defamation. The Plaintiff has gone to multiple customers and told them that Altman stole their trade secrets and even stole equipment. Altman maintains that these allegations are total fabrications.
4. Tortious interference.
5. Breach of contract for failure to pay certain commissions.
Altman, now the Defendant/Counter-Plaintiff is seeking at least $10 million in damages in addition to corrective advertising to clear her name.
Complaint - Woodbridge Liquidation Trustee vs. Woodbridge's LawyersPollard PLLC
The trustee of the Woodbridge Liquidation Trust has brought a $500 million+ lawsuit against the lawyers and law firms that it alleges helped facilitate the Woodbridge Ponzi scheme.
Representatives Nunes Sues CNN for Defamation & $435 Million in DamagesPollard PLLC
Representative Devin Nunes has sued CNN for defamation and is seeking $435 million in damages. Per the Complaint: Nunes alleges that CNN knowingly published numerous false statements about his alleged involvement in Ukraine.
Per the Complaint: Nunes was not in Ukraine - as alleged - digging up dirt of the Bidens. This was a false narrative invented by Parnas to obtain leverage and cut a deal.
Let's unpack this:
The Complaint is full of theatrics but probably survives a motion to dismiss. Plaintiff has alleged that the statements at issue were false. The truth or falsity of those statements is a factual dispute. As for the defamatory nature of the statements: The statements could be defamatory, but probably don't rise to the level of defamation per se.
The Washington DC Attorney General's Office has filed a lawsuit against DoorDash. The Complaint alleges that DoorDash engaged in false and deceptive practices regarding its tipping policies. Basically, DoorDash used "tips" to subsidize worker pay---- while representing to the consuming public that the tip was exactly that--- a tip that went to the driver.
The reason why lawsuits by state AG's are so important here: Most people - whether workers or consumers - probably can't sue DoorDash because of arbitration provisions and class action waivers. But those things are no obstacle to a state AG.
SDFL - Order Dismissing Various Claims - Jurisdiction - Trade SecretsPollard PLLC
The Plaintiff filed a 20 count lawsuit alleging, among other counts, theft of trade secrets, unjust enrichment, breach of fiduciary duty, trademark infringement, violations of the Computer Fraud Abuse Act and more.
This is the classic shock and awe, everything and the kitchen sink approach to litigation.
In this instance, that approach backfired spectacularly. The Court dismissed 17 of the counts on jurisdictional grounds -- holding they cannot be refiled in federal court but must be pursued, if at all, in state court.
The court also dismissed one count with prejudice. Denied the motion to dismiss with respect to one count. And granted leave to amend on one count--- but warned plaintiff and its counsel to mind Rule 11 if they decide to amend.
Think twice before you file a 20 count complaint in federal court where you are literally throwing everything at the wall and hoping something sticks.
Motion to Dismiss Claims for Misappropriation of Trade Secrets and Tortious Interference under Florida law. Tampa, Florida. Hillsborough County Circuit Court - Complex Business Litigation Division.
Pollard PLLC
P. 954-332-2380
Middle District of Florida - Recent Decision Denying Trade Secret InjunctionPollard PLLC
This is a great example of how courts should evaluate a request for a preliminary injunction in a misappropriation of trade secrets case.
Courts and judges should never credit boilerplate, generic allegations about trade secrets and misappropriation. All such allegations should be put to the test. The key questions:
What is the trade secret? Has it been identified? Has it been boiled down to something concrete and tangible? Is the same thing publicly available? Does it have economic value? Has it been misappropriated? Were there reasonable efforts to keep it secret?
Even when the plaintiff has good answers to all of these questions, they still have to prove irreparable harm.
The 11th Circuit repeatedly has made this clear: Preliminary injunctions are supposed to be extraordinary and drastic remedies. They should be issued only in dire circumstances where there is a clear, imminent threat of irreparable.
Great read.
Jonathan Pollard
Pollard PLLC
Non-Compete & Trade Secret Lawyers
954-332-2380
Order Denying Motion to Dismiss False Advertising & Defamation ClaimsPollard PLLC
Order denying Motion to Dismiss claims for false advertising under the Lanham Act and defamation. Southern District of Florida 2019. Pollard PLLC. Jonathan Pollard.
FLSA Litigation - Federal Court - MDFL Tampa - Fee Entitlement & MootnessPollard PLLC
Lawyers in FLSA cases and particularly on the defense side should view this as a cautionary tale: Tendering a check for the wages at issue does not moot the plaintiff's claim. FLSA claims are live until there is a judgment or a settlement approved by the court. And plaintiffs DO get their fees for litigating over the issue of attorneys' fees.
Simply put: A legitimate FLSA case, a skilled attorney on the plaintiff side, and defense counsel who do not understand the applicable legal framework make for disastrous results.
MDFL - Order Denying Motion to Dismiss Trade Secret & Fraud ClaimsPollard PLLC
In this order, the United States District Court for the Middle District of Florida, Tampa Division, denies the defendants' motions to dismiss claims for breach of contract, theft of trade secrets in violation of the Defend Trade Secrets Act, 18 USC 1836 et. seq., fraud and aiding and abetting fraud.
In relevant part, the Court rejects the defendants' efforts to impose a summary judgment like burden at the pleading stage. Notable holdings include: (1) The question of whether information constitutes a trade secret is a question of fact normally resolved by a jury after full presentation of evidence. (2) A claim for misappropriation may exist not only where the defendant itself is alleged to have stolen trade secrets, but where the defendant is alleged to have obtained the trade secrets while knowing that they were acquired by improper means. (3) The allegation that a defendant induced a plaintiff to enter an NDA with no intention of honoring it states a claim for fraud in the inducement that is not barred by the independent tort doctrine.
The plaintiff is represented by Fort Lauderdale, Florida based Pollard PLLC. The firm has extensive experience litigating complex non-compete, trade secret, trademark and unfair competition claims. Their office can be reached at 954-332-2380.
Complaint for legal malpractice, fraud, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, aiding and abetting fraud, and civil conspiracy. Pollard PLLC, Fort Lauderdale, FL 33301.
Complaint against Magellan Health, Inc. for $1 Million Unpaid Bonus CompensationPollard PLLC
Complaint and Demand for Jury Trial against Magellan Health, Inc. alleging that Magellan failed to pay an employee more than $1 million+ in earned bonus compensation. United States District Court, Middle District of Florida, 2018. Pollard PLLC.
Order Denying Motion to Dismiss False Advertising & Defamation ClaimsPollard PLLC
Order of the United States District Court for the Southern District of Florida denying Defendant's Motion to Dismiss various claims, including claims for false advertising and defamation per se.
The at issue advertisements and statements consisted of the following: A company allegedly advised numerous customers and vendors in the industry that the plaintiff had stolen its trade secrets and engaged in illegal conduct.
Fort Lauderdale, Florida competition lawyer Jonathan Pollard presents on Non-Compete Agreements, Antitrust & the Rule of Reason. This presentation covers (1) the antitrust underpinnings of non-compete law (2) the classic antitrust rule of reason framework, which is the basis for all non-compete legitimate business interest tests and (3) antitrust risks in connection with non-compete agreements. This presentation is particularly timely given the Department of Justice's recent statement that it intends to pursue criminal prosecutions of firms engaged in no-poaching agreements.
To reach Pollard PLLC, please call their office at 954-332-2380.
Federal False Advertising & Trade Libel LawsuitPollard PLLC
This is an example of a recent case filed by Pollard PLLC, a litigation firm based in Fort Lauderdale, Florida that focuses on competition law.
This case involves a dispute between former business colleagues. The Plaintiff left the Defendant's company to start his own business. There was no non-compete, non-solicitation or confidentiality agreement. Fearing fair competition by the Plaintiff, the Defendant set out on a campaign to destroy Plaintiff's reputation in the industry.
For more information, visit https://www.pollardllc.com or call 954-332-2380.
Answer, Counterclaims & Third Party Claims - Non-Compete & Tortious InterferencePollard PLLC
This is one of our cases in Volusia County, Florida. Our clients - all of the defendants in the case - were sued for breach of a non-compete agreement, breach of fiduciary duty and tortious interference.
We responded with counterclaims for a declaratory judgment holding the non-compete agreement(s) unenforceable, third party claims for breach of fiduciary duty and breach of contract and a demand for indemnification.
This is a good example of our level of work. We have extensive experience litigating non-compete and tortious interference cases on both sides. We prosecute and defend these types of cases.
In every case, we have a process: First, we master the facts. Many lawyer and law firms get involved in a case and immediately focus on law. In our view, that is the wrong approach. All cases are driven by facts. Any legal strategy must be tailored to the specific facts of a specific case.
We do not take anything for granted. We do not default to the same tired boilerplate pleadings. In every new case, we fashion a specific strategy for that case.
If you have a non-compete or tortious interference case, just give us a call at 9543-32-2380. That's what we're here for.
ALL EYES ON RAFAH BUT WHY Explain more.pdf46adnanshahzad
All eyes on Rafah: But why?. The Rafah border crossing, a crucial point between Egypt and the Gaza Strip, often finds itself at the center of global attention. As we explore the significance of Rafah, we’ll uncover why all eyes are on Rafah and the complexities surrounding this pivotal region.
INTRODUCTION
What makes Rafah so significant that it captures global attention? The phrase ‘All eyes are on Rafah’ resonates not just with those in the region but with people worldwide who recognize its strategic, humanitarian, and political importance. In this guide, we will delve into the factors that make Rafah a focal point for international interest, examining its historical context, humanitarian challenges, and political dimensions.
In 2020, the Ministry of Home Affairs established a committee led by Prof. (Dr.) Ranbir Singh, former Vice Chancellor of National Law University (NLU), Delhi. This committee was tasked with reviewing the three codes of criminal law. The primary objective of the committee was to propose comprehensive reforms to the country’s criminal laws in a manner that is both principled and effective.
The committee’s focus was on ensuring the safety and security of individuals, communities, and the nation as a whole. Throughout its deliberations, the committee aimed to uphold constitutional values such as justice, dignity, and the intrinsic value of each individual. Their goal was to recommend amendments to the criminal laws that align with these values and priorities.
Subsequently, in February, the committee successfully submitted its recommendations regarding amendments to the criminal law. These recommendations are intended to serve as a foundation for enhancing the current legal framework, promoting safety and security, and upholding the constitutional principles of justice, dignity, and the inherent worth of every individual.
NATURE, ORIGIN AND DEVELOPMENT OF INTERNATIONAL LAW.pptxanvithaav
These slides helps the student of international law to understand what is the nature of international law? and how international law was originated and developed?.
The slides was well structured along with the highlighted points for better understanding .
Military Commissions details LtCol Thomas Jasper as Detailed Defense CounselThomas (Tom) Jasper
Military Commissions Trial Judiciary, Guantanamo Bay, Cuba. Notice of the Chief Defense Counsel's detailing of LtCol Thomas F. Jasper, Jr. USMC, as Detailed Defense Counsel for Abd Al Hadi Al-Iraqi on 6 August 2014 in the case of United States v. Hadi al Iraqi (10026)
A "File Trademark" is a legal term referring to the registration of a unique symbol, logo, or name used to identify and distinguish products or services. This process provides legal protection, granting exclusive rights to the trademark owner, and helps prevent unauthorized use by competitors.
Visit Now: https://www.tumblr.com/trademark-quick/751620857551634432/ensure-legal-protection-file-your-trademark-with?source=share
Responsibilities of the office bearers while registering multi-state cooperat...Finlaw Consultancy Pvt Ltd
Introduction-
The process of register multi-state cooperative society in India is governed by the Multi-State Co-operative Societies Act, 2002. This process requires the office bearers to undertake several crucial responsibilities to ensure compliance with legal and regulatory frameworks. The key office bearers typically include the President, Secretary, and Treasurer, along with other elected members of the managing committee. Their responsibilities encompass administrative, legal, and financial duties essential for the successful registration and operation of the society.
Appellate Brief - Appeal of Preliminary Injunction - United States Court of Appeals for the 11th Circuit
1. No. 19-13247-C
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
JAMES LARWETH,
Plaintiff/Counter-Defendant-Appellant
v.
MAGELLAN HEALTH, INC.,
Defendant/Counter-Plaintiff-Appellee
ON APPEAL FROM AN ORDER ENTRED IN THE
UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF FLORIDA
6:18-cv-823-Orl-41DC1
The Hon. Carlos E. Mendoza
OPENING BRIEF OF APPELLANT JAMES LARWETH
Case: 19-13247 Date Filed: 10/21/2019 Page: 1 of 70
2. James Larweth v. Magellan Health, Inc., No. 19-13247-C
1
CERTIFICATE OF INTERESTED PERSONS AND CORPORATE
DISCLOSURE STATEMENT
The following individuals or enterprises have an interest in the outcome of
this case:
Accenda Health Holding Company, LLC, subsidiary of Magellan Health, Inc.
Ackerbaum Cox, Joyce, Esq., Attorney for Defendant/Counter-Plaintiff, Appellee
Anton Health, LLC, company enjoined by Order which is the subject of this
Appeal
Anton Rx, LLC, company enjoined by Order which is the subject of this Appeal
Baker & Hostetler, LLP, Attorneys for Defendant/Counter-Plaintiff, Appellee
Blackrock, Inc., (ticker “BLK”), owner of more than 10% of MGLN’s outstanding
shares of common stock.
Boies Schiller Flexner LLP, Attorneys for Plaintiff/Counter-Defendant, Appellant
Caceci, Craig, agent of Anton Rx, LLC, and Anton Health, LLC
Cravatta, Mary Caroline, Esq., Attorney for Defendant/Counter-Plaintiff, Appellee
Ghebali, Jacques, agent of Anton Health, LLC
Goldfarb, Carl E., Esq., Attorney for Plaintiff/Counter-Defendant, Appellant
Irick, The Honorable Daniel, Magistrate Judge, United States District Court,
Middle District of Florida, Orlando Division
Jonathan Pollard, LLC d/b/a Pollard PLLC, Attorneys for Plaintiff/Counter-
Defendant, Appellant
Case: 19-13247 Date Filed: 10/21/2019 Page: 2 of 70
3. James Larweth v. Magellan Health, Inc., No. 19-13247-C
2
Larweth, James, P., Plaintiff/Counter-Defendant, Appellant
Larweth, Leah, owner of Anton Health, LLC, Anton Rx, LLC, and part owner of
Polestar, LLC.
Lott, Johnathan, Esq., Attorney for Plaintiff/Counter-Defendant, Appellant
Magellan Capital, Inc., subsidiary of Magellan Health, Inc.
Magellan Financial Capital, Inc., subsidiary of Magellan Health, Inc.
Magellan Health, Inc., (ticker “MGLN”), Defendant/Counter-Plaintiff, Appellee
Magellan Healthcare, Inc., subsidiary of Magellan Health, Inc.
Magellan Method, LLC (f/k/a CDMI, LLC), subsidiary of Magellan Pharmacy
Services, Inc., which is a subsidiary of Magellan Health, Inc.
Magellan Pharmacy Services, Inc., subsidiary of Magellan Health, Inc.
Magellan Rx Management, LLC, subsidiary of Magellan Pharmacy Services, Inc.,
which is a subsidiary of Magellan Health, Inc.
Magellan Rx Pharmacy, LLC, subsidiary of Magellan Pharmacy Services, Inc.,
which is a subsidiary of Magellan Health, Inc.
Mendoza, The Honorable Carlos, Judge, United States District Court, Middle
District of Florida, Orlando Division
Muldowney, Patrick M., Esq., Attorney for Defendant/Counter-Plaintiff, Appellee
Oliu, Pascual, Esq., Attorney for Plaintiff/Counter-Defendant, Appellant
Case: 19-13247 Date Filed: 10/21/2019 Page: 3 of 70
4. James Larweth v. Magellan Health, Inc., No. 19-13247-C
3
Polestar, LLC, company owned in part by James P. Larweth, Plaintiff/Counter-
Defendant, Appellant
Pollard, Jonathan, Esq., Attorney for Plaintiff/Counter-Defendant, Appellant
Prater, Christopher, Esq., Attorney for Plaintiff/Counter-Defendant, Appellant
Sak, Thomas, agent of Anton Rx, LLC and Anton Health, LLC
Singer, Stuart H., Esq., Attorney for Plaintiff/Counter-Defendant, Appellant
Case: 19-13247 Date Filed: 10/21/2019 Page: 4 of 70
5. i
STATEMENT REGARDING ORAL ARGUMENT
Appellants respectfully request that the Court hear oral argument in this
matter. Appellants believe that oral argument would be of assistance to the Court
given the interaction of state and federal law at issue in this appeal and in addressing
questions about the record.
Case: 19-13247 Date Filed: 10/21/2019 Page: 5 of 70
6. ii
TABLE OF CONTENTS
STATEMENT REGARDING ORAL ARGUMENT ............................................... i
TABLE OF CONTENTS.......................................................................................... ii
TABLE OF CITATIONS ..........................................................................................v
INTRODUCTION .....................................................................................................1
STATEMENT OF SUBJECT-MATTER AND APPELLATE JURISDICTION ....2
STATEMENT OF THE ISSUES...............................................................................2
STATEMENT OF THE CASE..................................................................................3
A. Course of Proceedings Below ...............................................................3
B. Statement of Facts .................................................................................4
C. Standard of Review ...............................................................................7
SUMMARY OF THE ARGUMENT ........................................................................7
ARGUMENT AND CITATIONS OF AUTHORITY ..............................................9
I. Magellan Is Not Likely to Succeed on the Merits of Its Claim.....................10
A. The District Court Erroneously Disregarded Magellan’s Prior Breach
of the Employment Agreement, Which Bars Magellan’s Claim. .......10
B. The District Court Abused Its Discretion in Finding That the
Restrictive Covenants Are Enforceable Under Connecticut Law.......14
Case: 19-13247 Date Filed: 10/21/2019 Page: 6 of 70
7. iii
The non-solicitation restrictions are overbroad by the district
court’s own analysis, and the district court’s attempts to reform
them are improper.....................................................................14
The non-competition restriction is far broader than necessary to
protect Magellan’s legitimate business interests. .....................19
a. The restrictions are not supported by any legitimate
business interest..............................................................19
b. Even if otherwise supportable, the restrictions are not
supported by any legitimate business inasmuch as they
apply to companies that are not Magellan customers.....25
Larweth is denied the opportunity to pursue his occupation....30
Enforcement improperly interferes with the public’s interest..32
II. Magellan Will Not Suffer Irreparable Harm Absent the Injunction. ............35
A. The District Court Committed Legal Error By Relying on a State-Law
Presumption of Irreparable Harm Contrary to Federal Law...............36
B. Magellan’s Delay in Seeking the Injunction Makes Any Presumption
of Irreparable Harm Inapplicable........................................................43
A delay seeking injunctive relief makes a presumption of
irreparable harm inoperative in this circuit...............................44
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8. iv
A delay in seeking injunctive relief negates the reason for any
modified standard of proof under Connecticut law. .................45
The district court incorrectly disregarded Magellan’s delay....47
III. The Threatened Injury to Magellan Does Not Outweigh the Irreparable
Harm the Injunction Causes Larweth............................................................51
IV. The Public Interest Does Not Support an Injunction. ...................................52
CONCLUSION........................................................................................................52
CERTIFICATE OF COMPLIANCE.......................................................................54
CERTIFICATE OF SERVICE ................................................................................55
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9. v
TABLE OF CITATIONS
Page(s)
Cases
21St Century Oncology, Inc. v. Moody,
2019 WL 3948099 (N.D. Fla. Aug. 21, 2019) .....................................................51
566 New Park Associates, LLC v. Blardo,
906 A.2d 720 (Conn. App. Ct. 2006) ...................................................................12
American Civil Liberties Union of Florida, Inc. v. Miami-Dade County School Bd.,
557 F.3d 1177 (11th Cir. 2009)..............................................................................7
Amoco Prod. Co. v. Vill. of Gambell, AK,
480 U.S. 531 (1987) .............................................................................................37
Barrett v. Walker Cnty. School Dist.,
872 F.3d 1209 (11th Cir. 2017)............................................................................38
Beit v. Beit,
63 A.2d 161 (Conn. 1948)....................................................................... 15, 17, 29
Bell South Telecommunications, Inc. v. MCIMetro Access Transmission
Servs., LLC,
425 F.3d 964 (11th Cir. 2005)....................................................................... 50, 51
C.B. v. Bd. Of School Cmm’rs,
261 F. App’x 192 (11th Cir. 2008)................................................................ 38, 41
Case: 19-13247 Date Filed: 10/21/2019 Page: 9 of 70
10. vi
Capital Tool & Mfg. Co., Inc. v. Maschinefabrik Herkules,
837 F.2d 171 (4th Cir. 1988)................................................................................36
Commodores Entertainment Corp. v. McClary,
648 F. App’x 771 (11th Cir. 2016)................................................................ 37, 40
Commodores Entertainment Corp. v McClary,
2014 WL 5285980, (M.D. Fla. Oct. 15, 2014).....................................................40
Cost Mgmt. Incentives, Inc. v. London-Osborne,
2002 WL 31886860 (Conn. Super. Ct. Dec. 5, 2002)..........................................11
Creative Dimensions, Inc. v. Laberge,
2012 WL 2548717 (Conn. Super. Ct. May 31, 2012)............................. 18, 21, 31
Deming v. Nationwide Mut. Ins. Co.,
905 A.2d 623 (Conn. 2006)........................................................................... 15, 17
Distribution, Inc. v. Premier Logistics Services, Inc.,
2001 WL 1159767 (Conn. Super. Ct. June 20, 2001)..........................................24
E.A. Renfroe & Co. v. Moran,
249 F. App’x 88 (11th Cir. 2007).........................................................................51
eBay Inc. v. MercExchange, L.L.C.,
547 U.S. 388 (2006) .............................................................................................37
Fairfaxx Corp. v. Nickelson,
2000 WL 1409714 (Conn. Super. Ct. Sept. 14, 2000) .........................................27
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11. vii
Fairfield Cty. Bariatrics & Surgical Assocs., P.C. v. Ehrlich,
2010 WL 1375397 (Conn. Super. Ct. Mar. 8, 2010)......................... 35, 44, 45, 46
Ferrero v. Associated Materials Inc.,
923 F.2d 1441 (11th Cir. 1991)............................................................................36
First W. Capital Mgmt. Co. v. Malamed,
874 F.3d 1136 (10th Cir. 2017)............................................................................38
Flexible Lifeline Sys., Inc. v. Precision Lift, Inc.,
654 F.3d 989 (9th Cir. 2011)......................................................................... 37, 39
Forsyth County v. U.S. Army Corps of Engineers,
633 F.3d 1032 (11th Cir. 2011)..............................................................................9
Heritage Benefit Consultants, Inc. v. Cole,
2001 WL 237240 (Conn. Super. Ct. Feb. 23, 2001) ............................................11
Holiday Food Co. v. Munroe,
426 A.2d 814 (Conn. Super. Ct. 1981).................................................................24
Houlton Citizens’ Coalition v. Town of Houlton,
175 F.3d 178 (1st Cir. 1999) ................................................................................51
Indus. Techs., Inc. v. Paumi,
1997 WL 306723 (Conn. Super. Ct. May 28, 1997)............................................15
Koon v. United States,
518 U.S. 81 (1996) ...............................................................................................35
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12. viii
Lamb v. Emhart Corp.,
47 F.3d 551 (2d Cir. 1995) ...................................................................................13
Menudo Int’l, LLC v. In Miami Prod., LLC,
2017 WL 4919222 (S.D. Fla. Oct. 31, 2017).......................................................48
Merryfield Animal Hosp. v. Mackay,
2002 WL 31000298 (Conn. Super. Ct. July 31, 2002).........................................10
Merryfield Animal Hosp. v. Mackay,
2002 WL 31928627 (Conn. Super. Ct. Dec. 19, 2002)........................................31
Monsanto Co. v. Geertson Seed Farms,
561 U.S. 139 (2010) .............................................................................................42
New Haven Tobacco Co. v. Perrelli,
528 A.2d 865 (Conn. App. Ct. 1987) ............................................................ 32, 34
New Haven Tobacco Co., Inc. v. Perrelli,
559 A.2d 715 (Conn. App. Ct. 1989) ............................................................ 14, 33
Oliver v. Family Tree Concept, Inc.,
2018 WL 3413036 (S.D. Fla. Apr. 4, 2018).........................................................51
Opticare, P.C. v. Zimmerman,
2008 WL 1734933 (Conn. Super. Ct. Mar. 27, 2008).................................. passim
POP Radio, LP v. News Am. Mktg. In-Store, Inc.,
898 A.2d 863 (Conn. Super. Ct. 2005).................................................................45
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13. ix
Powers v. Sec’y, Florida Dep’t of Corr.,
691 F. App’x 581 (11th Cir. 2017).......................................................................43
Ranciato v. Nolan,
2002 WL 313892 (Conn. Super. Ct. Feb. 7, 2002) ..............................................19
RKR Dance Studios, Inc. v. Makowski,
2008 WL 4379579 (Conn. Super. Ct. Sept. 12, 2008) .................................. 45, 46
Robert S. Weiss & Associates, Inc. v. Wiederlight,
546 A.2d 216 (Conn. 1988).......................................................................... passim
S. Milk Sales, Inc. v. Martin,
924 F.2d 98 (6th Cir. 1991)..................................................................................36
Salinger v. Colting,
607 F.3d 68 (2d Cir. 2010) ............................................................................ 38, 41
Sanford Hall Agency, Inc. v. Dezanni,
2004 WL 3090673 (Conn. Super. Ct. Dec. 2, 2004)............................................27
Scott v. General Iron & Welding Co.,
368 A.2d 111 (1976)................................................................................ 19, 30, 33
Seiko Kabushiki Kaisha v. Swiss Watch Intern., Inc.,
188 F. Supp. 2d 1350 (S.D. Fla. 2002).................................................................47
Siegel v. LePore,
234 F.3d 1163 (11th Cir. 2000)..................................................................... 28, 29
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14. x
Sylvan R. Shemitz Designs, Inc. v. Brown,
2013 WL 6038263 (Conn. Super. Ct. Oct. 23, 2013) ............................. 18, 31, 45
Tech Traders, LLC v. Insuladd Envtl., Ltd.,
2018 WL 5830568 (M.D. Fla. Nov. 7, 2018).......................................................48
Tefel v. Reno,
180 F.3d 1286 (11th Cir. 1999)..............................................................................7
Tough Traveler, Ltd. v. Outbound Products,
60 F.3d 964 (2d Cir. 1995) ...................................................................... 43, 44, 50
Trans-Clean Corp. v. Terrell,
1998 WL 142436 (Conn. Super. Ct. Mar. 17, 1998)..................................... 18, 27
TransUnion Risk & Alternative Data Solutions, Inc. v. MacLachlan,
625 F. App’x 403 (11th Cir. 2015)................................................................ 38, 39
Tymetrix, Inc. v. Szymonik,
2006 WL 437823 n.1 (Conn. Super. Ct. Feb. 9, 2006) ........................................10
Voice of the Arab World, Inc. v. MDTV Med. News Now, Inc.,
645 F.3d 26 (1st Cir. 2011) .......................................................................... passim
Webster Ins. Inc. v. Levine,
2007 WL 4733105 (Conn. Super. Ct. Dec. 21, 2007)..........................................27
Winter v. Nat. Res. Def. Council, Inc.,
555 U.S. 7 (2008) .......................................................................................... 35, 37
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15. xi
Wreal, LLC v. Amazon.com, Inc.,
840 F.3d 1244 (11th Cir. 2016)..................................................................... 43, 44
Statutes
28 U.S.C. § 1292(a)(1)...............................................................................................2
28 U.S.C. § 1332(a) ...................................................................................................2
section 542.335(1)(j), Florida statutes .....................................................................38
Rules
11th Cir. R. 28-5 ......................................................................................................21
Federal Rule of Appellate Procedure 32(a)(7).........................................................54
Federal Rule of Appellate Procedure 32(g)(1) ........................................................54
FRAP 4(a)(1)(A)........................................................................................................2
Rule 65 of the Federal Rules of Civil Procedure.............................................. 36, 38
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16. 1
INTRODUCTION
In an order rife with legal error, the district court preliminarily enjoined James
Larweth (“Larweth”) from participating in the pharmaceutical rebate management
industry. The district court wrongly concluded that it did not need to determine
whether Magellan first breached the Employment Agreement under which it is
seeking to sue by failing to pay the commissions it owed Larweth; that the
nonsolicitation covenants could be reformed for reasonableness under Connecticut
law, which does not allow substantive reformation; that the noncompetition
covenant was not overbroad even though it applied to competition for non-Magellan
customers with whom Magellan had no legitimate protectable interest; that Larweth
was not denied the opportunity to pursue the profession he had engaged in for the
past 13 years; that Larweth’s business that saved millions of dollars for Medicare
and Medicaid plans did not benefit the public interest; that irreparably harm could
be presumed under state law where federal law applies to preliminary injunctions;
and that Magellan would suffer irreparable harm even though it sat on its hands for
nine months after learning that Larweth was competing against it before seeking
preliminary relief. Because the district court committed multiple legal errors and
abused its discretion in issuing the injunction, this Court should reverse.
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17. 2
STATEMENT OF SUBJECT-MATTER AND
APPELLATE JURISDICTION
The district court had subject matter jurisdiction over this action because the
parties are completely diverse and the amount in controversy is greater than $75,000.
28 U.S.C. § 1332(a). This court has appellate jurisdiction over this appeal from an
order entering a preliminary injunction under 28 U.S.C. § 1292(a)(1). The district
court’s order was issued on July 31, 2019, and a notice of this appeal was timely
filed on August 22, 2019. FRAP 4(a)(1)(A).
STATEMENT OF THE ISSUES
1. Whether the district court committed an error of law in holding that it was not
required to determine whether Magellan had breached its Employment
Agreement with Larweth because the commitment Larweth claimed Magellan
had broken was contained in a separate contract, even though the separate
contract was incorporated by reference into the Employment Agreement.
2. Whether the district court erred as a matter of law in narrowing the non-
solicitation covenants and holding that they were enforceable to the extent
they applied to the pharmaceutical rebate management industry where the
district court acknowledged that the covenants were otherwise overbroad and
Connecticut law does not allow reformation of restrictive covenants, only
“blue penciling.”
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18. 3
3. Whether the district court abused its discretion in holding that a covenant not
to compete was enforceable even though the covenant prohibited Larweth
from competing for customers who were never Magellan customers and
regarding whom Magellan had no protectable interest, and even though the
injunction was contrary to the public interest because it would cost state and
federal governments millions of dollars.
4. Whether the district court committed legal error in holding that Magellan
would suffer irreparable harm absent an injunction where it relied solely on a
state-law presumption of irreparable harm even though the relevant Rule 65
standard forbids such a presumption, and where Magellan failed to move for
an injunction for nine months after it learned that Larweth was competing
against it.
STATEMENT OF THE CASE
A. Course of Proceedings Below
On May 25, 2018, Larweth, an executive in the pharmaceutical rebate
business who negotiates manufacturer rebates for insurance companies, filed a
complaint against Magellan, seeking damages for contract and tort claims stemming
from his employment (and termination) there. D.E. 1.1
On November 26, 2018,
1
Citations to the record are to the Docket Entry number in the District Court and the
page within that Docket Entry as follows: “D.E. __ at __.”
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19. 4
Magellan filed counterclaims against Larweth, seeking among other things
declaratory and injunctive relief related to the restrictive covenants in Larweth’s
employment agreement. D.E. 35. On March 15, 2019, Magellan filed a motion for a
preliminary injunction as to these restrictive covenants. D.E. 60. The court held a
two-day evidentiary hearing on the motion on May 28 and 29, 2019, and on July 31,
2019, entered an order enjoining Larweth from further participation in his profession
of pharmaceutical rebate management services.2
D.E. 145. On August 22, 2019,
Larweth timely appealed the order.
B. Statement of Facts
Larweth has 25 years of experience in the pharmaceutical industry, where he
specializes in pharmaceutical rebates. D.E. 123 at 75:3-6; 76:6-15.3
He helps
companies secure and negotiate “rebates” that drug manufacturers offer in exchange
for insurance companies providing “preferred” status for those drugs and making
them more available to their insureds. D.E. 122 at 54:12-55:13; 56:13-57:17.
Larweth worked for Magellan from 2006 to 2011 and again starting in 2014. D.E.
2
The Order and injunction also apply to two companies Larweth founded, Anton Rx
and Anton Health. This brief refers to Larweth and his companies collectively as
“Larweth.”
3
D.E. 122 is the transcript from day one of the preliminary injunction hearing. D.E.
123 is the transcript from the second day. The documents were sealed below.
Redacted versions of those documents—D.E. 118 and 120, respectively—are being
electronically filed as part of the Appendix; unredacted versions will be provided by
paper.
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20. 5
123 at 115:20-23. In the interim period, he worked at another rebate management
company called CDMI, which competed with Magellan, and which Magellan
acquired in 2014. D.E. 122 at 61:12-62:9, 68:18-22, 79:25-80:2. When he was
rehired by Magellan in 2014, Larweth signed an employment agreement, which
contained several restrictive covenants, including non-compete and non-solicitation
provisions. D.E. 123 at 119:5-20; 122:22-123:17. Larweth was demoted from an
executive position at Magellan in January 2017. Id. at 84:18-19. Magellan
terminated him without cause in 2018. Id. at 85:16-17; 115:20-23.
Following his termination, Larweth founded Anton Rx, a pharmaceutical
rebate management company, in June or July 2018. D.E. 123 at 73:2-6, 135:18-23.
He also created a second company, Anton Health, that provided focus group services
in the industry. Id. at 72:19-73:1. Anton Rx charged lower fees than Magellan, and
was also more transparent about its fees. Id. at 28:14-30:21; 89:14-20; 92:3-94:22.
Anton Rx worked with insurance companies that ran Medicare/Medicaid programs,
and these insurance companies are required to pass on 50% of any rebate savings in
these programs to federal and state governments. Id. at 30:9-16; see also 204:14-24.
Through his work, Larweth has generated millions of dollars in savings for the
federal government. See id. Larweth also negotiated unique rebates for drugs, such
as cancer treatment drugs and insulin, and including less expensive “biosimilar”
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21. 6
versions of those drugs, which no one else in the industry negotiated. Id. at 98:14-
100:19, 193:24-194:11.
On June 5, 2018, about two weeks after Larweth filed suit against Magellan,
Larweth’s counsel wrote Magellan’s counsel about Magellan’s obligation to
preserve documents and also stated: “On a different note: Mr. Larweth will be re-
entering the rebate sales market immediately. The non-compete restrictions at issue
are completely unenforceable under Connecticut law and the customers are all fair
game. As of June 15th, Mr. Larweth will be open for business and engaged in fair,
lawful competition.” D.E. 60-7.4
On July 13, 2018, Larweth’s counsel again informed Magellan’s counsel that
the non-compete provisions were unenforceable and that Larweth was already
competing against Magellan. D.E. 60-9. In that letter, Larweth’s counsel stated:
“Magellan can either accept that Larweth is lawfully engaged in fair competition, or,
Magellan can go to the mat defending overbroad, unenforceable and illegal
restrictive covenants. … As it currently stands, Larweth could take $20 million
worth of business from Magellan in short order, not through engaging in unfair
competition, but because the market is a highly competitive free-for-all.” Id. at 2.
4
Connecticut law governed the agreement. See D.E. 60-3 at 17; D.E. 145 at 6.
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22. 7
However, Magellan did not seek a preliminary injunction against Larweth
until March 15, 2019—nine months after Larweth explicitly informed Magellan of
his intention to compete. See D.E. 60.
C. Standard of Review
This Court reviews a district court’s decision to grant a preliminary injunction
for an abuse of discretion. Tefel v. Reno, 180 F.3d 1286, 1295 (11th Cir. 1999).
“[Q]uestions of law supporting the preliminary injunction are reviewed de novo.”
Id. “An abuse of discretion occurs if the district court bases its decision on an
erroneous factual premise.” American Civil Liberties Union of Florida, Inc. v.
Miami-Dade County School Bd., 557 F.3d 1177, 1198 (11th Cir. 2009).
SUMMARY OF THE ARGUMENT
The district court committed a slew of legal errors in reaching its conclusion
that Magellan was entitled to a preliminary injunction. Each of these legal errors
constitute an abuse of discretion and requires that this Court reverse the injunction.
First, the district court abused its discretion in holding that it did not need to
determine whether Magellan had breached the employment agreement under which
it was suing in order to issue an injunction against Larweth. The district court
committed legal error in rejecting Larweth’s affirmative defense that Magellan had
first breached the Employment Agreement by failing to pay him his full commission
on the basis of the court’s erroneous conclusion that the promise to pay the
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23. 8
commission was contained in a separate contract; in fact, the “separate” contract was
specifically mentioned in the Employment Agreement and was incorporated by
reference into the agreement.
The district court also abused its discretion in finding that the covenants not
to compete and not to solicit customers and employees were likely enforceable under
Connecticut law. The district court acknowledged that the covenant not to compete
was overbroad and attempted to reform all three covenants to limit their application
only to the pharmaceutical rebate management industry, but Connecticut law does
not allow the non-solicitation covenants to be so reformed. In a related matter, the
noncompetition covenant is impermissibly overbroad because it applies to
competition for potential Magellan customers with whom Magellan had neither a
protectable relationship nor relevant proprietary information and so no protectable
interests. The covenants also impermissibly preclude Larweth from pursuing his
occupation in the pharmaceutical rebate management industry, where he has been
employed for the last 13 years. And the district court ignored evidence that Larweth
promoted the public interest by generating millions of dollars in savings for state and
federal government health plans.
The district court further abused its discretion in finding that Magellan would
suffer irreparable harm absent an injunction. The district court made no factual
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24. 9
findings regarding irreparable harm but instead committed legal error when it
presumed irreparable harm based on Connecticut law, finding that a violation of a
restrictive covenant gave rise to a rebuttal presumption of harm while ignoring that
federal law, not state law, governs the issuance of preliminary injunctions and that
federal law does not permit such a presumption. Moreover, the district court
misconstrued Connecticut law, erroneously concluding that the presumption would
apply where Magellan failed to seek injunctive relief for nine months after learning
that Larweth was competing against it, even though under Connecticut law the
presumption applies only when it is difficult to show irreparable harm because the
violation is so recent.
ARGUMENT AND CITATIONS OF AUTHORITY
A district court may issue a preliminary injunction only where the moving
party demonstrates that “(1) it has a substantial likelihood of success on the merits;
(2) irreparable injury will be suffered unless the injunction issues; (3) the threatened
injury to the movant outweighs whatever damage the proposed injunction may cause
the opposing party; and (4) if issued, the injunction would not be adverse to the
public interest.” Forsyth County v. U.S. Army Corps of Engineers, 633 F.3d 1032,
1039 (11th Cir. 2011) (quotation omitted). “A preliminary injunction is an
extraordinary and drastic remedy not to be granted unless the movant clearly
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25. 10
establishes the burden of persuasion as to the four requisites.” Id. (quotation
omitted).
I. MAGELLAN IS NOT LIKELY TO SUCCEED ON THE MERITS OF
ITS CLAIM.
The preliminary injunction was premised on Magellan’s likelihood of success
on the merits of its claim that Larweth was violating the restrictive covenants in the
Employment Agreement. D.E. 145 at 6-7. But this finding was an abuse of
discretion. First, the district court committed an error of law in analyzing Larweth’s
affirmative defense of prior breach that would have defeated Magellan’s claim.
Second, the district court committed multiple legal errors in finding that the
restrictive covenants were enforceable under Connecticut law.
A. The District Court Erroneously Disregarded Magellan’s Prior
Breach of the Employment Agreement, Which Bars Magellan’s
Claim.
Larweth argued, as an affirmative defense, see D.E. 66 at 15, that Magellan
had breached the Employment Agreement containing the restrictive covenants at
issue before bringing its counterclaim. The district court erred as a matter of law in
its analysis of Larweth’s claim that Magellan breached his employment agreement
by failing to pay him the commissions he was entitled to under that Employment
Agreement. This was a significant error because a prior breach would have defeated
Magellan’s claims for breach of the restrictive covenants as a matter of law.
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26. 11
“The breach of an employment contract by an employer is a recognized
defense to the enforcement of a noncompete agreement.” Merryfield Animal Hosp.
v. Mackay, 2002 WL 31000298, at *3 (Conn. Super. Ct. July 31, 2002) (collecting
cases); accord Tymetrix, Inc. v. Szymonik, 2006 WL 437823, at *1 n.1 (Conn. Super.
Ct. Feb. 9, 2006) (same). For example, in Heritage Benefit Consultants, Inc. v. Cole,
2001 WL 237240, at *9 (Conn. Super. Ct. Feb. 23, 2001), the court held that an
employee was not bound by a noncompete agreement after his employer breached
the employment agreement by failing to give him stock certificates that he was owed
under the agreement. Id.; see also Cost Mgmt. Incentives, Inc. v. London-Osborne,
2002 WL 31886860, at *8, *11 (Conn. Super. Ct. Dec. 5, 2002) (declining to enforce
restrictive covenants where employer committed prior breaches of the employment
agreement containing those covenants).
However, in addressing this argument, the district court failed to determine
whether Magellan had breached the agreement. Rather, the court determined it did
not need to reach that issue because “the specific terms of the incentive plans” that
were breached “were set forth in a separate contract.” D.E. 145 at 16. Thus, the court
found it was irrelevant whether or not there was a prior breach. That analysis is
incorrect as a matter of Connecticut law.
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27. 12
Instead, the promise to pay certain commissions that Larweth alleges was
breached was specifically incorporated by reference into the Employment
Agreement, which provides
(b) Benefits. Employee will be eligible to participate in Employer’s
benefit plans commensurate with his or her position. Employee will
receive separate information detailing the terms of such benefit plans
and the terms of those plans will control. Employee also will be
eligible to participate in any annual incentive bonus plan and long-
term incentive plan applicable to Employee by their terms,
respectively.
D.E. 60-3 at 3 (emphasis added). Connecticut law specifically allows language such
as this incorporate separate documents by reference into a single contract.
Generally, incorporation by reference of existing documents produces
a single contract which includes the contents of the incorporated papers.
Where the signatories execute a contract which refers to another
instrument in such a manner as to establish that they intended to make
the terms and conditions of that other instrument a part of their
understanding, the two may be interpreted together as the agreement of
the parties. The documents incorporated need not be attached to the
contract nor signed or initialed unless the contract so requires.
566 New Park Associates, LLC v. Blardo, 906 A.2d 720, 725 (Conn. App. Ct. 2006)
(quotations and ellipses omitted). Whether a contract is incorporated by reference
into another contract is a question of law. Id..
Thus district court failed to follow this law and erroneously concluded that
the commission plan had no relationship to the Employment Agreement because it
was a separate document, even though it was explicitly referenced in the
Employment Agreement and thereby incorporated by reference into the
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28. 13
Employment Agreement. Connecticut law does not contemplate such an absurd
result, at least not where the employment agreement expressly refers to the separate
document. A contrary position would allow an employer to enforce a restrictive
covenant while breaching its obligations to its former employee simply by putting
those obligations in a separate contract. In analogous circumstances, the Second
Circuit applying Connecticut law found that a Termination Agreement incorporated
the terms of certain stock-option plans by reference with the following language:
“Any rights which you may have following your separation date under outstanding
stock options granted to you will be determined in accordance with the terms of the
respective stock option plans under which the options were granted and in
accordance with the terms of the respective option agreements evidencing such stock
options.” Lamb v. Emhart Corp., 47 F.3d 551, 558 (2d Cir. 1995).
Larweth’s employment agreement used substantially similar language to
incorporate the terms of the incentive plans, which thus “produce[d] a single
agreement out of the incorporated documents and the contract itself.” Id.
Accordingly, the district court committed legal error by disregarding Larweth’s
prior-breach argument just because the incentive plans were set forth in different
documents. Given that the district court made no factual findings regarding whether
Magellan had breached the terms of the incentive bonus plan, this threshold legal
error requires reversal of the injunction.
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29. 14
B. The District Court Abused Its Discretion in Finding That the
Restrictive Covenants Are Enforceable Under Connecticut Law.
In Connecticut, “The five factors to be considered in evaluating the
reasonableness of a restrictive covenant ancillary to an employment agreement are:
(1) the length of time the restriction operates; (2) the geographical area covered; (3)
the fairness of the protection accorded to the employer; (4) the extent of the restraint
on the employee’s opportunity to pursue his occupation; and (5) the extent of
interference with the public’s interests.” Robert S. Weiss & Associates, Inc. v.
Wiederlight, 546 A.2d 216, 219 n.2 (Conn. 1988). This test is “disjunctive, rather
than conjunctive; a finding of unreasonableness in any one of the criteria is enough
to render the covenant unenforceable.” New Haven Tobacco Co., Inc. v. Perrelli,
559 A.2d 715, 717 (Conn. App. Ct. 1989). The district court erred in assessing these
factors; for several independent reasons—any one of which is sufficient to defeat
enforcement—the restrictive covenants are unenforceable under Connecticut law.
1. The non-solicitation restrictions are overbroad by the district
court’s own analysis, and the district court’s attempts to reform
them are improper.
The district court, first addressing the non-competition provision, noted at the
very beginning of its analysis that this provision would prohibit Larweth “from
working anywhere in the healthcare industry” and concluded “Larweth is correct,
this prohibition is overbroad.” D.E. 145 at 7. The court attempted to solve this
overbreadth issue and a related problem regarding the other two covenants by
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30. 15
“severing” the portions of all three restrictive covenants that applied to the
“pharmacy benefits management” industry—a broad term that would encompass
large portions, if not all, of Magellan’s multi-faceted business—and instead
enforcing the restrictive covenants only as to the “pharmaceutical rebate
management services” industry. Id. at 8.
The court violated Connecticut law in its attempts to reform the non-
solicitation provisions of the agreement, both as to the solicitation of customers and
former employers, in its efforts to solve their overbreadth. The Connecticut Supreme
Court has held that
A restrictive covenant which contains or may be read as containing
distinct undertakings bounded by different limits of space or time, or
different in subject matter, may be good as to part and bad as to part.
But this does not mean that a single covenant may be artificially split
up in order to pick out some part of it that it can be upheld. Severance
is permissible only in the case of a covenant which is in effect a
combination of several distinct covenants. Where the covenant is
intended by the parties to be an entirety, it cannot properly be so divided
by a court that it will be held good for a certain area but invalid for
another; indeed, as the trial court well states in its memorandum of
decision, this would be to make an agreement for the parties into which
they did not voluntarily enter.
Beit v. Beit, 63 A.2d 161, 166 (Conn. 1948) (quotations omitted). Thus under this
“blue-pencil” rule, a court may “strike an unreasonable restriction ‘to the extent that
a grammatically meaningful reasonable restriction remains after the words making
the restriction unreasonable are stricken.’” Deming v. Nationwide Mut. Ins. Co., 905
A.2d 623, 638 n.21 (Conn. 2006) (quotation omitted). Connecticut law, unlike some
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31. 16
other jurisdictions, does not allow “a court to enforce a noncompete provision to the
extent reasonable even when the objectionable restriction may be regarded as being
indivisible.” Indus. Techs., Inc. v. Paumi, 1997 WL 306723, at *4 (Conn. Super. Ct.
May 28, 1997) (citing Beit, 63 A.2d at 161).
The district court violated this rule in substantively reforming the non-
solicitation provisions to address the overbreadth issue. The non-solicitation
covenants, both as to customers and former employees, do not have language with
respect to alternative industries that could be “blue penciled” out.
(c) Non-Solicitation. To protect the goodwill of Employer or the
customers of Employer, Employee agrees that, for a period of three (3)
years immediately following the termination of his or her employment
with Employer, he or she will not, without the prior written permission
of Employer, directly or indirectly, for himself or herself or on behalf
of any other person or entity, solicit, divert away, take away or attempt
to solicit or take away any Customer of Employer for purposes of
providing or selling products or services that are offered by
Employer, if Employer is then still engaged in the sale or provision of
such products or services at the time of the solicitation. For purposes of
this Section 7(c), “Customer” means any individual or entity to whom
Employer has provided, or contracted to provide, products or services
and with whom Employee had, alone or in conjunction with others,
contact with, or knowledge of, during foe twelve (12) months prior to
foe termination of his or her employment. For purposes of this Section
7(c), Employee had contact with or knowledge of a customer if (i)
Employee had business dealings with the customer on behalf of
Employer; (ii) Employee was responsible for supervising or
coordinating the dealings between the customer and Employer; or (iii)
Employee obtained or had access to trade secrets or confidential
information about the customer as a result of Employee’s association
with Employer.
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(d) Non-Solicitation/Hiring of Employees. During Employer's
employment of Employee and for a period of (3) three years following
the termination of Employee’s employment with Employer for any
reason, Employee will not, directly or indirectly, for himself or herself
or on behalf of any other person or entity, solicit for employment or
hire, directly or indirectly, any employee of Employer who is
employed with Employer or who was employed with Employer (x)
with respect to the period during Employer’s employment of
Employee, within the one (1) year period immediately prior to such
action by Employee and (y) with respect to the three (3) year period
following the termination of Employee's employment within, the one
year period immediately prior to Employee’s termination.
See D.E. 60-3 at 10 (emphasis added). These restrictions plainly read in their
“entirety” to apply to the whole of Magellan’s entire business and the broad range
of health and pharmaceutical-related services in which the Fortune 500 company
engages; the covenant cannot be “divided” among Magellan’s different lines of
business. Beit, 63 A.2d at 166. It is impossible to maintain a “meaningful reasonable
restriction” “after the words making the restriction unreasonable are stricken.”
Deming, 905 A.2d at 638 n.21. Indeed, there are no words that can be stricken to
restrict the scope of these covenants. Rather, words must be added and that is
improper, but that is precisely what the district court did in fashioning its injunction.
See D.E. 145 at 18 (enjoining Larweth from “soliciting for employment in the
business of pharmaceutical rebate management services any employee of
Magellan…” and from “soliciting any customer of Magellan… for purposes of
providing pharmaceutical rebate management services”).
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Just as by the district court’s own analysis “Larweth is correct, this [non-
compete] prohibition is overbroad,” D.E. 145 at 7, the non-solicitation of customers
and employees provisions are overbroad “for the same reasons,” D.E. 145 at 12, and
Connecticut law does not allow those provisions to be salvaged by substantive
reformation. See Beit, 63 A.2d at 166 (covenant that restricted business in “all of
New London county” could not be enforced as to only a portion of New London
county); Sylvan R. Shemitz Designs, Inc. v. Brown, 2013 WL 6038263, at *9 (Conn.
Super. Ct. Oct. 23, 2013) (declining to “blue pencil” out unreasonably broad
restriction on any employment in entire industry because “the unreasonable
restrictions form the heart of the agreement” (quotation omitted)); Creative
Dimensions, Inc. v. Laberge, 2012 WL 2548717, at *5-6 (Conn. Super. Ct. May 31,
2012) (finding unreasonable a “[a] blanket prohibition on working with or soliciting
[former customers or employees]” because it would effectively “bar[] the defendants
form the market entirely,” and refusing to “blue pencil” those restrictions because
they formed the “heart of the agreement”); Trans-Clean Corp. v. Terrell, 1998 WL
142436, at *7 (Conn. Super. Ct. Mar. 17, 1998) (“[T]he geographical area
contemplated by the non-compete agreement is indivisible and thus cannot be
rewritten by the court under the so-called ‘blue pencil rule.’”) The district court’s
legal error in attempting to reform a restriction it acknowledged was illegal is
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34. 19
grounds for reversal of the preliminary injunction as to two of the three restrictive
covenants at issue.
2. The non-competition restriction is far broader than necessary to
protect Magellan’s legitimate business interests.
The district court erred in considering the “the fairness of the protection
accorded to the employer,” Robert S. Weiss, 546 A.2d at 219 n.2, in considering
whether a complete nationwide ban on Larweth’s participation in the pharmaceutical
rebate management industry was reasonable. First, the district court found that the
restriction was reasonable because of the “client relationships” that Magellan had
invested resources cultivating. D.E. 145 at 9. Second, the district court found that
“Larweth’s knowledge of Magellan’s pricing scheme and business systems gives
him an unfair competitive advantage.” Id. Neither of these reasons justify the ban
the court imposed on Magellan, and moreover, the district court’s analysis fails to
consider that Magellan did not demonstrate any protectable business interest in
precluding Larweth from competing for non-Magellan customers.
a. The restrictions are not supported by any legitimate
business interest.
“In order to be valid and binding, a covenant which restricts the activities of
an employee following the termination of his employment ... should afford only a
fair protection to the interest of the party in whose favor it is made.” Scott v. General
Iron & Welding Co., 368 A.2d 111, 114-15 (1976) (emphasis added). An “intention
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to hold an employee for no other purpose than to prevent that employee from
working for a competitor is unreasonable.” Ranciato v. Nolan, 2002 WL 313892, at
*5 (Conn. Super. Ct. Feb. 7, 2002) (quotation omitted). The noncompetition
restriction affords far more than a fair protection to Magellan, and is not supported
by either of the interests cited by the district court.
First, the record evidence flatly contradicts any notion that Larweth’s
knowledge of pricing and business systems gives him any unfair advantage in
competition and thus fairly protects Magellan’s legitimate business interests. The
district court reasoned that Larweth “explained that his companies were successful
in obtaining clients because they provide more information to their clients and they
charge lower prices than competitors like Magellan,” and thus “knowledge of
Magellan’s business practices and pricing structure has given Larweth the ability to
undercut Magellan.” But this reasoning is circular. The district court did not cite any
evidence that Larweth used pricing information he acquired at Magellan to unfairly
compete against Magellan, because the record does not contain any evidence that
Larweth remembered, let alone used, this information. Rather, the district court
concluded that because Larweth was able to effectively compete against Magellan
by offering better prices and providing more transparency, he must have been using
Magellan’s confidential information against it. But no evidence supports this logical
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36. 21
leap of faith.5
This evidence only suggests that Larweth, who was able to offer lower
prices than Magellan due to lean staffing and low overhead, e.g., D.E. 123 at 94:16-
22, was engaging in precisely the sort of good-faith market competition that the law
regarding non-competition agreements is designed facilitate, not undermine. See
Creative Dimensions, 2012 WL 2548717, at *3 (“In every case in which the court
upheld a covenant not to compete, the party whom the covenant benefitted was
seeking to protect against something other than mere competition—the use of
customer lists, information concerning potential customers in a limited area the
employee had acquired, the impairment of good will he had purchased, confidential
data or trade secrets, or some other advantage the employee acquired while in his
employ which would make his immediate competition unfair.” (quotation omitted)).
The record instead contains abundant evidence that Larweth did not and could
have used any pricing or other proprietary information to compete against Magellan.
The pricing information in in the rebate industry quickly goes stale, and is not useful
for competition in the industry. A Magellan executive, Mark Lederer, testified that
5
In support of the district court’s holding, Magellan has only pointed to testimony
suggesting that Larweth did effectively compete with Magellan by offering better
prices and services due a different business model with lower overhead. See D.E.
165 at 10 (citing D.E. 123 at 89:4-90:5; D.E. 98-11 at 45:17-48:6, 49:12-50:18).
Although Larweth demonstrated some general knowledge of the fact that Magellan
was a large corporation with bloated overhead, this knowledge plainly did not allow
him to unfairly compete with Magellan and dozens of others in a highly competitive
industry.
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“rates change pretty frequently,” “every quarter,” in the industry, and thus former
Magellan employees “would not have had access to current information” and thus
could not use that information to unfairly compete. D.E. 98-9 at 35:3-11.6
Compounding this effect, Larweth was demoted in January 2017, a year before he
left Magellan, and would have had lost his access to high-level, forward-looking
strategies. D.E. 123 at 84:18-19. Magellan executive Mostafa Kamal admitted that
Larweth did not take any information with him when he departed Magellan. D.E.
122 at 196:18-20. Larweth likewise testified that he did not take any of Magellan’s
“rebate business trackers” upon leaving and is not aware of Magellan’s formulary
design. DE 123 at 88:23-89:3, 95:16-19. Even if Larweth remembered Magellan’s
pricing information, and there is no evidence he did, that information would be
outdated 18 months later when the district court entered the preliminary injunction.
Moreover, the evidence established that pricing information was widely
available within the industry, even to those with no insider knowledge, because
manufacturers routinely shared competing rebate managers’ pricing information in
order to negotiate the best deal. A Magellan senior executive, Jim Rebello, testified
that customers have told him whether competitors have offered better rates. D.E. 98-
6
Exhibits to the preliminary injunction hearing, D.E. 98 et seq., which were filed
under seal, will be provided in the paper Appendix. Because the exhibits are not
accessible via the CM/ECF system, citations are to the transcript page, not the
CM/ECF page. Cf. 11th Cir. R. 28-5.
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38. 23
16 at 207:15-23. One of Larweth’s employees testified that a customer had provided
him information about what he needed to be competitive and information about what
competitors were offering. D.E. 123 at 70:5-16. He further testified that in soliciting
customers, he would sign an NDA and review their data in order to show them how
much he could save them (based on the information provided by the customer, not
on inside information from Magellan). Id. at 25:17-26:7. Similarly, Larweth testified
that customers would often disclose their total return on rebates and other
information, so that Larweth could find ways to provide value. Id. at 96:3-10. In
addition, as Magellan executive Mostafa Kamal testified, Magellan is a public
company that makes broad financial disclosures, and thus the margins tied to
Magellan’s rebate business would be publicly available. D.E. 98-12 at 15:6-14.7
7
See also D.E. 98-6 at 21:3-8, 53:19-22 (Magellan executive George Petrovas
testified that when he previously left Magellan to compete with them, he did not use
any confidential and proprietary Magellan information, so it was possible to so
compete); DE 123 at 110:18-25 (Larweth testified that he did not utilize any of
Magellan’s confidential information when he left to compete with them in the past);
D.E. 98-13 at 52:2-5 (Magellan’s corporate representative testified that competitors
may obtain business from its clients without using its confidential information); D.E.
98-9 at 38:15-21 (Magellan executive Mark Lederer testified that some rebate
contracts could be terminated with as little as thirty days’ notice); D.E. 98-16 at
83:21-85:10 (Rebello testified that he discussed changes in business lines with
competitors, including speaking to “former [Magellan] employees” including Caceci
regarding a health plan that terminated or opted not to renew); D.E. 98-8 at 139:9-
18 (Larweth’s employee Tom Sak testified that he had never seen nor been provided
with any Magellan information since joining Larweth). Further, no witness could
remember the terms of any specific rebate contracts, which are necessary to
determine the value and costs of such contracts. See, e.g., testimony of Mr. Rebello
(Doc. 98-16 at 101:5-102:15), Mr. Tavares (Doc. 98-15, Vol. II at 17:8-18:6, 40:25-
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39. 24
Second, the record does not support the district court’s finding that Magellan
had any protectable relationships. The district court incorrectly found that “Larweth
did not have these [customer] relationships or this [customer] information prior to
his employment with Magellan.” D.E. 145 at 9. But record shows that Larweth
attended and even spoke at rebate industry events for years prior to any involvement
with Magellan, D.E. 123 at 74:3-14; that Larweth actually negotiated rebate
contracts with health plans while working for a pharmaceutical company prior to
joining Magellan, id. at 76:1-77:24; that Larweth was hired to ICORE (which
Magellan later acquired) in 2006 largely because of his prior experience and pre-
existing industry relationships, id. at 81:9-11; and that Larweth continued to work
with the pre-existing relationships and contacts he developed at the pharmaceutical
company after he was employed by Magellan, id. at 84:1-5. Moreover, the customers
were large corporate clients, and the identities of these customers was in the public
domain. D.E. 122 at 111:22-25, 124:7-125:23; Petrovas Depo at 19:1-20:14
(explaining how he identified customers for CDMI to target without using Magellan
confidential information); see N.E. Distribution, Inc. v. Premier Logistics Services,
Inc., 2001 WL 1159767, at *3 (Conn. Super. Ct. June 20, 2001) (“A customer list is
not a trade secret when ... the information on the list could have been easily obtained
41:2, 59:5-60:9, 87:9-90:11, 93:1-3, 125:8-19), Mr. Vecchiolli (Doc. 98-7 at 45:24-
46:20), Mr. Petrovas (Doc. 98-6 at 60:3-61:24), Mr. Sak (Doc. 98-8 at 29:5-9), Mr.
Caceci (Doc. 98-10 at 38:13-39:8), and Larweth (Doc. 98-1 at 351:17-353:15).
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from other sources…” (citing Holiday Food Co. v. Munroe, 426 A.2d 814 (Conn.
Super. Ct. 1981)).
Other record evidence is not to the contrary. Larweth’s former boss at CDMI,
George Petrovas, testified that he was “not aware” of any pre-existing relationships
that Larweth had, D.E. 122 at 111:1-8, which does not contradict Larweth’s
testimony that he did have these relationships. Customers regularly had relationships
and business dealings with multiple rebate managers; customer relationships were
not exclusive. D.E. 98-15 at 85:8-23. And Larweth’s testimony that he was assigned
a “specific book of business” when he returned to Magellan in 2014, D.E. 123 at
127:12-18, does not suggest that he did not have pre-existing relationships with any
of those customers or others.
Thus the ban on participation in the pharmaceutical rebate industry is not
necessary to protect Magellan’s interests. It provides no legitimate protection to
Magellan because Larweth cannot use stale, publicly-available, and widely-shared
price information to compete for any customers, and in any event, Magellan had no
protectable relationship with those customers.
b. Even if otherwise supportable, the restrictions are not
supported by any legitimate business inasmuch as they
apply to companies that are not Magellan customers.
Even if Magellan had some protectable interest in its confidential information
about existing customers or in its relationships with existing customers, neither can
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41. 26
justify a prohibition enjoining Larweth from competition in the pharmaceutical
rebate management industry as to non-Magellan customers or customers with whom
he had no contact or relationship at Magellan. Enforcing the noncompetition
covenant, which encompassed these non-customers, was legal error.
Larweth solicited business from non-Magellan customers in the
pharmaceutical rebate industry and Magellan customers with whom he never had
direct interaction or a relationship. Larweth testified that he was targeting 30 or 40
health plan customers for business that he had no relationship with during the time
he was at Magellan. D.E. 123 at 198:21-199:3. Even assuming Larweth developed
customers relationships while at Magellan, any such customer relationships could
not give him a leg up in competing for other customers because Larweth did not and
could not have developed any relationship with these non-customers while at
Magellan. Even the non-solicitation-of-customers provision of the Employment
Agreement, D.E. 60-3 at 10 (§ 7(c)), recognized as much, limiting its application to
customers with whom Larweth actually had “business dealings” or for whom he had
obtained other relevant knowledge or information.
And even assuming that Larweth’s knowledge of Magellan’s pricing and
business information could give him some advantage in competing with Magellan
customers, it could not plausibly give him any advantage in competing for non-
Magellan customers, for whom he could not have any pricing or rebate information
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specific to that customer. Indeed, Magellan executive Mostafa Kamal admitted that
there would be less confidential information at issue for customers that Magellan
had not yet secured. DE 122 at 198:7-11.
Thus, the complete ban on participation in the pharmaceutical rebate industry
is not necessary to protect Magellan’s interests. It provides no legitimate protection
to Magellan’s customer relationships to prohibit Larweth from competing for non-
Magellan customers and customers with whom he had no relationship. Connecticut
courts do not enforce such overbroad restrictions.
In Fairfaxx Corp. v. Nickelson, 2000 WL 1409714, at *10 (Conn. Super. Ct.
Sept. 14, 2000), the court refused to enforce a restriction that would have completely
prohibited an employee from participating in an industry where, among other
reasons, “there is no proof that she is pursuing plaintiff’s clients.” In Sanford Hall
Agency, Inc. v. Dezanni, 2004 WL 3090673, at *3-4 (Conn. Super. Ct. Dec. 2, 2004),
the court held that a restrictive covenant was unenforceable where the defendant “is
in no position to threaten the plaintiff's interests in its customer relationships,” and
further noted that the covenant was impermissibly overbroad to the extent that it
“prevents [Defendant] from being able to solicit and attract any possible future
clients who have no relationship with the plaintiff but are looking for insurance and
are in the plaintiff’s range of business,” noting that “such a restriction puts
unnecessary restrains on ordinary competition.” And Webster Ins. Inc. v. Levine,
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2007 WL 4733105, at *6-7 (Conn. Super. Ct. Dec. 21, 2007), the court found a
covenant unreasonable where the restriction went further than barring solicitation of
current clients, “prohibiting Levine from accepting the business and servicing the
accounts of former Webster clients, regardless of whether Levine solicited them,”
and noted that it was unreasonable to bar the plaintiffs “from providing clients with
a product that Webster itself cannot provide.” See also Trans-Clean Corp., 1998 WL
142436, at *7 (“[I]t is hard to see why this good will should be protected in areas
where it does not even exist.”).
Additionally, Magellan could not have possibly suffered irreparable harm due
to Larweth’s competition from these potential customers, and has failed to show it
is facing impending irreparable harm. Indeed, when asked about such harm,
Magellan executive Mostafa Kamal could only answer that Magellan could
“potentially” be harmed by competition for companies that were not Magellan
customers, and even then only to the extent that the competition occurred with
companies that Magellan had been building a relationship with. D.E. 122 at 197:22-
198:6. This concession negates the basis for the injunction because “the absence of
a substantial likelihood of irreparable injury would, standing alone, make
preliminary injunctive relief improper.” Siegel v. LePore, 234 F.3d 1163, 1176 (11th
Cir. 2000).
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Thus the court abused its discretion in finding that a complete ban on
participating in the pharmaceutical rebate management market, including as to non-
Magellan customers and customers with whom Larweth had no relationship at
Magellan, was enforceable under Connecticut law. Moreover, because there is no
way to “blue pencil” the non-compete provision in accordance with Connecticut law
to limit the restrictions on competition only as to Magellan customers or Magellan
customers with whom Larweth had direct contact, the entire provision is overbroad
and unenforceable. See Part I.B.1, supra; Beit, 63 A.2d at 166. The covenant applies
indivisibly to competition in the entire industry, and not to any subsets of customers.8
8
The restrictive covenant reads:
(i) Employee covenants and agrees that during the term of his or her
employment with Employer and for a period of three (3) years immediately
following the termination of said employment for any reason, he or she will
not, on his or her own behalf or as a partner, officer, director, employee, agent,
or consultant of any other person or entity, directly or indirectly, engage or
attempt to engage in the business of developing, providing or selling products
or services in the United States that are products or services developed,
provided or offered by Employer at the time of the termination of his or her
employment with Employer, including without limitation the provision of all
or any part of the services provided by Employer (directly or through
subcontractors) in any way pertaining or related to pharmacy benefits
management, pharmaceutical rebate management, or any other component of
pharmacy benefits management services or products (whether such products
or services are developed, provided or offered by such other person or entity
individually or on an integrated basis with other products or services
developed, provided or offered directly by such person or entity or through
affiliated or subcontracted persons or entities) unless waived in writing by
Employer in its sole discretion. Employee recognizes that the above restriction
is reasonable and necessary to protect the interests of Employer.
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3. Larweth is denied the opportunity to pursue his occupation.
The district court further abused its discretion in considering the effect that a
blanket prohibition on participating in the pharmaceutical rebate management
services industry would have on Larweth’s “opportunity to pursue his occupation.”
Robert S. Weiss, 546 A.2d at 219 n.2. “[A] restrictive covenant is unenforceable if
by its terms the employee is precluded from pursuing his occupation and thus
prevented from supporting himself and his family.” Scott, 368 A.2d 111, 115.
The district court, without any citation to the record or to case law, reasoned
that “Larweth has an extensive background on the pharmaceutical manufacturer side
of the business, and nothing in the non-compete prohibits him from pursuing that
type of employment.” D.E. 145 at 11. However, this ignores that Larweth has spent
the last 13 years of his career in the pharmaceutical rebate management industry,
and not the “pharmaceutical manufacturer side of the business.” D.E. 145 at 2-3
(describing Magellan’s experience pharmaceutical rebate management industry);
D.E. 123 at 79:17-81:11 (describing taking a job in 2006 working in the carve-out
rebate management industry). In addition, Larweth has worked largely in the rebate
negotiation space since approximately 1994. D.E. 145 at 2-3; D.E. 123 at 75:5-77:1.
Larweth has not worked in the pharmaceutical benefit management space in over a
D.E. 60-3 at 9 (§ 7(b)(i)).
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decade, and the district court did not and could not find otherwise. His occupation is
in the pharmaceutical rebate management field, and the injunction is impermissibly
overbroad because it completely precludes Larweth from pursuing his occupation
anywhere in the country.
Connecticut courts have not enforced such overbroad injunctions that wholly
preclude an individual from engaging in their occupation. As one court reasoned,
“[t]he test for reasonableness is not whether the defendants would be able to make a
living in other ways, or in other occupations, but whether or not the Agreement as
drafted and applied would unfairly restrain their ‘opportunity’ to pursue their
occupation.” Creative Dimensions, 2012 WL 2548717, at *5. Thus the court in
Creative Dimensions refused to enforce a restrictive covenant that would have
wholly precluded the former employees from work in their “specific industry”—the
“portable display” sales industry—given that the employees’ skills were “well-
suited for the portable display world and less well-suited for others,” id., just as
Larweth’s skills are well suited to the pharmaceutical rebate management industry
and not the pharmaceutical benefit management industry. See also Sylvan R. Shemitz
Designs, 2013 WL 6038263, at *8-9 (refusing to enforce covenant that “prohibits
any employment by a ‘specialized lighting business,’” a “niche field”); Merryfield
Animal Hosp. v. MacKay, 2002 WL 31928627, at *1 (Conn. Super. Ct. Dec. 19,
2002) (refusing to enforce covenant that prohibited doctor of veterinary medicine
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47. 32
from “being employed in any capacity within any entity that provides veterinary
services”).
Although the district court additionally reasoned that “Larweth testified that
one of his companies—Anton Health—provides services unrelated to
pharmaceutical rebate management,” D.E. 145 at 11, the court relied on only a few
lines of Larweth’s deposition that establish that Anton Health provides “a focus
group or advisory boards” in order to connect individuals, the testimony does not
establish that Anton Health (which is also subject to the injunction) makes money
from activity outside of the pharmaceutical rebate management industry. Moreover,
this finding is at odds with the district court’s earlier finding that Anton Health and
Anton Rx (which “directly competes with Magellan’s [rebate] carve-out business”)
are “somewhat overlapping and co-mingled.” D.E. 145 at 5.
Thus the restrictive covenant is overbroad as a matter of Connecticut law
because it completely precludes Larweth from pursuing his occupation of work in
the pharmaceutical rebate management industry, and the district court abused its
discretion in enforcing it.
4. Enforcement improperly interferes with the public’s interest.
The district court likewise abused its discretion in assessing “the extent of
interference with the public’s interests.” Robert S. Weiss, 546 A.2d at 219 n.2. In
assessing this interference, courts look to “(1) the scope and severity of the
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covenant's effect on the public interest; (2) the probability of the restriction creating
or maintaining an unfair monopoly in the area of trade; and (3) the interest sought to
be protected by the employer.” New Haven Tobacco Co. v. Perrelli, 528 A.2d 865,
868 (Conn. App. Ct. 1987). As to the first factor, “the restrictions contained in the
covenant must be examined to determine how large a section of the populace will be
affected if the covenant is enforced.” Id. Further, as to the third factor, the court must
ensure that “the means chosen to achieve this end do not unreasonably deprive the
public of essential goods and services.” Id. at 869.
The district court, only cursorily considering this law and without citing any
record evidence, found that the restrictive covenant would not interfere with the
public’s interest, reasoning that
First, Larweth’s argument presumes that the insurance companies are
passing on the higher rebate to the public instead of keeping it, but there
is no evidence to support such a conclusion. Second, it is undisputed
that there are many companies in the market competing against
Magellan, thus prohibiting Larweth from doing so for a limited period
of time does not have a significant impact on the public interest. See
New Haven Tobacco Co. v. Perrelli, 559 A.2d 715, 718 (Conn. App.
Ct. 1989) (indicating that restrictive covenants are not contrary to the
public interest where they “do not unreasonably deprive the public of
essential goods and services” and where their enforcement would not
lead to a probability that a monopoly could be created).
D.E. 145 at 11. The district court wholly ignored three major ways in which Larweth
contributed to the public interest. First, the district court only considered Larweth’s
clients’ private insurance plans, and ignored his clients’ Medicare and Medicaid
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plans. In fact, uncontroverted evidence showed that Larweth’s clients with Medicare
and Medicaid plans passed 50% of any rebate directly to the government—and were
required by law do to so. One Larweth employee testified that for just one such
client, Anton Rx provided millions in additional savings compared to Magellan’s
rebates, and that 50% of those savings would be passed on to federal and state
governments. D.E. 123 at 28:15-30:21. Larweth testified that his company was set
to pay over $10 million to federal government in the near future. Id. at 204:14-24.
Second, Larweth was able to negotiate contracts for “biosimilar drugs”—
essentially much cheaper, virtually identical versions of existing drugs—for which
competitors were unable to obtain rebates. His rebates saved government health
plans millions of dollars, as such drugs cost about 1/3 less than their traditional
counterparts. Id. at 99:10-100:19, 193:24-194:11.
Third, Larweth brought a degree of transparency about pricing and pass-
through status of rebates to the industry that benefitted his clients, including
government plans. Id. at 28:15-30:21; 89:14-20; 92:3-94:22.
The district court simply ignored this testimony, and erroneously considered
only the testimony regarding rebates provided to non-government insurance plans.
In misapplying the law to these uncontroverted facts, the district court committed
legal error. See Perrelli, 528 A.2d at 869 (in analyzing reasonableness, the court
must ensure that “the means chosen to achieve this end do not unreasonably deprive
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the public of essential goods and services”). The court also placed undue emphasis
on its consideration of the “monopoly” factor cited Perrelli, even though that was
only one of the three factors. See id. By contrast, the court wholly failed to consider
“how large a section of the populace will be affected if the covenant is enforced,”
id., even though a very large portion of the population—Medicare and Medicaid
patients, and taxpayers generally—would be affected given the significant savings,
rebates, and other benefits that Larweth is able to provide to government health
plans.
II. MAGELLAN WILL NOT SUFFER IRREPARABLE HARM ABSENT
THE INJUNCTION.
The district court committed multiple legal errors in analyzing whether
Magellan faces “irreparable harm,” as required to support a preliminary injunction.
First, the court erred in applying state law because federal law governs the standard
for issuing a preliminary injunction. Second, the court wrongly applied a state-law
presumption of irreparable harm, even though such a presumption is contrary to
federal law and unavailable even under the state law that the court purported to
apply. These legal errors are by definition an abuse of discretion. Koon v. United
States, 518 U.S. 81, 100 (1996) (legal error is an abuse of discretion).
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A. The District Court Committed Legal Error By Relying on a State-
Law Presumption of Irreparable Harm Contrary to Federal Law.
In federal courts, it is black-letter law that “plaintiffs seeking preliminary
relief” must “demonstrate that irreparable injury is likely in the absence of an
injunction.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 22 (2008). The court
below did not hold Magellan to this burden; instead, it looked to state law and
erroneously presumed that Magellan was irreparably harmed. Order, at 13 (quoting
Fairfield Cty. Bariatrics & Surgical Assocs., P.C. v. Ehrlich, 2010 WL 1375397, at
*37 (Conn. Super. Ct. Mar. 8, 2010), and noting irreparable harm was “rebuttably
presumed). Preliminary injunctions are procedural devices, governed by federal
rather than state law, and the Supreme Court has repeatedly held that presumptions
of irreparable harm—or any other standards that lessen the burden on parties seeking
preliminary relief—are incompatible with the Federal Rules. By wrongly applying
contrary state law, the court committed legal error.
A federal court’s power to grant a preliminary injunction is governed by Rule
65 of the Federal Rules of Civil Procedure, which “codified by reference” the
“federal procedural standards” for such injunctions. Ferrero v. Associated Materials
Inc., 923 F.2d 1441, 1448 (11th Cir. 1991) (holding that federal law, rather than state
law, governs standard for preliminary injunctions). The preliminary injunction is a
procedural device that allows the court to preserve the relative positions of the parties
pending trial, and thus under Erie principles, courts have held that the federal
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procedural law governs the availability of preliminary injunctions. See id.; S. Milk
Sales, Inc. v. Martin, 924 F.2d 98, 102 (6th Cir. 1991) (holding that federal law
governs the standard for issuing a preliminary injunction because “the case law …
applying Fed. R. Civ. P. 65 governs what is essentially procedural”); Capital Tool
& Mfg. Co., Inc. v. Maschinefabrik Herkules, 837 F.2d 171, 172–73 (4th Cir. 1988)
(same). This is true even in diversity cases. Ferrero, 923 F.2d at 1448; Capital Tool,
837 F.2d at 172–73. Thus, the court was wrong to look at state law, rather than
federal law, in determining the standard for granting a preliminary injunction in this
diversity action. See D.E. 116 ¶ 11.
The district court’s legal error was significant in this case, because federal law
requires plaintiffs to prove, not presume, that “irreparable injury is likely in the
absence of an injunction.” Winter, 555 U.S. at 22. Thus, the U.S. Supreme Court has
repeatedly rejected presumptions of irreparable harm and other attempts to lessen
the burden of proof on parties seeking an injunction, which are contrary to the
traditional equitable principles codified in Rule 45. See id; eBay Inc. v.
MercExchange, L.L.C., 547 U.S. 388, 393–94 (2006) (rejecting “general rule” that
injunction should issue once patent validity and infringement were established
except in “unusual” cases); Amoco Prod. Co. v. Vill. of Gambell, AK, 480 U.S. 531,
544–45 (1987) (rejecting presumption of irreparable harm as “contrary to traditional
equitable principles”). Such lower standards, the Court has held, are “inconsistent”
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with the Court’s “characterization of injunctive relief as an extraordinary remedy
that may only be awarded upon a clear showing that the plaintiff is entitled to such
relief.” Winter, 555 U.S. at 22.
Since the Supreme Court’s decisions in eBay and Winter, this Circuit and
others have rejected presumptions of irreparable harm in a variety of contexts.
Commodores Entertainment Corp. v. McClary, 648 F. App’x 771, 777 (11th Cir.
2016) (“In light of the Supreme Court’s holding in eBay, a presumption of
irreparable harm cannot survive” in Lanham Act cases); Flexible Lifeline Sys., Inc.
v. Precision Lift, Inc., 654 F.3d 989, 997 (9th Cir. 2011) (no presumption in
copyright action); Salinger v. Colting, 607 F.3d 68, 78 (2d Cir. 2010) (“[W]e see no
reason that eBay would not apply with equal force to an injunction in any type of
case.” (emphasis in original)). This Circuit’s post-eBay decisions apply a
presumption of irreparable harm only if the legislature clearly and expressly alters
these traditional equitable principles by statute, with a narrow exception not
applicable here.9
See C.B. v. Bd. Of School Cmm’rs, 261 F. App’x 192, 194 (11th
Cir. 2008); see also First W. Capital Mgmt. Co. v. Malamed, 874 F.3d 1136, 1141
(10th Cir. 2017) (explaining that presumption applies only if expressly mandated by
statute).
9
The exception is for violations of certain Constitutional rights, such as privacy and
free speech, the deprivation of which is presumed irreparable. Barrett v. Walker
Cnty. School Dist., 872 F.3d 1209, 1229 (11th Cir. 2017).
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For example, this Circuit dealt with a statute expressly creating a presumption
of irreparable harm in TransUnion Risk & Alternative Data Solutions, Inc. v.
MacLachlan, 625 F. App’x 403, 407 (11th Cir. 2015). The unpublished decision
recognized that federal law governs the standard for issuing a preliminary injunction
in federal courts. Id. at 406 (“We apply Rule 65 to the exclusion of any contrary state
procedure.”). The court then considered section 542.335(1)(j), Florida statutes,
which expressly creates a presumption or irreparable harm for violations of a valid
restrictive covenant. The court also examined the district court’s “application” of
this law, noting that the court had “conducted a thorough review of the evidence,
which contained numerous indicia of irreparable harm.” Id. at 406. In light of the
statutory text and the district court’s evidentiary findings, the court found that
applying Florida’s presumption was not contrary to federal law.10
By contrast, in this case there is no statute analogous to Florida’s: this case is
governed by Connecticut law, and there is no statutory presumption of irreparable
10
Significantly, however, neither party in TransUnion cited the Supreme Court’s
decision in eBay in their appellate briefs. The decision itself did not discuss eBay,
Winter, or any of the other federal cases cited above holding that a presumption of
irreparable harm is inappropriate. Thus, while TransUnion is consistent with
Eleventh Circuit precedent allowing a presumption only when mandated by statutory
text, this unpublished decision cannot stand for a broader principle that such a
presumption survived the Supreme Court’s rejection of presumptions in those cases.
Cf. Flexible Lifeline, 654 F.3d at 997 (“The panel’s summary treatment of the
presumption without consideration of the effect of eBay and Winter does not bind
this panel or constitute an affirmation of the presumption's continued vitality.”).
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harm in Connecticut. Additionally, the court did not conduct “a thorough review of
the evidence” before finding irreparable harm; instead, it relied on a single,
unpublished Connecticut trial-court decision which concluded (despite contrary
decisions in Connecticut, as discussed below) that violations of a restrictive covenant
create a presumption of irreparable harm, although in circumstances radically
different from those present here. D.E. 145 at 13. Given both the lack of a statute
and of independent evidence of irreparable harm, this case is unlike TransUnion; the
district court’s decision is contrary to this Circuit’s post-eBay decisions, which do
not allow presumptions of irreparable harm except when required by statute.
Instead, this case is more analogous to the decision in Commodores, decided
less than a year after the inapplicable TransUnion case, where the Court rejected a
presumption of irreparable harm that was rooted in caselaw rather than express
statutory text. 648 F. App’x at 773; Commodores Entertainment Corp. v McClary,
2014 WL 5285980, (M.D. Fla. Oct. 15, 2014). Whereas eBay was not mentioned in
either the appellate briefs or the Court’s opinion in TransUnion, the Commodores
decision held that “[i]n light of the Supreme Court’s holding in eBay, a presumption
of irreparable harm cannot survive.” Id. Nonetheless, the Court affirmed because
“the district court went beyond merely presuming irreparable harm; it also made a
factual finding” of irreparable harm. Id.
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The court below did not go “beyond merely presuming irreparable harm.”
Instead, relying on a non-statutory presumption, the court put the full burden on
Larweth to come forward with evidence to rebut that presumption (and concluded
that he had not done so). D.E. 145 at 13 (“any delay that may have occurred in this
case is not sufficient to overcome the presumption of irreparable harm”). For
example, the court made no finding that whatever harm Magellan suffered from
Larweth’s competition, if any, was actually irreparable. In rejecting Larweth’s
arguments that such harm could be reversed or remedied, the court made no contrary
finding—instead, the court stated that “such an argument ignores the fact that
Larweth is unfairly competing,” D.E. 145 at 14, which has nothing to do with
whether the resulting harm is irreparable. The court also stated that the market is not
“as fluid as Larweth would like the Court to believe,” but nowhere stated that the
loss of a customer would be irreparable. D.E. 145 at 14. These are the only findings
below even remotely addressing irreparable harm, and without a presumption, they
would not be enough to support a finding of irreparable harm.
Moreover, the record would not support such a finding even if it had been
made below. After all, lost revenue from Larweth’s competition can be compensated
with money damages; such losses are not irreparable. Magellan put on evidence that
it had lost business to Larweth, but its witnesses could not even specify whether
Magellan lost much of that business before or after Larweth began competition with
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Magellan. D.E. 122 at 114:9-115:21, id. at 201:23-203:1. Indeed, the record shows
that Larweth did not even take existing business from these customers, but instead
provided new and different business that Magellan never had in the first place. Id. at
191:4-194:12. Thus, Magellan never actually lost any clients as a result of Larweth’s
competition—it lost only the new business that went to Larweth. Magellan has
alternatively claimed that Larweth’s competition would “erode[] the customer
relationship over time,” id. at 176, but its witnesses could only give one example of
such “erosion,” and that example relied on hearsay, id. at 204:12-205:22. Tellingly,
the court below did not find that there was any such “erosion,” or that such “erosion”
was actually irreparable.
Instead of making the necessary findings, the Court put a “thumb on the
scales” and relied on a presumption of irreparable harm, which is precisely what the
Supreme Court has said courts may not do: “It is not enough for a court considering
a request for injunctive relief to ask whether there is a good reason why an injunction
should not issue; rather, a court must determine that an injunction should issue under
the traditional four-factor test set out above.” Monsanto Co. v. Geertson Seed Farms,
561 U.S. 139, 158 (2010). Because the court below did not hold Magellan to its
burden, the decision must be reversed.
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B. Magellan’s Delay in Seeking the Injunction Makes Any
Presumption of Irreparable Harm Inapplicable.
As discussed above, Supreme Court precedent precludes presumptions of
irreparable harm in deciding whether to grant a preliminary injunction. Regardless,
however, no presumption would be available here because Magellan needlessly
delayed—over nine months—its efforts to obtain the injunction. Specifically,
Larweth’s counsel informed Magellan by June 5, 2018, that Larweth would compete
against Magellan, and subsequent emails confirmed that he considered all customers
“fair game.” Despite its current contention that this competition is irreparably
harming Magellan, the company nonetheless waited nine months to seek the
supposedly “preliminary” injunction. Under federal and Connecticut decisions, such
delay renders any presumption of irreparable harm unavailable. E.g., Voice of the
Arab World, Inc. v. MDTV Med. News Now, Inc., 645 F.3d 26, 35 (1st Cir. 2011)
(even if a presumption of irreparable harm survived ebay, “any presumption of
irreparable harm that may arise upon a finding of likelihood of success on the merits
of a trademark infringement claim ‘is inoperative if the plaintiff has delayed either
in bringing suit or in moving for preliminary injunctive relief.’” (quoting Tough
Traveler, Ltd. v. Outbound Products, 60 F.3d 964, 968 (2d Cir. 1995)); Opticare,
P.C. v. Zimmerman, 2008 WL 1734933, at *4 (Conn. Super. Ct. Mar. 27, 2008)
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(declining to apply presumption where substantial time had elapsed since
competitor’s employment ended).
1. A delay seeking injunctive relief makes a presumption of
irreparable harm inoperative in this circuit.
In this Circuit, “a party’s failure to act with speed or urgency in moving for a
preliminary injunction necessarily undermines a finding of irreparable harm.”
Wreal, LLC v. Amazon.com, Inc., 840 F.3d 1244, 1248 (11th Cir. 2016); accord
Powers v. Sec’y, Florida Dep’t of Corr., 691 F. App’x 581, 583–84 (11th Cir. 2017).
Indeed, a delay of “even only a few months—though not necessarily fatal—militates
against a finding of irreparable harm.” Wreal, 840 F.3d at 1248. This principle is not
punitive, nor is it rooted in whether the plaintiff’s conduct was morally culpable or
the defendant’s conduct “blatant,” D.E. 145 at 13. Rather, the principle is based on
the common-sense notion that plaintiffs who really need urgent relief to prevent
irreparable harm are not likely to wait around before seeking that relief. Wreal, 840
F.3d at 1248. As this Court has explained, “the very idea of a preliminary injunction
is premised on the need for speedy and urgent action to protect a plaintiff’s rights
before a case can be resolved on its merits.” Wreal, 840 F.3d at 1248.
Because delay in seeking the injunction is inconsistent with the notion that the
plaintiff will be irreparably harmed if one is not issued before trial, numerous courts
have found that delays render the presumption inoperative. Voice of the Arab World,
645 F.3d at 37 (holding that applying presumption was abuse of discretion in light
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of plaintiff’s delay, without deciding whether presumption survived eBay); Tough
Traveler, 60 F.3d at 968 (“[G]iven the leisurely pace of Tough Traveler’s pursuit of
the matter, the court's reliance on the general presumption was a misapplication of
the law.”). In both Voice of the Arab World and Tough Traveler, the appellate court
reversed a district court for applying the presumption despite the plaintiffs’ delay.
Thus, even if Supreme Court precedent did not entirely preclude any
presumption of irreparable harm, federal law would not allow such a presumption in
light of Magellan’s delay.
2. A delay in seeking injunctive relief negates the reason for any
modified standard of proof under Connecticut law.
Turning to Connecticut law, the district court below erroneously concluded
that the state applies a presumption of irreparable harm. The district court cited only
one state trial-court decision, which itself acknowledged that “appellate case law is
not entirely clear, and trial court decisions are divided” on this issue. Fairfield
County Bariatrics & Surgical Associates, P.C. v. Ehrlich, FBTCV1050291046,
2010 WL 1375397, at *36 (Conn. Super. Ct. Mar. 8, 2010). The Fairfield decision
ultimately concluded that a presumption applied, but other decisions indicate that, if
“the competition has not yet, or only barely commenced,” Connecticut simply
lessens the burden of proof without treating irreparable harm as “automatically
established.” POP Radio, LP v. News Am. Mktg. In-Store, Inc., 898 A.2d 863, 871
(Conn. Super. Ct. 2005); accord Sylvan R. Shemitz Designs, 2013 WL 6038263, at
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*10–11. Indeed, at least one Connecticut decision has expressly distinguished this
“moderated” burden of proof from a presumption, holding that “irreparable harm
needs to be proven and may not be presumed.” RKR Dance Studios, Inc. v.
Makowski, 2008 WL 4379579, at *10 (Conn. Super. Ct. Sept. 12, 2008).
Critically, these decisions indicate that the reason for applying a moderated
standard or proof is because irreparable harm would otherwise be difficult or
impossible to establish if competition has only recently begun—and thus a lesser
stand of proof is unnecessary if competition has been ongoing for many months, as
in the present case. POP Radio, 898 A.2d at 871. Thus, where an injunction is sought
after substantial time has elapsed since the competition began, Connecticut law
requires “some proof of irreparable harm” rather than a presumption. Opticare, P.C.
v. Zimmerman, 2008 WL 1734933, at *4 (Conn. Super. Ct. Mar. 27, 2008). In
Opticare, the court declined to apply a presumption where “the Court has the benefit
of observing the effect of the defendant’s departure on the plaintiffs, some 16 months
after the fact.” Id. The court contrasted situations “when a person has just left his
employ,” in which case “it may be difficult to establish irreparable harm,” and thus
“it may be necessary for a court to employ the presumption.” Id. See also RKR Dance
Studios, 2008 WL 4379579, at *10 (declining to apply presumption but noting that
a “more lenient standard” may be appropriate “where, for example, competition has
not yet commenced”).
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The decision cited below, Fairfield, acknowledged this principle in
distinguishing Opticare. Fairfield, 2010 WL 1375397, at *38. The Fairfield court
applied the presumption because the plaintiff was acting “in the wake of the
defendant’s termination and violation of the restrictive covenant,” rather than
months later as in Opticare. Id. (emphasis added). Indeed, in the Fairfeld matter, the
plaintiff could hardly have acted quicker; the plaintiff brought suit on December 4,
2009, about one week after dismissing the defendant doctor on November 27, 2009,
id. at *8-9, thereby triggering the non-compete agreement, id. at *1. The Fairfeld
court also found that the plaintiff had demonstrated irreparable harm. Id. at 37 (“there
has been proof of irreparable harm and lack of an adequate remedy at law”).
Magellan certainly did not act “in the wake of” Larweth’s termination, or even
right after competition began. Instead, Magellan knew Larweth was openly
competing with it for nine months before it moved for a preliminary injunction. In
these circumstances, no presumption of irreparable harm is available under
Connecticut law.
3. The district court incorrectly disregarded Magellan’s delay.
The district court disregarded Magellan’s delay in seeking preliminary relief
for three incorrect reasons. First, the court acknowledged that Larweth’s counsel
advised Magellan by email on June 5, 2018 (nine months before Magellan’s motion)
that “Mr. Larweth will be re-entering the rebate sales market immediately,” but the
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court stated that “the conversations that followed were legal discussions regarding
the enforceability of the restrictive covenants and indicated a possibility of
settlement,” citing two subsequent letters sent in June and July 2018. D.E. 145 at 13.
The court was correct that the letters contained “legal discussions” about
“enforceability,” but this only emphasized that Larweth would begin competing: the
June 5, 2018 letter from Larweth’s counsel explained that he believed that “[t]he
non-compete restrictions at issue are completely unenforceable under Connecticut
law and the customers are all fair game.” D.E. 60-7. The court below did not explain
why this “legal discussion[]” or even settlement conversations (if the letters could
be construed as that) in June or July 2018 could justify a delay lasting until March
of 2019. See Voice of the Arab World, 645 F.3d at 36 (early settlement talks could
not justify delay after “significant negotiations” ended); Seiko Kabushiki Kaisha v.
Swiss Watch Intern., Inc., 188 F. Supp. 2d 1350, 1356 (S.D. Fla. 2002) (citing three-
month delay between last settlement talks and commencement of suit as a reason for
finding lack of irreparable harm). Caselaw indicates that parties who face irreparable
harm should seek preliminary relief “even in the midst of negotiating a potential
settlement,” Menudo Int’l, LLC v. In Miami Prod., LLC, 2017 WL 4919222, at *6
(S.D. Fla. Oct. 31, 2017), and certainly cannot delay further once settlement
conversations end, Voice of the Arab World, 645 F.3d at 36.
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Second, the court stated that “[i]t was not until Magellan and Larweth engaged
in discovery that Magellan was able to obtain the specifics as to Larweth’s
competition.” D.E. 145 at 13. But Magellan did not need to wait for “specifics,”
because Larweth’s counsel informed Magellan in no uncertain terms that “Larweth
will be re-entering the rebate sales market immediately” and that he believed “the
customers are all fair game.” D.E. 60-7. If that were not clear enough, Larweth’s
counsel then told Magellan one month later that Larweth was already competing
with Magellan and “could take $20 million worth of business from Magellan in short
order[.]” D.E. 60-9 at 2. In light of these unequivocal statements—informing
Magellan that Larweth was already competing, considered all of Magellan’s
customers “fair game,” and could “take” $20 million in business from Magellan—it
is hard to imagine what additional “specifics” Magellan needed before seeking an
injunction. Again, plaintiffs who believe their business is being “irreparably
harmed” would not wait for ever-finer details before seeking an injunction. See Tech
Traders, LLC v. Insuladd Envtl., Ltd., 2018 WL 5830568, at *3 (M.D. Fla. Nov. 7,
2018) (rejecting argument that plaintiff needed to “investigate” the claims further,
explaining that “then the necessity of moving expeditiously—a touchstone
requirement for a preliminary injunction—could be brushed away and the
irreparable harm prong could be eliminated by a lawyer citing a good faith ‘need to
investigate’”). Moreover, under Connecticut law, the fact that Magellan took more
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