Saban v. Caremark RX, L.L.C.
780 F. Supp. 2d 700
N.D. Ill.2011Background
- Joel Saban, an executive in Caremark's PBM division, signed a December 2009 employment agreement containing a broad one-year non-compete and a non-disclosure provision; he resigned on April 20, 2010 and joined SXC Health Solutions as Executive Vice President, Pharmacy Operations.
- Caremark sought a preliminary injunction to enforce the non-compete and to restrain use/disclosure of confidential information; Saban filed a declaratory judgment action seeking to invalidate the non-compete.
- The magistrate judge recommended denying Caremark's preliminary injunction, finding the non-compete overbroad and unenforceable under Rhode Island law, and excluding certain computer-forensic evidence; Caremark objected.
- The district court conducted de novo review of contested factual and legal issues and adopted the magistrate judge's findings, denying the injunction; it held that the non-compete is unenforceable as written and that Caremark failed to prove likelihood of success on its ITSA, fiduciary-duty, and CFAA claims.
- Rhode Island choice-of-law governs the non-compete; Rhode Island law requires tailoring of restraints to protect legitimate interests and avoidance of bad-faith overreach; the court found partial enforcement inappropriate given Caremark's conduct.
- Ultimately, the court denied Caremark's motion for a preliminary injunction and retained that Caremark has an adequate remedy at law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the non-compete is enforceable under Rhode Island law. | Saban’s conduct is prohibited; the covenant protects legitimate interests. | Stricter enforcement under Rhode Island law is required; the clause is ancillary and adequately supported. | Unenforceable as written; overly broad and a product of bad faith overreaching. |
| Whether ITSA claim is likely to succeed. | Trade secrets were misappropriated. | No actual or inevitable disclosure; information is stale and not actionable. | ITSA unlikely to succeed. |
| Whether CFAA claim is likely to succeed. | Unauthorized access and damage occurred via removal of data. | No proven damage or loss; no actual misuse of data shown. | CFAA claim unlikely to succeed. |
| Whether irreparable harm exists and an injunction is appropriate. | Disclosure of confidential information would cause irreparable harm. | No proven risk of disclosure; substantial harms to Saban if injunction issued. | No irreparable harm; injunction denied; adequate legal remedies exist. |
Key Cases Cited
- Winter v. NRDC, 555 U.S. 7 (U.S. Supreme Court 2008) (injunctions require likelihood of irreparable harm and other factors)
- Durapin v. American Products, 559 A.2d 1051 (R.I. 1989) (reasonableness test for restraints; tailoring required)
- Cranston Print Works Co. v. Pothier, 848 A.2d 213 (R.I. 2004) (Restatement approach to reasonableness; enforceability hinges on legitimate interests and tailoring)
- Nestle Food Co. v. Miller, 836 F.Supp. 69 (D.R.I. 1993) (trade secrets protection; information kept confidential; not all knowledge is a trade secret)
- Diamond Blade Warehouse v. Paramount Diamond Tools, 420 F.Supp.2d 866 (N.D.Ill. 2006) (irreparable harm in trade secrets disputes; need for a clear showing of harm)
- SKF USA, Inc. v. Bjerkness, 636 F.Supp.2d 696 (N.D.Ill. 2009) (ITSA, trade secrets protective standards; use of evidence to show confidential information)