Opinion
CV186037988S
10-05-2018
STAMFORD HEALTH MEDICAL GROUP v. Anthony ALLEVA, M.D. et al.
UNPUBLISHED OPINION
TAGGART D. ADAMS, JUDGE TRIAL REFEREE
I. BACKGROUND
The plaintiff Stamford Health Medical Group (SHMG) has applied to the court for a temporary injunction barring the four defendant medical doctors from competing against SHMG in purported violation of their employment agreements with SHMG. SHMG describes itself as a "physician led, multi-specialty medical group with more than thirty offices in Fairfield County" in the State of Connecticut. It is a Connecticut corporation and a subsidiary of the Stamford Hospital. Verified complaint, Dkt Entry (DE) 100.31; Ex. 1. The defendants are three internists and one cardiologist (Neeson) with their practices located at 75 Holly Hill Lane in Greenwich, Connecticut, who, in 2012, were operating as Greenwich Medical Group (GMG). In December of that year SHMG purchased the assets of GMG and employed the four defendants pursuant to separate Physician Employment Agreements.
SHMG was formerly known as Stamford Health Integrated Practices (SHIP).
There were two asset purchase agreements. One involved GMG’s equipment used for diagnostic and imaging purposes; Ex. 3; and the other covering the remaining assets of GMG. Ex. 2. Both agreements contained undertakings by the defendant doctors (described as "Equity Physicians") that for two years after their employment with SHMG ended they would "not, directly or indirectly, on a full time or part time basis, practice medicine or surgery of any type in any capacity whatsoever, within Stamford Hospital’s primary, secondary extended service areas ..." These service areas were identified on "Exhibit B" of the doctors’ employment agreements. § § 8.4 of Exhs. 2 and 3. That Exhibit B lists a number of areas identified by zip codes covering a large portion of Fairfield County (not including Bridgeport) and a number of New York State communities generally contiguous to Fairfield County. E.g. Ex. 4.
The defendant doctors also each signed a Physician Employment Agreement. Each such agreement contained a similar provision for non-competition with the employer which at the time was SHIP and has since become SHMG. Exhs 4-7, § 9.2. The Physician Employment Agreements all called for a specific additional payment to the defendant doctors ($25,000 to Alleva, Fennell and Neeson; $7,500 to Kurian) in consideration for accepting the non-compete provision. Exhibits 4-7, First Addendum, ¶ 2(a). In addition, the defendant doctors agreed in their Employment Agreement that any actual or threatened violation of Section 9 of the agreement would warrant SHMG obtaining injunctive relief. Exhs 4-7, § 9.6.
On July 12, 2018 the defendant doctors sent individual letters to SHMG announcing that, pursuant to Section 5.3 of their Physician Employment Agreements, each of them was terminating his or her employment because of purported material breaches by SHMG of their employment agreements, such termination to be effective at the conclusion of the ninety-day notice provision of Section 5.3. Exhs 22-25. The ninety days expires on October 10, 2018. Each of the above letters specifically notes the individual doctor’s belief that the non-competition provisions of their SHMG employment agreements are no longer applicable or enforceable against the doctor. Id. SHMG responded to each doctor discussing their complaints and stating that it intended to enforce the restrictive covenants. In its letter to Dr. Alleva SHMG conceded he had been underpaid by $5,150.38 and enclosed a check in that amount. Ex. 27; see also Exhs 26, 28, 29.
II. HEARING AND OTHER EVIDENCE
The hearing on the application for a temporary injunction took place on October 1, 2018 at the Special Proceedings calendar over the better part of a day. Normally, hearings of that length are scheduled to commence on another day or days later in the week or some other time. Because of exigencies of this case and the proximity of October 10 the court agreed to hear and decide the matter as quickly as possible. The court appreciates the efforts of all counsel and the parties to expedite the proceeding.
Elizabeth Longmore testified at some length for SHMG. Her testimony was detailed and credible during both direct and cross examination, and she was candid in admitting when she did not have sufficient information to answer, or fully answer, a question. Longmore is the chief operating officer of SHMG. Through her, the documentary evidence of the specific contracts and correspondence were introduced and explained. Importantly, during her testimony the doctor defendants stipulated that, if not restrained therefrom, they intend to practice medicine in the Greenwich area after October 10, 2018.
Longmore testified that SHMG had spent about $6.5 million to upgrade the building at 75 Holly Hill Lane, and the refurbished and enlarged medical facility opened in December 2017. It is the goal of SHMG to grow its medical practices and patient base in Greenwich in order to increase diagnosis and treatment referrals to Stamford Hospital. The subject non-compete agreements were integral to the decision to expand the Greenwich facility as SHMG needed to know what doctors would be available and what equipment would be needed, and that the patient population would be secure and not be inconvenienced by the loss of medical personnel.
At the hearing the court agreed to review the defendant doctors’ affidavits submitted in opposition to SHMG’s applications. DEs 109.00-112.00. It was agreed that this review would be focused on the affidavits’ relevance to the issue of the enforceability of the non-compete provisions. In arriving at its decision the court has carefully reviewed the testimonial and documentary evidence, including the affidavits, and considered the arguments of counsel.
III. DISCUSSION
A. Temporary Injunction
A Superior court is authorized to issue a temporary injunction. Chapter 916 of the General Statutes. The "well settled" standard is that the party seeking such relief must show that it (1) has no adequate remedy at law; (2) will suffer irreparable harm without such relief; (3) will likely prevail on the merits of the case, and (4) the balance of equities tips in its favor. Aqleh v. Cadlerock Joint Venture II, L.P., 299 Conn. 84, 97-98 (2010); Griffin Hospital v. Commission on Hospitals and Health Care, 196 Conn. 451, 456-58 (1985). The primary purpose of a temporary injunction is to preserve the status quo and prevent irreparable harm until the merits of the case are determined after a full trial. Olcott v. Pendleton, 128 Conn. 292 (1941).
After reviewing a number of prior cases this court has previously stated that Connecticut law "supports a distinctly moderated level of proof required to establish the elements of irreparable harm and lack of an adequate remedy at law necessary for the issuance of a temporary injunction where the circumstances involve an alleged breach of a noncompetition agreement" and concluded "the realities of attempting to prove irreparable harm ... Where the competition has not yet, or only barely commenced, counsel toward the imposition of a more lenient standard which allows for a certain amount of informed prediction of future results to be weighed by the court as evidence than otherwise might normally be the case." POP Radio, LP v. News America Marketing In-Store, Inc., 49 Conn.Supp. 566, 577 (2005) 2005 WL 5543590.
In this case the court finds the evidence to be very persuasive that the defection of four doctors from SHMG’s Holly Hill Lane building, all with established patients and able to and planning on continuing their practice in Greenwich will irreparably harm SHMG. Absent an injunction, the plaintiff has no immediate or effective remedy for this.
B. Enforceability
Additionally, the court further finds there is a likelihood that the non-compete provisions of their employment agreements and in the asset purchase documents are enforceable. Connecticut law recognizes that reasonable restrictions on competition are enforceable. Robert S. Weiss & Associates, Inc. v. Wiederlight, 208 Conn. 525 (1988); Macdermid, Inc. v. Raymond Selle and Cookson Group, PLC, 535 F.Supp.2d 308, 316 (2008). In Robert S. Weiss the Connecticut Supreme Court listed "[t]he five factors to be considered in evaluation the reasonableness of a restrictive covenant" in an employment agreement as: (1) length of restriction, (2) geographical area covered, (3) fairness of protection provided the employer, (4) the extent of the restriction on the employees’ opportunity to pursue his occupation, and (5) any interference with the public interest. Robert S. Weiss, supra, 208 Conn. 525 n.2. In an earlier case, Scott v. General Iron & Welding Co., Inc., 171 Conn. 132 (1976) the Connecticut Supreme Court clearly foreshadowed the decision and relevant factors set forth by Robert S. Weiss . Scott held that in order to be binding an agreement restricting an employee’s activities after leaving employment must be partial and restricted as to time and place, should "afford only fair protection" to the employer and not affect the public’s interest and not preclude the employee’s right to pursue his occupation. Scott v. General Iron & Welding Co., Inc., supra, 171 Conn. 137. The Robert S. Weiss decision upheld a two-year restriction, and Scott found a state-wide five-year restriction to be reasonable, relying in part on the fact the employee had access to the employer’s customer list.
Assessing the subject restrictive covenants in this case and the limited record, the court finds they meet the reasonableness requirements of Connecticut law. The restrictions last two years and are limited in geographic scope to lower and central Fairfield County. Three of the defendant doctors can practice in Rye Brook and Portchester, New York, communities that are contiguous to Greenwich. The temporal and geographic restrictions reasonably protect SHMG’s interest and investment in its practice at 75 Holly Hill Lane. The court, with some hesitation, also finds that the defendant doctors are not unreasonably constrained in their practice of medicine since they can continue in the New York metropolitan area and most of the State of Connecticut. This is a close question and on a fuller record a more reasonable area might be found to include just Greenwich and Stamford.
There is no evidence that the public interest is adversely affected by the restrictions at issue.
C. Connecticut Statute
On July 1, 2016 General Statutes § 20-14p became effective. The statute deals with the validity and enforceability of employment agreements restricting the right of a physician to practice medicine in any geographic area for any period of time after the employment ends. Specifically, Sections 20-14p(b)(2) and (3) say:
(2) A covenant not to compete that is entered into, amended, extended or renewed on or after July 1, 2016, shall not: (A) Restrict the physician’s competitive activities (i) for a period of more than one year, and (ii) in a geographic region of more than fifteen miles from the primary site where such physician practices; or (B) be enforceable against a physician if (i) such employment contract or agreement was not made in anticipation of, or as part of, a partnership or ownership agreement and such contract or agreement expires and is not renewed, unless, prior to such expiration, the employer makes a bona fide offer to renew the contract on the same or similar terms and conditions, or (ii) the employment or contractual relationship is terminated by the employer, unless such employment or contractual relationship is terminated for cause. (3) Each covenant not to complete entered into, amended or renewed on and after July 1, 2016, shall be separately and individually signed by the physician.
The parties to this case have offered competing, and well argued, positions as to the scope and applicability of this statute. The defendant doctors contend the covenants contained in their employment agreements require a restrictive period of two years rather than the one-year limit contained in the 2016 statute. Further, defendants contend the covenants were not "separately and individually signed by the physician." On the other hand SHMG points out that a Superior Court case has held that Section 20-14p does not apply retroactively, citing Jefferson Radiology, P.C. v. Baldwin, Superior Court, judicial district of Hartford, CV 16-6070917 (June 8, 2017, Dubay, J.) (2017 WL 3000714) and contends that SHMG paid for the existing non-compete agreements in 2012 not-withstanding their renewal in 2018.
SHMG also points out that Section 20-14p(c) allows other provisions of the subject employment agreements that contain a non-compete provisions to remain "in full force and effect." This would include Section 14 of the employment agreement which states that other contractual provisions would "remain valid operative and enforceable to the maximum extent permitted [by law]."
Out of this mélange of facts, cases and laws the court concludes Section 20-14p applies, and that SHMG is entitled to enforce the existing non-compete agreements at issue in an area within a fifteen mile radius of 75 Holly Hill Lane offices for a period of one year. This determination includes a prohibition on the defendant doctors for the same period of time from soliciting patients away from the plaintiff or improperly using the plaintiff’s trade secrets or confidential information.
The employment agreements contain provisions about non-solicitation and prohibiting dissemination of confidential information. There was no evidence presented on these issues, but the court concludes that an enforceable non-compete provision necessarily includes a bar on soliciting patients of SHMG or use of its confidential business information.
D. Bond
Pursuant to General Statutes § 52-472 the court is required to order the posting of a bond by the party obtaining injunctive relief unless the court finds good cause to do away with the requirement. In this case the court concludes it would be inappropriate to require a bond. While it is true that the temporary injunction granted herein could result in monetary damages to the defendants, there are other factors in play. The defendant doctors have commenced their own lawsuit in this judicial district against SHMG for, among other things, breach of contract. Alleva et al. v. Stamford Health Medical Group, FST CV 18 6037925. In that case they have moved for an immediate trial of their claims. The parties and counsel may wish to confer among themselves and the court caseflow office in an effort to expedite a full trial on the merits of this case and the Alleva case.