60 F.4th 372
6th Cir.2023Background:
- Stryker (Howmedica as sole managing member) employed Abbas from 2013 until mid-2022; Abbas signed an April 2022 confidentiality, noncompetition, and nonsolicitation Agreement governed by Michigan law.
- The Agreement bars disclosure/use of Stryker confidential information and prevents Abbas for one year from working for any "Conflicting Organization" where his services could enhance a competing product/service he knew about in the prior 24 months.
- Abbas resigned to accept a newly tailored sales position at competitor Alphatec; Stryker alleged Abbas had broad access to trade secrets, supported litigation, and that the Alphatec role risked misuse of confidential information.
- Stryker sued in state court (breach of contract and trade-secret claims), obtained a TRO, and after removal to federal court the district court issued a preliminary injunction prohibiting Abbas from working for Alphatec/any Conflicting Organization per the Agreement and barring ex parte communications with Alphatec counsel.
- Abbas appealed arguing (1) the injunction is overbroad/amounts to an industry-wide ban, (2) erroneous reliance on the inevitable-disclosure doctrine, and (3) the injunction improperly disqualifies counsel; the Sixth Circuit affirmed.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject-matter jurisdiction / amount-in-controversy | Diversity exists (Abbas CA; Howmedica NJ; Stryker NJ/MI) and the value of the injunction/possible damages exceed $75,000 | Removal contention challenged as amount based on costs to defendant; initial record unclear on Stryker's LLC membership | Court found diversity satisfied (Howmedica sole member) and amount-in-controversy met by value of the object and possible damages; federal jurisdiction exists |
| Noncompetition breadth | Enforce the Agreement to prevent Abbas from competing with Stryker consistent with Agreement definitions | Injunction is an impermissible industry-wide ban and broader than Agreement terms | Injunction not an industry-wide ban; language enforces Agreement as interpreted by district court, preserves status quo, and is modifiable if parties craft compliant role |
| Inevitable-disclosure doctrine | (Plaintiff did not rely on inevitable-disclosure for PI) | Abbas: district court erred by invoking/applying inevitable disclosure | Issue preserved on appeal but moot: district court did not apply inevitable-disclosure in granting the PI, so argument is irrelevant |
| Communication with opposing counsel / counsel disqualification | Restriction prevents disclosure of Stryker confidential/privileged info and avoids conflicts if Abbas's counsel also represents Alphatec | Provision improperly disqualifies or unreasonably restricts Abbas's counsel-client communications | Paragraph forbidding ex parte communications with Alphatec counsel was within the district court's equitable discretion to protect privileged/confidential information and not an abuse of discretion |
Key Cases Cited
- Winter v. Natural Resources Defense Council, 555 U.S. 7 (2008) (four-factor standard for preliminary injunctions)
- Univ. of Texas v. Camenisch, 451 U.S. 390 (1981) (purpose of preliminary injunction is to preserve parties' relative positions)
- Trump v. International Refugee Assistance Project, 137 S. Ct. 2080 (2017) (courts exercise equitable discretion when crafting preliminary relief)
- Hunt v. Washington State Apple Advertising Commission, 432 U.S. 333 (1977) (amount in controversy in injunctive/declaratory actions measured by value of the object of the litigation)
- Hertz Corp. v. Friend, 559 U.S. 77 (2010) (principles for determining corporate citizenship for diversity jurisdiction)
- Certified Restoration Dry Cleaning Network v. Tenke Corp., 511 F.3d 535 (6th Cir. 2007) (likelihood-of-success standard for preliminary injunction)
- Bard v. Brown County, 970 F.3d 738 (6th Cir. 2020) (preservation of issues raised at district-court hearing)
- E.E.O.C. v. Wilson Metal Casket Co., 24 F.3d 836 (6th Cir. 1994) (equitable courts may proscribe broader activities to enforce legal standards)