951 F.3d 50
1st Cir.2020Background
- John Lavin was a long‑time CVS Caremark executive (SVP for Provider Network Services) with detailed knowledge of CVS's pricing, contracts, and strategic initiatives.
- In 2017 Lavin signed a Restrictive Covenant Agreement (RCA) in exchange for a stock award; it contained an 18‑month, nationwide noncompetition clause with a broad enterprise‑wide definition of "Competition"/"Competitor."
- Lavin accepted a job at PillPack (an Amazon‑owned online pharmacy) to negotiate with PBMs and payers and to help develop procurement/disruption strategy; PillPack agreed to recuse him from CVS‑specific matters.
- CVS sued in Rhode Island federal court and obtained a preliminary injunction enjoining Lavin from working at PillPack for 18 months; the district court found (unreversed) that Lavin’s new role was likely to result in disclosure/use of CVS confidential information.
- On appeal Lavin challenged only CVS’s likelihood of success (i.e., the covenant’s reasonableness/enforceability); the First Circuit affirmed, holding CVS likely to succeed under either an as‑applied or a facial/partial‑enforcement analysis.
- The panel acknowledged a doctrinal tension (facial vs as‑applied review) and, while not definitively resolving it, held the injunction sustainable either way; concurring opinions disagreed about which doctrinal framework Rhode Island law endorses.
Issues
| Issue | Plaintiff's Argument (CVS) | Defendant's Argument (Lavin) | Held |
|---|---|---|---|
| Whether Lavin's PillPack position falls within the RCA's prohibited "Competition" | Lavin's role will likely implicate CVS confidential information and thus falls within the covenant | Lavin says his duties are limited, he will be recused from CVS matters, and nondisclosure/nonsolicitation covenants suffice | Court accepted district factual findings: Lavin's role likely will disclose/use confidential info; position falls within covenant |
| Whether the covenant is reasonable and enforceable (facial challenge) | The covenant is reasonable (or at least enforceable as applied to Lavin); protecting confidential info justifies scope/time | The enterprise‑wide definition is facially overbroad and unreasonable; thus unenforceable | Court declined to endorse facial reasonableness on this record but concluded partial enforcement could preserve restraint as to Lavin’s specific role; overall enforceable |
| Proper analytical framework: facial review vs as‑applied (and role of partial enforcement) | Courts may and should analyze reasonableness as‑applied to the employee's specific prospective conduct; partial enforcement still available | Courts must evaluate the covenant's reasonableness on its face because covenants are disfavored and must be narrowly tailored | Panel did not pick a single rule: held outcome would be the same under either approach; one concurrence favored as‑applied, another thought facial review + partial enforcement is correct under RI law |
| Whether preliminary injunction was appropriate given other factors (irreparable harm, balance of harms, public interest) | District court correctly found these factors support injunction; Lavin did not meaningfully contest them on appeal | Lavin made only passing references and waived full contention | Because likelihood of success established and other factors supported relief, injunction affirmed |
Key Cases Cited
- Durapin, Inc. v. Am. Prods., Inc., 559 A.2d 1051 (R.I. 1989) (threshold requirements for enforcing noncompetes; partial enforcement doctrine)
- Cranston Print Works Co. v. Pothier, 848 A.2d 213 (R.I. 2004) (noncompetes disfavored; reasonableness test)
- Max Garelick, Inc. v. Leonardo, 250 A.2d 354 (R.I. 1969) (reasonableness depends on circumstances of the agreement)
- Mento v. Lanni, 262 A.2d 839 (R.I. 1970) (examining reasonableness of restraint in light of factual context)
- Astro‑Med, Inc. v. Nihon Kohden Am., Inc., 591 F.3d 1 (1st Cir. 2009) (confidential business information is a protectable interest)
- Ross‑Simons of Warwick, Inc. v. Baccarat, Inc., 102 F.3d 12 (1st Cir. 1996) (preliminary injunction framework; likelihood of success as central factor)
- R.J. Carbone Co. v. Regan, 582 F. Supp. 2d 220 (D.R.I. 2008) (example of narrowing geographic scope under partial enforcement)
- Central Adjustment Bureau, Inc. v. Ingram, 678 S.W.2d 28 (Tenn. 1984) (influence on RI partial enforcement doctrine; refusal to partially enforce contracts obtained by deliberate overreaching)