Freedom Med. Inc. v. Whitman
343 F. Supp. 3d 509
| E.D. Pa. | 2018Background
- Freedom Medical, a Pennsylvania medical-equipment seller and preferred GPO provider, alleges three former regional branch managers (Whitman, Cavanaugh, Oderlin) left to work for Med One and misappropriated confidential pricing, GPO pricing schedules, and regional business plans.
- Freedom Medical requires employees to sign Acceptable Use and restrictive-covenant agreements (including a one-year global non-compete); contracts specify Pennsylvania law.
- Procedural posture: Freedom Medical moved for a TRO and preliminary injunction; TRO partially granted (preventing Individual Defendants from using/divulging trade secrets and ordering return of confidential materials); hearings held Oct. 23 & 25, 2018.
- Evidentiary highlights: Whitman emailed price spreadsheets to his personal account on the eve of resignation but testified he deleted them and used them only to wrap up work; Cavanaugh emailed Freedom Medical pricing and a 2017 SoCal business plan to his personal account and to Med One employees, then left Med One; Oderlin emailed Freedom Medical GPO price schedules to Med One and remains employed by Med One in his former territory.
- Freedom Medical asserted claims under the DTSA and PUTSA (trade-secret misappropriation), breach of contract, tortious interference, and breach of fiduciary duty; it sought broad injunctive relief including return of materials, nonuse, non-solicitation, and enforcement of non-compete terms.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Trade-secret misappropriation by Whitman (emailing price spreadsheets) | Whitman exported proprietary pricing spreadsheets and thus likely to misuse them at Med One | Whitman sent files only to finish Freedom Medical work, deleted them before employment ended, and has no need/ability to use them at Med One | Denied — plaintiff failed to show actual or inevitable misappropriation; no injunction against Whitman on trade-secret claim |
| Trade-secret misappropriation by Cavanaugh (sharing business plan & pricing) | Cavanaugh emailed business plan and pricing to personal and Med One accounts and used it to pursue customers | Cavanaugh has since left Med One; past disclosure insufficient to show future use | Denied — plaintiff proved misappropriation but failed to show imminent irreparable harm; no injunction on trade-secret claim |
| Trade-secret misappropriation by Oderlin (sharing GPO pricing) | Oderlin sent Freedom Medical GPO pricing to Med One and remains in same territory, posing imminent harm | Oderlin contends he relied on memory/legitimate knowledge | Granted — plaintiff likely to succeed and demonstrated irreparable harm; injunction issued against Oderlin for misappropriation |
| Liability / injunction against Med One and affiliates for acquiring/using secrets | Med One knowingly received and used improperly acquired trade secrets and facilitated poaching | Med One contests knowledge and vicarious liability; record sparse; lack of briefing on vicarious liability | Denied — insufficient record to show Med One likely to be held liable or to justify injunction |
| Enforcement of restrictive covenants (breach of contract) | Covenants are valid, supported by consideration, and breach by the Individuals justifies injunctions (one-year restriction) | Defendants argue California law or that covenants are unreasonable because geographic scope is unlimited | Partial — Pennsylvania law governs; one-year term reasonable, but geographic breadth overbroad; injunction limited to protecting plaintiff within each defendant's former sales territory (granted as to Oderlin only) |
| Tortious interference & breach of fiduciary duty | Med One induced breaches and Individuals breached duties by soliciting/using confidential info | Defendants argue past conduct only; damages remediable by money; no ongoing interference | Denied — plaintiff failed to show immediate irreparable harm; injunctions inappropriate |
Key Cases Cited
- Winter v. Natural Res. Def. Council, 555 U.S. 7 (2008) (standard for preliminary injunction)
- SI Handling Sys., Inc. v. Heisley, 753 F.2d 1244 (3d Cir. 1985) (trade-secret elements and protection for pricing compilations)
- Bimbo Bakeries USA, Inc. v. Botticella, 613 F.3d 102 (3d Cir. 2010) (injunctions for actual or threatened trade-secret misappropriation and inevitable-disclosure doctrine)
- Campbell Soup Co. v. ConAgra, Inc., 977 F.2d 86 (3d Cir. 1992) (irreparable harm in trade-secret cases requires clear showing of imminent use or disclosure)
- Victaulic Co. v. Tieman, 499 F.3d 227 (3d Cir. 2007) (geographic scope of restrictive covenants must align with employee duties)
- Piercing Pagoda, Inc. v. Hoffner, 465 Pa. 500 (Pa. 1976) (Pennsylvania allows reasonable restrictive covenants ancillary to employment)
- Boldt Mach. & Tools, Inc. v. Wallace, 469 Pa. 504 (Pa. 1976) (sales-based employees' noncompete protection limited to assigned sales territory)
- John G. Bryant Co. v. Sling Testing & Repair, Inc., 471 Pa. 1 (Pa. 1977) (threat of ongoing covenant violation establishes irreparable harm)
- Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C., 137 A.3d 1247 (Pa. 2016) (elements of breach of contract)