MICHAEL H. SIMON, District Judge.
Plaintiff Pacific Kidney & Hypertension, LLC ("Plaintiff" or "Pacific Kidney") seeks a temporary restraining order and preliminary injunction against Defendant Dr. Claire T. Kassakian ("Defendant" or "Dr. Kassakian"). Dkt. 3. On January 19, 2016, the Court held a hearing on Plaintiff's motion for a temporary restraining order. Pacific Kidney appeared through its counsel James M. Barrett of OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C. Dr. Kassakian appeared through her counsel, Joel P. Leonard and John D. Ostrander of ELLIOTT, OSTRANDER & PRESTON, P.C. For the reasons stated below, Plaintiff's motion for a temporary restraining order is granted in part and denied in part.
In deciding whether to grant a motion for a temporary restraining order ("TRO"), courts look to substantially the same factors that apply to a court's decision on whether to issue a preliminary injunction. See Stuhlbarg Int'l Sales Co. v. John D. Brushy & Co., 240 F.3d 832, 839 n.7 (9th Cir. 2001). A preliminary injunction is an "extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief." Winter v. Natural Res. Def. Council, 555 U.S. 7, 22 (2008). A plaintiff seeking a preliminary injunction generally must show that: (1) the plaintiff is likely to succeed on the merits; (2) the plaintiff is likely to suffer irreparable harm in the absence of preliminary relief; (3) the balance of equities tips in favor of the plaintiff; and (4) an injunction is in the public interest. Winter, 555 U.S. at 20 (rejecting the Ninth Circuit's earlier rule that the mere "possibility" of irreparable harm, as opposed to its likelihood, was sufficient, in some circumstances, to justify a preliminary injunction).
The Supreme Court's decision in Winter, however, did not disturb the Ninth Circuit's alternative "serious questions" test. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131-32 (9th Cir. 2011). Under this test, "`serious questions going to the merits' and a hardship balance that tips sharply toward the plaintiff can support issuance of an injunction, assuming the other two elements of the Winter test are also met." Id. at 1132. Thus, a preliminary injunction may be granted "if there is a likelihood of irreparable injury to plaintiff; there are serious questions going to the merits; the balance of hardships tips sharply in favor of the plaintiff; and the injunction is in the public interest." M.R. v. Dreyfus, 697 F.3d 706, 725 (9th Cir. 2012) (citing Cottrell).
Finally, a temporary restraining order is necessarily of a shorter and more limited duration than a preliminary injunction.
Based on the evidence presented by the parties thus far, and subject to revision after the hearing on Plaintiff's motion for preliminary injunction, the Court finds the following facts are more likely true than not:
1. Pacific Kidney is a limited liability company with its principal place of business in Colorado. It provides nephrology services to patients in the Portland, Oregon metropolitan area who need treatment from physicians with expertise in kidney disease. Pacific Kidney offers its services at several office locations as well as at hospitals and dialysis clinics. Dr. Robert Provenzano, M.D., a resident and citizen of Michigan, is the sole member of Pacific Kidney.
2. Dr. Kassakian is a physician who provides nephrology services to patients with kidney disease. Beginning September 1, 2014, Dr. Kassakian was employed by Pacific Kidney in Portland, Oregon. Shortly before she began working for Pacific Kidney in Portland, Dr. Kassakian moved to Oregon from Rhode Island. More than six months before she began working for Pacific Kidney, Pacific Kidney informed Dr. Kassakian in a written employment offer that nonsolicitation and noncompetition agreements would be required as a condition of her employment. Dr. Kassakian signed a Physician Employment Agreement (the "Agreement"), containing nonsolicitation and noncompetition agreements, with Pacific Kidney in February 2014.
3. Paragraph 1 of the Physician Covenants, entitled "Non-Solicitation," as contained in Exhibit B of the Agreement, provides, among other things:
Paragraph 2 of the Physician Covenants, entitled "Non-Competition," provides, among other things:
Paragraph 2 further provides:
Paragraph 3 of the Physician Covenants, entitled "Liquidated Damages," provides:
Paragraph 5 of the Physician Covenants, entitled "Reasonableness," provides:
Paragraph 7 of the Physician Covenants, entitled "Equitable Relief," provides:
Dkt. 5-1, at Exhibit B-1 through B-2.
4. During her employment with Pacific Kidney, Dr. Kassakian held a position as a nephrologist and treated patients with severe, chronic renal problems. Nephrologists are in high demand, both nationally and in the Portland area. Dr. Kassakian received an annual salary of $144,000 based on a four-day work week (0.80 FTE) with additional bonuses and benefits.
5. As required by Or. Rev. Stat. ("ORS") § 653.295, at least two weeks before her first day of work with Pacific Kidney, Dr. Kassakian was informed that a noncompetition agreement was required as a condition of her employment. In addition, Dr. Kassakian was a "professional" employee of Pacific Kidney within the meaning of ORS § 653.020(3). Pacific Kidney has a "protectable interest" because Dr. Kassakian had access to Pacific Kidney's "trade secrets," as defined by ORS § 646.461, at least in the form of a confidential customer list during her employment. Finally, Dr, Kassakian's salary was greater than the median family income for a four-person family, as determined by the United States Census Bureau.
6. In October 2015, Dr. Kassakian notified Pacific Kidney of her intention to terminate her employment with Pacific Kidney effective January 19, 2016. According to Dr. Kassakian, she decided to leave Pacific Kidney "because of the poor quality of care it delivered and the lack of managerial progress to improve it." Dkt. 13, ¶ 11. Dr. Kassakian provided Pacific Kidney with 90 days' advance notice of her intention to take employment with Northwest Renal Clinic, Inc. ("NW Renal"), a direct competitor of Pacific Kidney in the provision of nephrology services. Id. On November 27, 2015, Dr. Kassakian informed Pacific Kidney that she intended to work at NW Renal's eastside clinic, which is located within the Restricted Area.
7. On December 28, 2015, in an attempt to satisfy the liquidated damages provision of the Agreement, Dr. Kassakian tendered a check to Pacific Kidney for $145,299. Pacific Kidney promptly rejected and returned the check.
8. Dr. Kassakian is replacing a departing physician at NW Renal and has 65 new patients—whom she did not previously treat while at Pacific Kidney—scheduled to see her in her first two weeks of employment at NW Renal. According to the Clinic President of NW Renal, Dr. Clayton Smiley, M.D., NW Renal "did not look for Dr. Kassakian to bring along any patients because our practice already has a full schedule/roster of patients." Dkt. 14, ¶ 5. "Moreover, from the physician's perspective, there is not a competitive market for nephrology patients in the Portland vicinity because already there is a vast supply of patients, and too few nephrologists to treat them." Id. Dr. Smiley also explained that "there is currently a wait time of two to three months for scheduling new patients with Northwest Renal Clinic and Dr. Kassakian's presence will help to alleviate that wait time and permit patients to be seen in a more timely manner." Id.
9. Dr. Kassakian has not solicited any of her existing patients at Pacific Kidney to follow her to her new practice at NW Renal. Dkt. 13, ¶ 14.
10. Several of Dr. Kassakian's patients at Pacific Kidney, however, have notified NW Renal that they would like to continue receiving treatment from Dr. Kassakian at NW Renal. One of Dr. Kassakian's former patients at Pacific Kindey is S.R., who is a 78 year old physician. In early December 2015, S.R. received a call from Pacific Kidney, requesting that he reschedule his January 19, 2016 appointment. "The clinic did not disclose that Dr. Kassakian was leaving." Dkt. 16, ¶ 3. After Christmas, S.R. received a letter from Pacific Kidney, again requesting that he reschedule his appointment. The letter stated that Dr. Kassakian was leaving Pacific Kidney but did not disclose where she was going or how she could be reached. Id. ¶ 4; Dkt. 16, Ex. A. After receiving this letter, S.R. "asked the front desk reception at the clinic where she [Dr. Kassakian] was going. They said that they did not know." Id. ¶ 4.
11. Another of Dr. Kassakian's former patients at Pacific Kidney is B.F. She is a 37 year old woman who received a kidney transplant eight months ago. At Pacific Kidney, B.F. was treated by Dr. S.I. and by Dr. Kassakian. B.F. did not believe that she was receiving the attention from Dr. S.I. that B.F. needed and she believed that her health had suffered as a result. She does, however, have confidence in Dr. Kassakian and requested that Dr. Kassakian continue her care. According to B.F., she "was told by [Pacific Kidney] that [Dr. Kassakian] was moving out of the area and that [B.F.] could not have her." Dkt. 18, ¶ 2.
12. Another of Dr. Kassakian's former patients at Pacific Kidney is M.P. She is a 67 year old woman who has been treated by Dr. Kassakian for the past six months. During her last visit, Dr. Kassakian informed M.P. that Dr. Kassakian would be leaving Pacific Kidney. When M.P. asked Dr. Kassakian where the doctor would be going, Dr. Kassakian replied that she was not at liberty to disclose that information. M.P. does "not want to be forced to seek care from a different nephrologist," but simply wants to continue to receive treatment from Dr. Kassakian. Dkt. 19, ¶¶ 1-3.
13. Another of Dr. Kassakian's former patients at Pacific Kidney is A.C. He is a 42 year old man who also received a kidney transplant about eight months ago. A.C. has been treated by Dr. Kassakian for more than a year. A.C. recently received a letter from Pacific Kidney stating that Dr. Kassakian "was moving out of the area." Dkt. 17, ¶ 2. If A.C.'s summary of the contents of this letter is correct, this could be another materially false statement by Pacific Kidney.
14. Ethics Opinion 9.02 of the American Medical Association ("AMA") Code of Medical Ethics provides in relevant part:
AMA Code of Medical Ethics, Opinion 9.02 (emphasis added) (http://www.amaassn.org/ama/pub/physician-resources/medical-ethics/code-medical-ethics/opinion902.page) (last visited on Jan. 18, 2016); see also Dkt. 21-9.
15. Ethics Opinion 9.06 of the AMA Code of Medical Ethics provides in relevant part:
AMA Code of Medical Ethics, Opinion 9.06 (emphasis added) (http://www.amaassn.org/ama/pub/physician-resources/medical-ethics/code-medical-ethics/opinion906.page) (last visited on Jan. 18, 2016).
1. Pacific Kidney has shown a likelihood of success on the merits of its breach of contract claim; at the minimum there are "serious questions" going to the merits of Pacific Kidney's breach of contract claim.
2. "Irreparable harm" encompasses harm to a company's goodwill, reputation, loss of client relationships, and financial damage. See Stuhlbarg Int'l Sales Co., 240 F.3d at 841. Pacific Kidney will likely suffer some irreparable harm in the form of loss of client relationships and accompanying financial damage in the absence of at least some temporary injunctive relief that prohibits Defendant from soliciting Pacific Kidney's patients. Pacific Kidney, however, has not presented evidence that it will likely suffer harm to its goodwill or reputation in the absence of temporary injunctive relief.
3. "To qualify for injunctive relief, the plaintiffs must establish that `the balance of equities tips in [their] favor.'" Stormans, Inc. v. Selecky, 586 F.3d 1109, 1138 (9th Cir. 2009) (quoting Winter, 555 U.S. at 20 (alteration in original)). "In assessing whether the plaintiffs have met this burden, the district court has a `duty . . . to balance the interests of all parties and weigh the damage to each.'" Stormans, 586 F.3d at 1138 (citation omitted). Here, the non-speculative damage to Pacific Kidney is modest, at most. Similarly, the non-speculative damage to Dr. Kassakian is modest because she can continue her practice seeing new patients provided she does so outside of the 25-mile radius Restricted Area.
4. Under the facts presented in this case, the most significant factor in deciding whether to grant a temporary restraining order (and, if so, the scope of any such order) appears to be the fourth factor: the public interest. There is, of course, a public interest in upholding the law and having parties abide by their legal duties, but that is not the only consideration in this factor. See Pashby v. Delia, 709 F.3d 307, 330 (4th Cir. 2013) ("[T]he district court could find that the likelihood of success on the merits satisfied the public interest prong only if other considerations did not meaningfully weigh on that factor.").
In addition, the Court recognizes that the parties "agreed" in paragraph 2 ("Non-Competition") of the Physician Covenants portion (Exhibit B) of their Agreement that the non-competition "provision does not unreasonably restrict the general public from accessing Physician's [Dr. Kassakian's] services and the limitations imposed by this provision are both reasonable and sufficiently limited in scope that they will not interfere with the public's interests." The parties' "agreement," however does not displace Court's obligation to make an independent judgment regarding whether the requested injunctive relief is in the public interest. See, e.g., Baker's Aid, a Div. of M. Raubvogel Co., Inc. v. Hussmann Foodservice Co., 830 F.2d 13, 16 (2d Cir. 1987) ("contractual language declaring money damages inadequate in the event of a breach does not control the question whether preliminary injunctive relief is appropriate"); Firemen's Ins. Co. of Newark, N.J. v. Keating, 753 F.Supp. 1146, 1154 (S.D.N.Y. 1990) ("The [contractual provision], likewise, does not, by its mere presence in the [contracts], satisfy the requirement that plaintiff make a showing of likely irreparable harm before the Court will grant its motion for a preliminary injunction. To the contrary, the Court must fully apply the same test for irreparable harm that it would were the [provision] not to exist.") (citation omitted).
Moreover, the Supreme Court has directed:
Winter, 555 U.S. at 24 (quoting Weinberger v. Romero-Barcelo, 456 U.S. 305, 312 (1982)). As the Ninth Circuit has clarified:
Stormans, 586 F.3d at 1138-39 (ellipses in original).
5. Former patients of Dr. Kassakian who want to continue to be treated by her will affirmatively seek her out and will locate her if they are provided with timely and accurate information. If a former patient of Dr. Kassakian desires to continue to be treated by her and that patient is denied that opportunity to be seen by Dr. Kassakian as a result of Pacific Kidney's invocation of the "non-competition" clause in the Agreement, that patient's sense of well-being and receipt of adequate care likely will be significantly diminished. In addition, due to the likely increased waiting time to see another physician qualified in this area, for example, the actual well-being of that patient also may be diminished. Enforcement of the non-competition agreement under these circumstances would not be in the public interest.
6. In addition, as Dr. Smiley explained, Dr. Kassakian was not hired to bring any patients from Pacific Kidney, but to serve the patients at NW Renal who were previously being treated by a physician who left the state. Dr. Smiley also noted that "from the physician's perspective, there is not a competitive market for nephrology patients in the Portland vicinity because already there is a vast supply of patients, and too few nephrologists to treat them." He added that "there is currently a waiting time of two to three months for scheduling new patients with Northwest Renal Clinic and Dr. Kassakian's presence will help to alleviate that wait time and permit patients to be seen in a more timely manner." Enforcement of the non-competition agreement under these circumstances would not be in the public interest.
7. The Court observes that Pacific Kidney relies on two Oregon appellate cases, McCallum v. Asbury, 238 Or. 257 (1964), and Ladd v. Hikes, 55 Or.App. 801 (1982), for the proposition that the enforcement of a physician's non-competition agreement does not violate Oregon public policy. The Court has closely reviewed those two cases. In McCallum, three individuals practiced medicine in a partnership. The plaintiff sued to dissolve the partnership and the remaining partners counterclaimed for an injunction to enforce against the plaintiff a restrictive covenant that would prohibit the plaintiff from practicing medicine for ten years in Corvallis, Oregon, or within 30 miles of that city. The trial court denied all relief to all parties, and the Oregon Supreme Court reversed on both points. Although the plaintiff argued that he will suffer severe hardship and "that the community will suffer if the injunction is allowed," 238 Or. at 262, the Oregon Supreme Court found, as a factual matter, to the contrary:
McCallum, 238 Or. at 264-65. Thus, McCallum may support the proposition that, in the abstract, a physician's non-competition agreement is not necessarily void as against public policy. That conclusion, however, does little to inform the analysis when a court facing a request for injunctive relief is presented with persuasive evidence that the requested relief is not in the public interest.
8. The Oregon Court of Appeals in Ladd also considered a claim by a medical partnership operating a clinic in Corvallis, Oregon, to enjoin the defendant from the practice of medicine in the area of the City of Corvallis based on a non-competition clause in the parties' agreement. The trial court denied the injunction, the plaintiffs appealed, and the Oregon Court of Appeals reversed based on McCallum. The Oregon Court of Appeals noted that after McCallum was decided by the Oregon Supreme Court in 1964, the Oregon Medical Association "adopted a resolution to the effect that the use of such restrictive covenants are `not generally conceived in the public interest.'" Ladd, 55 Or. App. at 805. The Oregon Court of Appeals, however, considered itself bound by the earlier decision of the Oregon Supreme Court for the general proposition that non-competition clauses among physicians are not per se void as against public policy and the appellate court found no specific factual findings from the trial court sufficient to support denying injunctive relief in this case. The Oregon Court of Appeals majority opinion held:
Ladd, 55 Or. App. at 806-7 (footnote omitted).
One of the three judges in Ladd, however, dissented. Although that judge based his dissent on the conclusion that the plaintiff has not shown that injunctive relief is needed, that dissenting judge also stated:
Ladd, 55 Or. App. at 807 (Buttler, P.J., dissenting).
9. The AMA Ethics Opinions were not in place when the Oregon Supreme Court decided McCallum.
10. The grounds for the Court's ruling here is that, based on the specific evidence presented to the Court thus far and the Court's specific factual findings described above, a temporary restraining order enjoining Defendant from soliciting her former patients is appropriate but a broader order enjoining Defendant from continuing to serve critically ill patients suffering from kidney disease needing a local physician with nephrology expertise, in the circumstances of the current situation in the local area, is not in the public interest.
11. Finally, the Court notes that other district courts have denied injunctive relief upon finding that an injunction would negatively affect the well-being and even convenience of patients and consumers. See, e.g., Johnson & Johnson Vision Care, Inc. v. CIBA Vision Corp., 712 F.Supp.2d 1285, 1292 (M.D. Fla. 2010) (denying a permanent injunction based on evidence that "millions of innocent contact lens wearers will suffer real adverse consequences if sale of [the defendant's contact lens brand] is enjoined" and that "[t]here will also be significant disruption, confusion and cost (estimated to be in the hundreds of millions of dollars) caused by [the defendant's] patients being abruptly told that the contact lens for which they have been fitted and with which they are satisfied, is no longer available"); Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc., 2009 WL 920300, at *8 (D. Ariz. Mar. 31, 2009), aff'd, 670 F.3d 1171 (Fed. Cir. 2012), opinion vacated in part on other grounds on reh'g en banc, 476 F. App'x 747 (Fed. Cir. 2012) (holding that permanently enjoining the sale of the defendant's medical equipment would harm the public interest after "focus[ing] on the practical consequences—for real patients and surgeons—of granting Plaintiffs' requested remedy"); z4 Techs., Inc. v. Microsoft Corp., 434 F.Supp.2d 437, 443-44 (E.D. Tex. 2006) (declining to enjoin Microsoft's product sales or order Microsoft's servers deactivated based on a finding that "it is likely that any minor disruption to the distribution of the products in question . . . would have an effect on the public due to the public's undisputed and enormous reliance on these products" and that "unsuspecting public consumers would undoubtably suffer some negative consequences").
1. Until this Court orders otherwise and except as otherwise expressly permitted by this Temporary Restraining Order, for the next 28 days,
2. Notwithstanding paragraph 1, Dr. Kassakian may see, examine, and treat at NW Renal any of her former patients whom she previously saw, examined, or treated at Pacific Kidney, provided that she did not directly or indirectly solicit those patients to follow her to NW Renal. The category of former patients whom Dr. Kassakian may continue to see, examine, or treat includes, but is not limited to, the patients identified in this Opinion and Order as S.R., B.F., M.P., and A.C.
3. Dr. Kassakian shall not use, disclose, or rely on confidential or trade secret information belonging to Pacific Kidney for the benefit of herself or any other entity.
4. This Order does not prohibit Dr. Kassakian from continuing her teaching duties at Providence Portland's Internal Medicine Residency Program or seeing patients directly connected with those duties.
5. The parties may engage in expedited discovery, within the scope of Rule 26 of the Federal Rules of Civil Procedure, in a timeframe that allows for the exchange of documents, responses to discovery requests, and the taking of depositions at least three (3) days before the preliminary injunction hearing scheduled below.
6. Pacific Kidney shall post a surety bond of $2,500 not later than January 26, 2016.
7. Dr. Kassakian shall appear on February 16, 2016, in Courtroom 13B of the United States District Courthouse, 1000 S.W. Third Avenue, Portland, Oregon, at 2:00 p.m. to show cause, if any, why a preliminary injunction should not issue continuing the foregoing injunctive relief or other equitable relief as ordered by the Court.
Plaintiff's Motion for Temporary Restraining Order and Preliminary Injunction (Dkt. 3) is GRANTED IN PART AND DENIED IN PART as set forth in this Opinion and Order.
Other courts also have allowed both injunctive relief and liquidated damages when the liquidated damages would inadequately compensate a plaintiff and the parties did not intend to provide a true alternative to performance. Courts usually emphasize one or the other of these requirements rather than both. See, e.g., Vacold LLC v. Cerami, 545 F.3d 114, 130 (2d Cir. 2008) ("Although a liquidated damages provision precludes a party from recovering lost profits and other measures of damages, it does not prevent a party from seeking specific performance, absent an express provision to this effect." (citations omitted) (emphasis in original)); Washel v. Bryant, 770 N.E.2d 902, 906 (Ind. Ct. App. 2002) ("The right to injunctive relief arises in an employment context, as in this case, when the remedy at law is inadequate. The liquidated damages clause in the parties' agreement does not obviate [the plaintiff's] right to injunctive relief."); U-Haul Co. of N. C. v. Jones, 269 N.C. 284, 287 (1967) ("The mere insertion in the contract of a clause describing the sum to be recovered for a breach as liquidated damages, but which were not intended to be payable in return for the privilege of doing the acts forbidden by the contract, will not exclude the equitable remedy, and is regarded as put there for the purpose of settling the damages, if there should be a suit and recovery for a breach." (quoting Tobacco Growers' Co-op. Ass'n v. Jones, 185 N.C. 265, 284 (1923) (quotation marks omitted)).
