384 F. Supp. 3d 227
D.R.I.2019Background
- John Lavin, a senior CVS/Caremark executive for ~27 years, signed a 2017 Restrictive Covenant Agreement and received RSUs (~$157,500) conditioned on that Agreement.
- The Agreement bars Lavin for 18 months post-employment from directly or indirectly providing services to a defined set of "Competitors" (including PBMs and retail pharmacies) that are the same/similar to services he performed in the last two years or that would likely lead to disclosure/use of CVS Confidential Information.
- Within a year of signing, Lavin accepted a role at Amazon’s PillPack as Director of Third-Party Networks & Contracting, with duties including negotiating network participation, payer and PBM engagement, procurement strategy, and contributing to PillPack’s growth/disruption strategy.
- CVS sued and obtained a temporary restraining order and moved for a preliminary injunction to enforce the restrictive covenant, arguing Lavin’s new role is substantially similar and risks disclosure/use of confidential pricing, client, and strategic information.
- Lavin and PillPack contend the role is different (limited to PBMs other than Caremark), that firewalls limited his access to retail-side secrets, and that the covenant is overbroad and unreasonable.
- The district court found CVS likely to succeed on the merits, that the covenant is reasonable and narrowly tailored, and that irreparable harm, equities, and public interest favor a preliminary injunction; the injunction was granted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lavin’s PillPack role violates the Agreement (same/similar services) | Lavin will perform substantially the same work (negotiating network inclusion/pricing and strategy) for a Competitor | Lavin’s role is materially different: limited to PBMs (excluding Caremark) and does not compete with Caremark | Held for plaintiff: role is same/similar; PillPack is a Competitor and duties overlap |
| Whether Lavin’s employment likely will disclose Confidential Information | Lavin had access to confidential pricing, payer terms, enterprise strategy and underwriting info that would advantage PillPack | Lavin was firewalled from certain retail-side information and lacked access to some confidential retail data | Held for plaintiff: likely disclosure/use of confidential information given his senior-level access and strategic knowledge |
| Whether the restrictive covenant is reasonable and enforceable under RI law | Agreement is ancillary, supported by consideration (RSUs), narrowly tailored in scope and duration (18 months) to protect legitimate interests | Covenant is alleged overbroad (citing Saban) and restrictive of future employment | Held for plaintiff: covenant is reasonable (limited definition of Competition/Competitor, 18-month term tied to industry selling cycles) |
| Whether preliminary injunction factors are satisfied | Irreparable harm from disclosure of trade secrets; likelihood of success; equities and public interest favor enforcement | Enforcement burdens Lavin’s employment prospects; PillPack may be harmed | Held for plaintiff: all four Winter factors satisfied; preliminary injunction granted |
Key Cases Cited
- Winter v. Natural Res. Def. Council, 555 U.S. 7 (2008) (standard for preliminary injunction requires likelihood of success and irreparable harm)
- Mazurek v. Armstrong, 520 U.S. 968 (1997) (characterizing preliminary injunction as extraordinary remedy requiring substantial proof)
- Voice of the Arab World, Inc. v. MDTV Med. News Now, Inc., 645 F.3d 26 (1st Cir. 2011) (describing preliminary injunction as extraordinary and standards for issuance)
- Durapin, Inc. v. American Products, Inc., 559 A.2d 1051 (R.I. 1989) (framework for enforceability of non-compete agreements under Rhode Island law)
- Cranston Print Works Co. v. Pothier, 848 A.2d 213 (R.I. 2004) (Rhode Island precedent on reasonableness and enforcement of restrictive covenants)
- Astro-Med, Inc. v. Nihon Kohden Am., Inc., 591 F.3d 1 (1st Cir. 2009) (citation applying Rhode Island law principles and reasonableness analysis for covenants)