United States District Court, D. Rhode Island
MEMORANDUM AND ORDER
J. MCCONNELL, JR., United States District Judge.
case involves the propriety and application of a non-compete
agreement. John Lavin worked for CVS Pharmacy, Inc. as a
senior executive for 27 years. He signed a Restrictive
Covenant Agreement ("Agreement") in 2017. Within
two years of signing the Agreement, Mr. Lavin resigned from
CVS and started employment with the PillPack unit of Amazon
sued Mr. Lavin and the Court granted a temporary restraining
order to maintain the status quo. CVS now seeks a preliminary
injunction. ECF No. 27. The parties have fully briefed and
argued this matter. ECF Nos. 27, 33, 36. All parties waived
presentation of testimony but filed substantial and extensive
evidence by affidavits attached to their papers. ECF No. 27-1
through 27-8, 30, 33-1 through 33-3, 38, 39.
the Court finds the Agreement enforceable and applicable to
Mr. Lavin's new employment with PillPack, the Court
GRANTS CVS's Motion for a Preliminary Injunction. ECF No.
Lavin was a Senior Vice President responsible for leading CVS
Caremark's Retail Network. He began work there in the
early 1990s. His team totaled 250 employees.
Lavin negotiated with retail pharmacies on behalf of CVS
Caremark, a Pharmacy Benefits Manager ("PBM"). PBMs
manage prescription benefits for their clients (insurance
companies, employers, unions, governments)
("Payers"). The PBMs negotiate with retail
pharmacies and mail-order distributors to get the best deal
for the Payers and the Payers' subscribers. The parties
describe this three-tiered system (Payers-PBMs-Pharmacies) as
a complex structure applicable to the pharmaceutical
industry. ECF No. 27 at 6. CVS owns both a PBM (CVS Caremark)
and thousands of retail pharmacies throughout the country.
CVS Caremark also has a mail-based pharmacy that competes in
the retail market.
addition to negotiating with retail pharmacies, the Executive
Committee tasked Mr. Lavin with analyzing the terms it had
with mail-in retail pharmacies for his last three years at
CVS Caremark. He took part in "executive-level
strategy" with other CVS executives in both the PBM and
retail business. This mattered to CVS because of Amazon's
entry into the pharmacy business through its acquisition of
PillPack, a mail-in retail pharmacy.
Lavin signed the Agreement with CVS in 2017. ECF No. 27-4 at
10-18. In exchange for signing the Agreement, CVS awarded Mr.
Lavin Restricted Stock Units ("RSUs") that had a
value of $157, 500. Id. at 1-8. The RSU agreement
states that the "award of RSU's ... is expressly
subject to and contingent upon the requirement that [Mr.
Lavin] shall have fully executed and delivered [to CVS] the
Restrictive Covenant Agreement provided by [CVS]."
Id. at 7, § 12. The Agreement, under the
section captioned "Consideration for Agreement"
states that CVS "has awarded [Mr. Lavin] restricted
stock units contingent on the execution of this Agreement and
compliance with its terms." Id. at 10, §
Agreement mandates that during his employment with CVS and
for 18 months thereafter, Mr. Lavin will not "directly
or indirectly" engage in Competition with a Competitor.
• Competition is described as "providing services
to a Competitor of [CVS] . . . that' (i) are the same or
similar in function or purpose to the services [he] provided
to [CVS] at any time during the last two years of [his]
employment by [CVS]; or (ii) will likely result in the
disclosure of Confidential Information to a Competitor or the
use of Confidential Information on behalf of a
Competitor." Id. at 10, § 2(a).
• A Competitor is defined as any entity that
"competes with one or more of the business offerings of
[CVS] . . . including] (i) [PBMs] . . . (ii) retail . .
.." Id. at 10, § 2(b).
year after he signed the Agreement and received the RSUs, Mr.
Lavin began discussions with PillPack about employment. He
interviewed with both PillPack and Amazon executives.
PillPack offered Mr. Lavin a job as "Director [of]
Third-Party Networks & Contracting" reporting
directly to PillPack CEO TJ Parker. ECF No. 27-8 at 37.
what Mr. Lavin would be doing with PillPack seems to be a
moving target. His role and responsibilities at PillPack seem
to ebb and flow with this litigation. While PillPack now asserts
that Mr. Lavin would be negotiating only with PBMs (excluding
CVS Caremark) on behalf of PillPack, the original job
description of the position for which PillPack hired Mr.
Lavin also included negotiating with Payers. ECF No. 27-8 at
Lavin is also expected to contribute to PillPack's
overall growth strategy and help drive its long term
disruptive strategy. PillPack CEO TJ Parker stated that he
expected Mr. Lavin to "contribute significantly to
[PillPack's] procurement efforts . . . and help
[PillPack] develop a long term disruptive strategy."
Id. at 35. Mr. Lavin told one of his job
interviewers from PillPack that he was "excited about
the opportunity for disruption and the strategic components
of the work." Id., at 34.
STANDARD OF REVIEW
obtain a preliminary injunction, the burden is on CVS to
establish that (1) it is likely to succeed on the merits, (2)
it is likely to suffer irreparable harm with no preliminary
relief, (3) the balance of equities tips in its favor, and
(4) an injunction is in the public interest. See Winter v.
Nat. Res. Def. Council Inc., 555 U.S. 7, 20 (2008). The court
should not award the "extraordinary and drastic
remedy" of a preliminary injunction unless CVS meets its
burden of persuasion with "substantial proof." See
Mazurek v. Armstrong, 520 U.S. 968, 972 (1997)
(internal quotation marks omitted); see also Voice of the
Arab World, Inc. v. MDTV Med. News Now, Inc., 645 F.3d
26, 32 (1st Cir. 2011) (describing a preliminary injunction
as an extraordinary remedy).
Court must first determine if Mr. Lavin's new position
with PillPack violates the Agreement-will the new job have
Mr. Lavin directly or indirectly engage in Competition
(described as either (1) providing services that are the same
or similar, or (2) likely to disclose Confidential
Information) with a Competitor of CVS? If it does not, then
the analysis ends, and Mr. Lavin is free to join PillPack in
his new position. If the new position does violate the
Agreement, the Court must then determine whether the
Agreement violates public policy because it is not
"reasonable." And finally, the Court must determine
if all the factors for issuing a preliminary injunction
Does the New Job Violate the Agreement?
Same or Similar Services
argues that the services Mr. Lavin will provide to PillPack
will be the same or similar in function or purpose to the
services he provided to CVS. At CVS, Mr. Lavin's primary
responsibility had been negotiating with pharmacies on behalf
of CVS Caremark. At PillPack, Mr. Lavin will negotiate with
PBMs for PillPack's participation in Retail Networks. At
both jobs he is involved with negotiations between PBMs and
retail pharmacies, just on the opposite side of the table. At
both jobs his primary goal is to achieve the most favorable
terms for his employer in negotiations related to inclusion
in the Retail Network. Mr. Lavin will also negotiate and
build relationships with private Payers and public Payers,
both of whom are current CVS clients.
Lavin is also expected to contribute significantly to
PillPack's overall growth strategy and help drive its
"long term disruptive strategy." ECF No. 27-8 at
35. He will be charged with building a strategy to engage
directly with Payers that are traditional clients of PBMs. He
is also expected to "own" PillPack's drug
procurement strategy and relationships and "contribute
significantly" to PillPack's pharmaceutical
distribution as a service initiative, which ...