Marinelli v. Medco Health Solutions, Inc.

Filing 66

MEMORANDUM OF DECISION. For the reasons stated herein, Medco's Motion for Preliminary Injunction 16 is GRANTED IN PART and DENIED IN PART. The parties' Rule 26(f) Report shall be filed within fourteen days of this Memorandum of Decision. Signed by Judge Michael P. Shea on 6/13/2013. (Lake, G.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
JOSEPH MARINELLI,
Plaintiff,

No. 3:13cv199 (MPS)

v.
MEDCO HEALTH SOLUTIONS, INC. d/b/a
EXPRESS SCRIPTS, INC.,
Defendant.

MEMORANDUM OF DECISION
This dispute calls on the Court to determine whether a non-compete clause is enforceable
under New Jersey law. In January 2013, Plaintiff Joseph Marinelli, a longtime employee of
Defendant Medco Health Services (“Medco”),1 resigned his position with Medco and began
working at Coventry Health Care (“Coventry”) as its Vice President of Medicare Part D
Operations. After Medco indicated that it considered Mr. Marinelli’s joining Coventry to be a
breach of his contract with Medco, Mr. Marinelli initiated this suit for declaratory relief in
Connecticut Superior Court against Medco on February 6, 2013, seeking a declaration that the
non-compete clause in his contract with Medco was not enforceable against him with respect to
his new position at Coventry. On February 13, 2013, Medco filed a timely Notice of Removal
[Dkt. # 1] and a Counterclaim [Dkt. # 6] against Mr. Marinelli for allegedly breaching the noncompete clause in his employment contract. Shortly thereafter, Medco filed a Motion for
Temporary Restraining Order and Preliminary Injunction [Dkt. # 16].2 After denying Medco’s

1

The Court uses “Medco” as a shorthand to refer collectively to Counterclaim Plaintiffs
Medco Health Solutions, Inc., Express Scripts Holding Company, Medco Health Services, Inc.,
and Express Scripts Inc. Express Scripts acquired Medco on April 2, 2012. (Hr’g Tr.
[Dkt. # 65] at 58.)
2
On February 28, 2013, the Court held a telephonic status conference and, in light of the
representations by Mr. Marinelli’s counsel that Mr. Marinelli would agree to abide by a

request for a temporary restraining order, the Court held a hearing on the motion for a
preliminary injunction on April 16, 2013.
Having carefully considered the exhibits and testimony offered at the preliminaryinjunction hearing, the Court concludes that, with respect to the non-compete clause, Medco has
not met its burden to make a clear or substantial showing that it is likely to succeed on the merits.
Under New Jersey law, covenants not to compete are enforceable only to the degree that they are
reasonably tailored to protect the legitimate interests of an employer. As discussed below, the
Court finds that (1) Mr. Marinelli was merely exposed to, rather than intimately familiar with,
certain confidential and protectable information; (2) Mr. Marinelli’s new job responsibilities at
Coventry entail little risk of disclosure, a risk that is further reduced by the existing injunction;
(3) in seeking to enforce the non-compete clause, Medco was motivated by its desire to keep a
highly competent employee rather than by a legitimate concern about protecting confidential
information; and (4) enforcing the non-compete agreement here would impose undue hardship
on Mr. Marinelli. In light of these findings, the Court concludes that Medco has failed to
establish a likelihood of demonstrating that the non-compete clause at issue is reasonable as
applied to Mr. Marinelli’s job at Coventry. Although the Court denies Medco’s request for a
preliminary injunction as to the covenant not to compete, the Court will maintain the stipulated
temporary injunction currently in place.

This injunction—which bars Mr. Marinelli from

disclosing confidential information—is sufficient to protect Medco’s legitimate interests in

stipulated temporary restraining order proscribing his use of enumerated confidential
information, the Court denied Medco’s motion for a temporary restraining order. (See Order
[Dkt. # 35]; Minute Entry [Dkt. # 34].) On March 6, 2013, the parties proposed—and on March
7, 2013, the Court so ordered—a stipulated temporary injunction barring Mr. Marinelli from
using or disclosing certain confidential information specified therein. (See Order [Dkt. # 38].)
2

guarding its proprietary information. As such, Medco’s request for a preliminary injunction is
granted in part and denied in part.
I.

Findings of Fact
The following findings of fact are based on the exhibits and testimony presented during

the April 16, 2013 hearing on Medco’s motion for a preliminary injunction. Four witnesses
testified at the hearing: Brenda Jackson, who replaced Mr. Marinelli as Senior Director of
Enrollment Operations at Medco; Britton Pim, the General Manager of Medco’s Government
Programs Division; Nancy Cocozza, Senior Vice-President of Medicare at Coventry; and Mr.
Marinelli.
A.

Medicare Part D

Medicare Part D, a federal drug benefit created in 2003, provides Medicare beneficiaries
with insurance coverage for prescription drugs.

Under Part D, beneficiaries can obtain

prescription drug coverage individually or through their employers.3 Some Medicare Part D
prescription drug plans (“PDPs,” for short) are marketed and sold directly to individual
consumers on a public exchange. Employer Group Waiver Plans (known as “EGWPs”) are
marketed and sold to employers for the exclusive benefit of their employees or retirees. Both
Medco and Coventry offer EGWPs and PDPs, although Medco largely offers the former, and
Coventry almost exclusively the latter.4

3

As Mr. Pim explained: “[T]here’s two primary segments for a Part D plan. An
individual market, if you have parents that are eligible for Medicare, there’s an annual process in
the fall where you enroll in a plan. There’s another segment . . . where an employer, UAW Trust
or some other large retiree system, could sponsor a Part D plan just for those retirees that
wouldn’t be available to anybody else . . . .” (Hr’g Tr. at 59.)
4
Medco provides prescription drug coverage to approximately 2.2 million individuals
through its EGWPs and approximately 500,000 people through individual PDPs. (Id. at 60.)
Individual PDPs constitute Coventry’s core business, while EGWPs constitute less than 1% of its
plans’ total membership. (Id. at 131.) Mr. Marinelli has argued that the competitive overlap
3

The Centers for Medicare and Medicaid Services (“CMS”), a branch of the U.S.
Department of Health and Human Services, administers the Medicare Part D prescription drug
program. CMS does not implement the various plans; rather, private companies design, sponsor,
and implement PDPs that must comply with CMS’s publically available regulations and
guidance. The applicable regulations evolve rapidly, as CMS changes its guidance frequently,
with updates issuing “several times a day.” (Hr’g Tr. at 50.) Furthermore, the extent and nature
of CMS’s regulations differ for individual PDPs and EGWPs. (See Hr’g Tr. at 132-33.)
For healthcare companies like Medco and Coventry, compliance with CMS’s regulations
is of paramount importance. For example, for individual PDPs, CMS assigns each plan an
overall quality rating—from one to five stars—based on its assessment of various measures of
plan performance, including member experience, pricing, patient safety, customer service, and
member complaints. High-rated plans receive bonus payments from the government, while
low-rated plans are subject to sanctions, including being barred by CMS from enrolling new
beneficiaries. (Hr’g Tr. at 62, 79.) In addition, a plan’s star rating is made available to
beneficiaries, who may take account of the rating in making their decision to enroll in a
particular PDP.
To sell individual PDPs, Medco and Coventry are required to engage in a bidding
process. Each company submits a bid for contracts with CMS on an annual basis. If the

between the two firms is thus quite limited. Medco countered by introducing evidence that
Coventry has agreed to be acquired by Aetna and that Aetna views EGWPs as a key growth area.
(Id. at 61, 76-77.) The Aetna evidence, however, lacks necessary specifics. First, although the
merger is expected to become final within the year, as of the April 16 hearing, it was “in the
hands of regulators.” (Hr’g Tr. at 146.) It is therefore uncertain whether the merger will be
effected before Mr. Marinelli’s non-compete obligations expire, i.e., on January 18, 2014.
Second, Medco failed to introduce any details of Aetna’s EGWP business. As such, the Aetna
merger, though not irrelevant, does not warrant much weight in the Court’s decisionmaking.
4

company’s bid is approved, it enters into a contract with CMS that permits the company to
market and sell individual PDPs.
B.

Medco and Coventry

In addition to sponsoring both individual PDPs and EGWPs, a major component of
Medco’s business is the provision of pharmacy benefit management (“PBM”) services to
employers, health plans, labor unions, government agencies, and individuals. Medco gives
operational support to organizations that provide prescription drug coverage—including other
plan sponsors—and offers services that include network pharmacy claims processing, mail
pharmacy services, specialty pharmacy services, specialty benefit management, benefit design
consultation, drug-utilization review, formulary management (e.g., figuring out which drugs to
offer), and retail pharmacy network development.
One of Medco’s top PBM clients is Coventry. Even though the companies compete in
the individual-PDP market, Medco provides pharmacy benefit management services to Coventry
for Coventry’s Medicare Part D prescription drug plans.5
Medco regularly shared—and continues to share—with Coventry and its other PBM
clients various best practices regarding compliance.

For example, Medco conducts “Stars

summits” to share information about improving operations to help its clients better their CMS
Star Ratings. (Hr’g Tr. at 136.)

Medco also specifically shared with its PBM clients its

processes, procedures, and methods for complying with CMS reporting requirements,
maximizing claims processing, monitoring fraud and waste, and obtaining a high score under
CMS’s Star Rating System. When Mr. Marinelli was still working for Medco, management

5

In fact, as it happens, one of Mr. Marinelli’s responsibilities in his new job with
Coventry is to ensure that both Medco and Coventry are performing their contractual obligations
under the companies’ PBM contract.
5

instructed him to share its best practices about how to perform enrollment premium billing with
Coventry. (Hr’g Tr. at 174.) No one from Medco’s leadership team instructed Mr. Marinelli not
to share details about Medco’s operational processes or any other information during these
meetings. (Hr’g Tr. at 223.)
C.

Mr. Marinelli
1.

The Employment Contract and Non-Compete Clause

When Mr. Marinelli began his employment as a business analyst with a predecessor of
Medco in 1998, he signed the contract that is the subject of this suit—the “Key Employee
Agreement.” (Ex. 508.) This agreement includes a non-compete clause stating as follows:
[F]or a period of twelve (12) months following the termination of my
employment, I will not (as an individual, principal, agent, employee, consultant or
otherwise), directly or indirectly . . . engage in activities competitive with, nor
render services to any firm or business engaged or about to become engaged in
the Business of the Employer. The Business of the Employer includes . . . (ii) the
design, development or marketing of or consulting as to, prescription drug benefit
plans . . . .
(Id.)
The Key Employment Agreement also includes a nondisclosure covenant, which
provides in relevant part:
I agree that, except as required by my employment with the Employer, I will not
at any time, directly or indirectly, use, publish, communicate, describe,
disseminate, or otherwise disclose Confidential Information to any person or
entity without the express prior written consent of the Employer. The term
Confidential Information shall include, but shall not be limited to: (a) customer
lists, lists of potential customers and details of agreements with customers; (b)
acquisition, expansion, marketing, financial and other business information and
plans of the Employer; (c) research and development . . . . Confidential
Information shall not include such information that is generally available to the
public (other than as a result of a disclosure by me or others in violation of law or
agreement) or that is disclosed to me by a third party under no obligation to keep
such information confidential.

6

(Id.) In addition, Mr. Marinelli signed an agreement entitled “Confidentiality of Company
Records & Documents” that imposed further confidentiality obligations. (See Ex. 507.)
None of these agreements includes any “safety net” or other feature protecting the
employee from the prospect of unemployment in the event he or she is unable to find work
without violating the literal terms of the agreement. Cf. Campbell Soup Co. v. Desatnick, 58 F.
Supp. 2d 477, 482 (D.N.J. 1999) (observing that under the non-compete clause at issue, the
plaintiff-employer agreed to pay all of the defendant-employee’s base salary lasting for the
duration of the non-compete provision or until the defendant-employee found a suitable
position).
2.

Job Duties with Medco

After joining Medco as a business analyst, Mr. Marinelli received multiple promotions
within the company. After Medicare Part D was enacted, Marinelli became responsible for
overseeing information technology projects and implementing processes and procedures for
complying with the Medicare Part D regulations. In 2009, Mr. Marinelli became Senior Director
for Enrollment Operations at Medco.
As Senior Director of Enrollment Operations—a position currently held by Brenda
Jackson, who testified at the hearing—most of Mr. Marinelli’s job was dedicated to enrollment,
premium billing, and related customer service activities. (Hr’g Tr. at 169; see also id. at 11-12,
153-54, 200-02.) These responsibilities extended to managing the operations for both EGWPs
and individual PDPs. (Id.) To perform his job, Mr. Marinelli needed to know the number of
enrollees in Medco’s plans—and the pipeline of expected future enrollment—because the
number of enrollees and prospective enrollees affected operational staffing.

7

Mr. Marinelli managed Medco’s relationship with two outside vendors to which Medco
outsourced its Medicare Part D operations and compliance activities: TMG Health and Global
Pharmaceutical Solutions.6 For example, Mr. Marinelli managed a team of approximately 150
TMG Health employees who performed back-office operations to support enrollees, including
answering membership questions and complaints from a call center, processing enrollment
applications, and sending applications to the government.
Finally, Mr. Marinelli was responsible for a process called reconciliation and for ensuring
that Medco was compliant with the applicable Medicare Part D regulations. According to the
evidence presented at the hearing, reconciliation entails synchronizing key data with the
government to ensure that the plan sponsor—here, Medco—obtains proper reimbursement.7 Mr.
Marinelli was also responsible for regulatory compliance. As Ms. Jackson explained, “[a]ny
time new guidance comes out relative to CMS, changes from a Medicare perspective either for
enrollment, grievance, complaint, tracking, things of that nature, it’s our responsibility to ensure
that we review that guidance, that we’re interpreting it appropriately.” (Hr’g Tr. at 12.) Mr.
Marinelli analyzed and interpreted CMS regulations and guidance, provided operational updates
to CMS’s regional office, and oversaw CMS audits.
3.

Exposure to Information at Medco

Plaintiff has not retained possession or control of any of Medco’s confidential
documents. (Hr’g Tr. at 185.) As such, the only confidential information at risk of disclosure or
use is information that Mr. Marinelli remembers. As part of his job, Mr. Marinelli was exposed
6

Unlike Medco, Coventry does not outsource its PDP operations.
Mr. Marinelli described reconciliation in the following way: “It’s both money and
membership. There’s lots of details that [PDP sponsors] exchange with the government. The
government will say [a beneficiary] is at a certain income level and should be offered certain
subsidies. So there are a number, I’ll call them data points, that we’ll have to synchronize.
Money is one of them. Then there’s other benefit information.” (Hr’g Tr. at 153.)
7

8

to certain categories of corporate information that Medco seeks to protect as confidential: (1)
client information, (2) Medco’s business strategy, and (3) certain business processes for
complying with CMS regulations.8 Though exposed to confidential information, Mr. Marinelli
did not, by virtue of his role as Medco’s Senior Director of Enrollment Operations, create such
information or work with such information on a daily basis. The Court’s findings as to the
details of Mr. Marinelli’s exposure to these three categories of confidential information are set
forth below.
First, Mr. Marinelli had only limited exposure to confidential information relating to
existing or prospective customers.

Medco’s customers generally communicated with their

account managers at Medco, and then with client solutions managers. Only if customer issues
were not resolved by those two layers of contact would Mr. Marinelli have direct client contact.
On occasion, Mr. Marinelli also attended meetings with prospective EGWP clients to respond to
operational questions once a sale was near final, as he did before Medco finalized an EGWP
contract with the UAW Trust.9

Finally, by virtue of his operational responsibilities, Mr.

8

Medco also suggests that Mr. Marinelli has confidential information regarding vendor
management, based on his role overseeing the third-party vendors TMG Health and Global
Pharmaceutical Solutions. As Coventry, unlike Medco, does not outsource its compliance
operations, there is no reason to believe that Mr. Marinelli is likely to disclose this information to
his new employer, and the Court does not make detailed findings about the scope of Mr.
Marinelli’s exposure to putatively confidential information about third-party vendors.
9
Medco’s attempts to use this particular transaction with the UAW Trust to demonstrate
that Mr. Marinelli was a key salesman are unconvincing. According to Ms. Jackson’s testimony,
Steve Wogen, Mr. Marinelli’s boss, made the actual sale, and Mr. Marinelli “became involved
later on in finalizing things, responding to questions, getting things firmed up.” (Hr’g Tr. at 54.)
This version makes sense: for a large sale, a prospective client may want to do its due diligence
to make sure that Medco has the operative capacity to fulfill its obligations. The fact that Mr.
Marinelli, as a go-to operations employee, attended a meeting to allay the concerns of a
prospective EGWP client does not, by itself, transform Mr. Marinelli into a person holding the
type of intimate knowledge of a prized customer relationship that could pose a threat to Medco if
it fell into the hands of a competitor. It is also worth noting, again, that EGWPs such as the
UAW Trust represent less than 1% of Coventry’s business.
9

Marinelli knew the names of some of Medco’s prospective EGWP clients. (Hr’g Tr. at 201-02.)
If Medco was about to sponsor a large EGWP, then Mr. Marinelli had to make sure that Medco
was able to scale up its operational capacity to service the new batch of beneficiaries—e.g., by
hiring additional call staff to handle the new enrollees’ questions about their coverage. Mr.
Marinelli thus had access to the pipeline of Medco’s prospective EGWP clients, including its top
ten targets.

His job was not, however, focused on marketing or selling to customers or

developing strategies to win customers away from competitors.
Second, with respect to business strategy, Mr. Marinelli had some—albeit limited—
access to strategic planning information, including Medco’s bid strategy regarding the individual
PDPs that Medco would propose to sponsor in CMS’s annual bidding processes. Although Mr.
Marinelli was exposed to various planning documents, he did not create those documents or play
an integral role in the company’s strategic planning and does not maintain continuing familiarity
with Medco’s strategic direction.10 The Court found Mr. Marinelli to be credible when he
testified that, “What I did was I focused on my role. And so I didn’t focus ever on the bid,
product development, product management. So I don’t come with any knowledge of Medco[’s]
. . . bid [or] their product development.” (Hr’g Tr. at 170.)11 Because Mr. Marinelli did not
create Medco’s strategic planning information and because his job at Medco did not entail

10

Medco argues that Mr. Marinelli was a member of the so-called “PDP Leadership
Team,” and was therefore required to participate in weekly meetings at which confidential
business information was discussed. The Court, however, credits Mr. Marinelli’s testimony that
these meetings were essentially regular staff meetings at which employees shared updates on
projects and current events. (Hr’g Tr. at 178.)
11
Medco relies heavily on the fact that strategic planning information was e-mailed to
Mr. Marinelli. (See, e.g., Exs. 501, 502; Hr’g Tr. at 23-24.) But Mr. Marinelli usually received
in excess of 200 e-mails per day. Under these circumstances, receipt of an e-mail containing or
attaching confidential information cannot, by itself, be the basis for a finding of a significant risk
that the recipient viewed that information, remembers it, and will disclose it to his new employer.
10

working with such information on a day-to-day basis, the Court finds credible his testimony that
he does not now maintain a continuing familiarity with Medco’s strategic plans.
Third, Medco has failed to adduce evidence that Mr. Marinelli walked away from Medco
with specific, protectable business information derived from his day-to-day activities in
managing various compliance-related processes. A favorite refrain of Medco’s witnesses was
that compliance procedures were ingredients in the “secret sauce” that makes Medco successful.
(Hr’g Tr. at 40, 69.) Repeating a catch phrase, however, is not a substitute for making an
evidentiary showing that the processes known to Mr. Marinelli are, in fact, protectable. Medco
failed to make this showing. The only specific example provided was Mr. Pim’s testimony that
Medco has developed, in the context of EGWPs, “very specific processes in the way [it]
manage[s] the enrollment and eligibility process” that minimize the likelihood that a beneficiary
will be subject to a late enrollment penalty. (Hr’g Tr. at 72.) As previously discussed, however,
Medco did not treat its Medicare Part D compliance processes and procedures as confidential;
rather, Medco regularly shared with its PBM clients including Coventry its processes and
procedures relating to compliance. (See, e.g., Hr’g Tr. at 174, 223.) To the extent that Medco’s
business processes are based on proprietary algorithms concerning staffing and cost
containment—rather than generalized concepts that Medco has not demonstrated are even
remotely protectable—there is no evidence that Mr. Marinelli knows the algorithms. (See Hr’g
Tr. at 108.)
4.

Job Duties with Coventry

In January 2013, Mr. Marinelli joined Coventry as its Vice President of Medicare Part D
Operations. In his new role, Mr. Marinelli is in charge of complying with Medicare Part D
reporting requirements, preparing for CMS’s annual data validation audit, stewarding Coventry’s

11

annual benefit process, managing the data involved in the PDP bidding process, and ensuring
that Coventry and Medco are both performing their obligations under their PBM contract. (Hr’g
Tr. 137, 167-68.)
What Mr. Marinelli does not do at Coventry is as or more important than what he does
do. First, although Mr. Marinelli manages some of Coventry’s PDP bidding data, his role with
the PDP bidding process has nothing to do with setting the terms of Coventry’s actual bid. (See
Hr’g Tr. at 168 (“I’m not in charge of anything related to the actual bid, the pricing, the
medications known as the formulary, none of those things. But I’m in charge of all of the data as
it is keyed into the government system and pulled back out.”).) Second, Mr. Marinelli does not
manage any third-party vendors, because, as noted, Coventry does not outsource its PDP
operations. (Hr’g Tr. at 137, 169.) Third, Mr. Marinelli is not responsible for assisting in the
marketing or sale of Coventry’s PDPs and does not solicit business from any customers. (Hr’g
Tr. at 168.) Fourth, information about Medco’s pipeline of EGWP customers is largely, if not
completely, immaterial, to Coventry, as it primarily sponsors individual PDPs rather than
EGWPs.12 Fifth, the information in Medco’s three-year PDP business strategy plan contained no
information that Mr. Marinelli needs to perform his job duties at Coventry. Sixth, Coventry uses
entirely different software for processing applications, enrolling new members, billing, and the
like. In sum, notwithstanding a similar sounding job title, Mr. Marinelli’s job at Coventry is
quite different from his job at Medco.

12

See note 4, supra (noting that the evidence in the record regarding the Aetna-Coventry
merger is not sufficiently detailed and specific to affect the Court’s analysis, even though Aetna
may have a more active EGWP business than Coventry).
12

5.

The Events Leading to This Lawsuit

After Express Scripts acquired Medco in April 2012, there were significant layoffs in
Medco’s New Jersey offices, where Mr. Marinelli worked. Specifically, Medco laid off 30-50%
of its employees in New Jersey. (Hr’g Tr. at 164.) Mr. Marinelli reasonably feared for his job
and worried about salary reductions. (Id.) Moreover, management had guaranteed significant
severance benefits only until April 2013. (Id.) As a result, Mr. Marinelli decided to look for
other job opportunities and, with the assistance of a recruiter, began substantive conversations
with Coventry about joining it as its Vice President of Medicare Part D Operations.
After Coventry hired Mr. Marinelli in early 2013, representatives of Coventry and Medco
held a telephone call to discuss the hiring decision and Medco’s concomitant concerns. Among
others, Ms. Cocozza (the Senior Vice-President of Medicare at Coventry) and Britt Pim (the
General Manager of Medco’s Government Programs Division), both of whom testified at the
hearing, participated in the call. In light of its importance, the Court recounts large excerpts of
Ms. Cocozza’s testimony about the call, which the Court found to be candid and credible:
[T]he purpose of the call was for me to explain to [Medco] the nature of the
position that [Mr. Marinelli] would be filling and why the role that, you know, he
was filling for us really didn’t—shouldn’t be interpreted as a competitive threat to
[Medco]. So we had a call to talk about the role and responsibility that [Mr.
Marinelli] would be assuming at Coventry and tried to, you know, find a solution
that would alleviate their concern.
(Id. at 140.) Describing Mr. Pim’s reaction during the call, Ms. Cocozza continued:
I explained the role that [Mr. Marinelli] would be undertaking. We had shared the
job description with [Medco] earlier. And I had heard just through conversation
that [Medco] had been concerned particularly about Star Ratings. And I was
incredulous about this because we, in essence, rely on them to help us achieve the
very best Star Ratings. And I did say specifically, I asked specifically if their
concern was Star Ratings because I couldn’t see how they could be, in essence,
paid by us to help us with Star Ratings and, you know, and now be feeling like
there was some proprietary special sauce or whatever that they wouldn’t share
with us. And Britt [Pim] assured me that was not the case. That his concern was
13

not at all about Star Ratings and went further to say that his concern was less
about [Mr. Marinelli] as a person and really -- less about [Mr. Marinelli] per se
and the situation with [Mr. Marinelli] per se, but the need for [Medco] to try to
protect its assets, its personnel assets. And it had more to do with just [Mr.
Marinelli’s] general competencies and his ability to execute than it did with any
specific aspects of the job.
(Id. at 140-41.)
This testimony undermines Medco’s motion in two ways. First, it confirms that the
compliance process information with which Mr. Marinelli was most familiar from his work at
Medco—including information regarding “star ratings”—was specifically and continuously
shared with Coventry as part of its customer relationship with Medco, and that Medco therefore
was not concerned about Mr. Marinelli’s disclosure of such information to Coventry. Second, it
establishes that Medco did not want Mr. Marinelli to join Coventry for two overlapping reasons:
Medco did not want to lose a valuable employee (see id. at 141 (noting that Medco’s “biggest
concern” was losing Mr. Marinelli’s “overall competency”)), and it did not want a competitor to
gain a valuable employee. The Court finds it noteworthy that Mr. Pim’s testimony at the
preliminary-injunction hearing contains variations on the theme described by Ms. Cocozza. For
example, Mr. Pim testified that
[W]e are the highest rated national PDP, and I believe that gives us a competitor
advantage in the market in terms of trying to attract new beneficiaries. So if
someone were to leave our company and go to a competitor and just, as part of
their daily job, identify improvement opportunities that allowed them to improve
their Star Rating it’s going to erode my competitive lead that I have over other
players in the marketplace.
(Id. at 71.) In making this finding as to Medco’s purpose in attempting to prevent Mr. Marinelli
from leaving Medco to join Coventry, the Court does not mean to impugn in any way Medco’s
or its employees’ motives; to the contrary, such competitive thinking makes for smart business.

14

But, as discussed below, an employer’s interest in stifling competition cannot justify
enforcement of a non-complete clause under New Jersey law.
II.

Conclusions of Law
A.

Legal Standard

Ordinarily, to obtain a preliminary injunction under Federal Rule of Civil Procedure 65, a
movant—here, Medco—must demonstrate “(1) that [it] will suffer irreparable harm absent
injunctive relief, and (2) either (a) that [it] is likely to succeed on the merits, or (b) that there are
sufficiently serious questions going to the merits to make them fair ground for litigation, and that
the balance of hardships tips decidedly in [its] favor.” Moore v. Consol. Edison Co. of N.Y., Inc.,
409 F.3d 506, 510 (2d Cir. 2005) (internal quotation marks omitted). In this case, however,
Medco “must make a ‘clear’ or ‘substantial’ showing of a likelihood of success [because] (1) the
injunction sought will alter, rather than maintain, the status quo—i.e., is properly characterized
as a ‘mandatory’ rather than ‘prohibitory’ injunction.” Jolly v. Coughlin, 76 F.3d 468, 473 (2d
Cir. 1996); see also SEC v. Unifund SAL, 910 F.2d 1028, 1039 (2d Cir. 1990) (observing that
where an injunction goes beyond the preservation of status quo, it requires “a more substantial
showing of likelihood of success”). Because Mr. Marinelli was working at Coventry before the
initiation of this lawsuit, the requested preliminary injunction would alter the status quo by
requiring him to cease his current employment.

Medco must therefore make a clear or

substantial showing that it is likely to succeed on the merits. Jolly, 76 F.3d at 473.13

13

The Court acknowledges that there may be cases in which imposing the heightened
burden for mandatory injunctions on the employer would encourage gamesmanship by
rewarding employees who breached their non-compete agreements by jumping ship and signing
up with a competing employer before the former employer could reach the courthouse. But this
is not such a case. Mr. Marinelli gave his notice to Medco that he was resigning and planned to
join Coventry. (See Hr’g Tr. at 91-93, 182-83.) His last day at Medco was January 18, 2013.
Aware that Medco objected to his move, he sought a declaratory judgment by complaint dated
15

B.

Likelihood of Success on the Merits

Both parties agree that New Jersey law governs this dispute, as a result of the
choice-of-law provision in Mr. Marinelli’s employment contract. (Ex. 508.) Under New Jersey
law, a covenant not to compete will be enforced only to the extent it is “reasonable under the
circumstances.” Solari Indus. v. Malady, 55 N.J. 571, 585 (1970). A non-compete clause is
reasonable insofar as it is “[1] reasonably necessary to protect [an employer’s] legitimate
interests, [2] will cause no undue hardship on the [employee], and [3] will not impair the public
interest.” Id.14 Medco largely overlooks an essential component of the Solari standard—
namely, that the covenant not to compete must be reasonably necessary to protect the
employer’s legitimate interests. Mr. Marinelli is already subject to an independent contractual
obligation not to disclose confidential information (see Ex. 508 (“Covenant Against Use and
Disclosure”)), and Medco has failed to establish facts that demonstrate that this non-disclosure
provision is insufficient to protect its legitimate business interests.

Furthermore, Medco’s

February 6, 2013 asking for a judicial declaration as to whether he could continue working at
Coventry. Notwithstanding, Medco’s opportunity to bring suit before Mr. Marinelli began his
new job, it was only after Mr. Marinelli started working at Coventry and filed suit that Medco
sought injunctive relief, on February 15, 2013.
14
New Jersey courts do not give much consideration or weight to the third prong of the
Solari test—whether the non-compete clause impairs the public interest—because they recognize
that “competing public interests” are already at stake in the first prong. See Campbell Soup, 58
F. Supp. 2d at 489. Enforcing non-compete covenants serves the public interest in “safeguarding
fair commercial practices and . . . protecting employers from theft of piracy of trade secrets,
confidential information or . . . knowledge and technique in which the employer may be said to
have a proprietary interest,” but enforcing such covenants harms the public interest in “fostering
creativity and invention and in encouraging technological improvement and design enhancement
of all goods in the marketplace.” Id. In this case, consideration of these competing interests is
subsumed in the Court’s analysis of the first Solari factor, i.e., whether the non-compete clause is
“reasonably necessary to protect the employer’s legitimate interests.” Solari, 55 N.J. at 585. It
is unnecessary to address separately the “public interest” prong.

16

motivation in seeking to enforce the non-compete clause is to stifle competition, which is not a
legitimate interest that can justify the use of a covenant not to compete.
An “employer has no legitimate interest in preventing competition as such,” Whitmyer
Bros., Inc. v. Doyle, 58 N.J. 25, 33 (1971), and New Jersey courts will therefore refrain from
enforcing “a restrictive agreement merely to aid the employer in extinguishing competition . . .
from a former employee.” Campbell Soup, 58 F. Supp. 2d at 489. Courts will, however, enforce
a non-compete clause where doing so is necessary to protect an employer’s legitimate interests—
such as an “employer’s interest in protecting trade secrets, confidential information, and
customer relations.” Ingersoll-Rand Co. v. Ciavatta, 110 N.J. 609, 628 (1988). The New Jersey
Supreme Court further recognizes that “employers may have legitimate interests in protecting
information that is not a trade secret or proprietary information, but highly specialized, current
information not generally known in the industry, created and stimulated by the research
environment furnished by the employer, to which the employee has been exposed and enriched
solely due to his employment.” Id. at 638 (internal quotation marks omitted).
1.

The Non-Compete Clause Is Not Reasonably Necessary to Protect
Medco’s Legitimate Interests

Medco relies on a formulaic reading of New Jersey law, arguing that if (1) an employee
was exposed to confidential information and (2) that employee seeks to take a job in the same
industry, i.e., in an industry in which the confidential information could be used, then the
non-compete clause is, ipso facto, reasonably necessary to protect Medco’s legitimate business
interests. Applying this standard, Medco asserts that the non-compete clause must be enforced
because Mr. Marinelli was exposed to confidential information and has joined a competing firm
in the same industry that could use the confidential information to Medco’s detriment.

17

Such a mechanical standard, however, does not find an adequate basis in the New Jersey
case law Medco cites. In Campbell Soup Co., 58 F. Supp. 2d at 492-93, a district court allowed
Campbell Soup Company to enforce its non-compete agreement against a high-level advertising
executive who sought to become chief marketing officer at Pillsbury, maker of Progressive Soup,
i.e., a competitor of Campbell’s Soup. Id. at 485, 487. Unlike Mr. Marinelli, the employee in
Campbell Soup was intimately involved in creating confidential advertising and business strategy
that would be highly useful to the new employer he sought to join. Id. at 483-84. At his new
job, the defendant-employee would have been responsible for “advertising and creating strategies
for brand acceptance of Pillsbury’s products, including those that compete with Campbell’s
brands in which [the defendant-employee] has sensitive competitive and trade secret
information.” Id. at 485. Put another way, the confidential information from the advertising
executive’s old job—which included his own analysis and evaluation of Campbell’s past
advertising and development of Campbell’s confidential brand positioning statements—would be
highly useful to him in his new job because, armed with Campbell’s strategic information, he
would know how to tailor Pillsbury’s advertising to outmaneuver Campbell’s. In addition, the
court emphasized that attempts to insulate the executive from making decisions concerning
Pillsbury products that competed with Campbell’s products—leaving him free to perform his job
as to other Pillsbury products—were not feasible because Campbell’s had demonstrated that the
executive was untrustworthy. See id. at 487 (“[T]o insulate [the executive] at Pillsbury from
duties dealing with Progresso . . . would require a great measure of trust that he could comport
his conduct to the requirements of the non-compete clause. . . . [Some of the executive’s past
behavior] shows bad judgment, while the explanations show a dissembling trait that undermines
trustworthiness in observing duties of loyalty.”).

18

Simply put, the facts in Campbell Soup

demonstrated a significant likelihood that the employee would use the employer’s proprietary
information in his new job, and that lesser measures—e.g., limiting his job responsibilities—
were insufficient because the employee was dishonest and could not be trusted to adhere to such
limitations.15
Medco also cites National Reprographics, Inc. v. Strom, in which the district court
granted a preliminary injunction enforcing a non-compete agreement that barred the
defendant-employee from working for any competitor within fifty miles of one of plaintiff’s
branches for one year after the termination of his employment. 621 F. Supp. 2d 204, 208, 211
(D.N.J. 2009). National Reprographics is distinguishable, however, in two key respects. First,
by virtue of the defendant’s job responsibilities with the plaintiff, the defendant was well
acquainted with—rather than merely exposed to—confidential pricing information.

Before

departing from his job with the plaintiff–reprographics company, the defendant was “very
involved in setting pricing and determining pricing methods for customers . . . .” Id. at 214; see
also id. at 226 (“[The plaintiff] came into a key position that of necessity would expose him to
sensitive . . . information.”). Second, this proprietary pricing information would plainly be
useful to the employee in his new role with the competing reprographics firm at which he
planned to work—responsibilities that included participating in business strategy development,
an activity for which knowledge of a competitor’s pricing strategy would be very useful. See id.
at 220 (quoting the competitor’s job proposal, which described one job responsibility as
“[identifying] key new targets for our existing products/services and work[ing] with corporate
management to develop a strategy to capture this additional business.”); id. at 226-27.

15

In addition, the court in Campbell Soup found it quite significant that the contract
contained a “safety net” that compensated the employee for the duration of the non-compete
clause. See infra Section II.B.2 (analyzing the undue-hardship prong of the Solari test).
19

Campbell Soup and National Reprographics16 found that non-compete clauses were
enforceable where the employee not only had an in-depth familiarity with confidential
information partly as a result of being involved in creating that information, but also accepted a
position with job responsibilities for which the confidential information would be useful. To
enforce a non-compete clause in the absence of these two factual predicates—as Medco urges—
would run counter to the Solari reasonableness requirement. Non-compete covenants must be
“reasonably necessary to protect [an employer’s] legitimate interests,” see Solari, 55 N.J. at 585,
and where the risk that a company’s confidential information will be disclosed or used is merely
negligible, enforcing a non-compete covenant would be unreasonable.
Taken to its logical extreme, Medco’s “mere exposure” argument would bar any
employee who was subject to Medco’s non-compete agreement and was exposed to confidential
information at any time from taking a job—even the position of janitor—at any firm in the same
industry.

The plain terms of Medco’s “Key Employee” agreement would support such a

sweeping prohibition, stating that

16

Medco also directs the Court’s attention to Medco Health Services, Inc. v. Courtman,
No. C-323-12 (N.J. Super. Ct. Jan. 9, 2013), a New Jersey Superior Court decision issuing a
preliminary injunction based on the court’s conclusion that a non-compete clause, which had
wording identical to the one at issue here, was reasonable as applied to the defendant-employee.
(See Countercl. Pls.’ Am. Proposed Findings of Fact and Conclusions of Law [Dkt. # 56] at 10.)
Courtman, however, has little persuasive value. First, Courtman is factually distinguishable.
The defendant-employee against whom Medco sought to enforce the non-compete clause was the
Senior Vice President of Pharmacy Network Management—a job that is far more senior than Mr.
Marinelli’s job at Medco. Courtman, No. C-323-12, at *2. And the defendant-employee left to
become the president of a competing firm. Id. Second, the Court finds the reasoning in
Courtman unpersuasive, not least because the five-page order granting a preliminary injunction
does not cite a single case or include any analysis of whether the plaintiff would actually be
harmed by the defendant-employee’s actions. Instead, the decision issuing the preliminary
injunction states in conclusory fashion that the scope of the covenant is “reasonable” and that
“[r]easonable restrictive covenants are enforceable precisely because the harm high level former
employees can visit upon their former employees [sic] is not readily susceptible to, or remediable
by, monetary calculation.” Id. at *4.
20

[F]or a period of twelve (12) months following the termination of [his]
employment, [Mr. Marinelli] will not (as an individual, principal, agent,
employee, consultant, or otherwise), directly or indirectly in any territory in which
the Employer and/or any of its affiliates does business and/or markets its products
and services, engage in activities competitive with, nor render services to any firm
or business engaged or about to become engaged in the Business of the Employer.
(Ex. 508.) Adopting a literal reading of the agreement to impose such a result—foreclosing the
employee from working as a janitor for the other firm—would not, however, be reasonably
necessary to protect the employer’s legitimate interests. There is little risk that, as a janitor, the
employee would disclose her former employer’s confidential information, as her job
responsibilities would not call on her to use that information. That is not to say that there is no
risk of disclosure; the janitor could always affirmatively decide to share information with another
employee. Nonetheless, even Medco conceded that the agreement would be unenforceable in
such a situation. (Hr’g Tr. at 233 (discussing janitor hypothetical).) Mr. Marinelli’s position at
Coventry is hardly that of janitor. But Medco has failed to demonstrate that, in light of his mere
exposure to confidential information while he was at Medco, the differing responsibilities
between his two jobs, and the limited competitive overlap between the two companies, there is a
materially greater risk of disclosure of confidential information than in the janitor scenario.
To properly evaluate this risk—that is, to decide whether this case is more like the janitor
hypothetical or more like Campbell Soup and National Reprographics—requires specifics, and
as it is Medco’s motion, Medco bears the burden of identifying specific protectable information
for which there is some non-negligible risk of disclosure or use. Merely identifying confidential
information to which Mr. Marinelli was exposed is insufficient; Medco must make a clear or
substantial showing of some risk that Mr. Marinelli will disclose or use protected information at
Coventry. See Jolly, 76 F.3d at 473; Solari, 55 N.J. at 585.

21

Medco has failed to meet this burden.

As discussed below, all of the protectable

information identified by Medco—with the exception of compliance procedures—falls into two
largely overlapping categories: (1) information that Mr. Marinelli was merely exposed to and
does not remember; and (2) information that has no bearing on Mr. Marinelli’s current job with
Coventry. Information in the first category is not at risk of disclosure or use for the obvious
reason that Mr. Marinelli cannot use or disclose what he does not remember. Information in the
second category is similarly safe from use or disclosure because, much like in the janitor
example, Mr. Marinelli’s job responsibilities at Coventry do not raise a realistic threat that he
will disclose or use the protected information. Further, Mr. Marinelli is under an independent
obligation—by contract and by order of the Court—not to disclose protected information.17
Even Medco’s witnesses agreed that Mr. Marinelli is a “man of integrity” (Hr’g Tr. at 55.), and
the Court is aware of no reason to expect that he will violate his legal obligations. Accordingly,
there is no need for additional protection from a non-compete clause.
i.

Information to Which Mr. Marinelli Was Merely Exposed

In this first category of confidential information, the Court includes some of Medco’s
customer lists, Medco’s business plans, and Medco’s strategy for bidding for contracts to sell
individual PDPs. The Court finds that Mr. Marinelli’s exposure to this information while at
Medco was minimal. As the Senior Director of Member Enrollment, Billing, and Reconciliation
at Medco, Mr. Marinelli managed operations related to compliance with Medicare Part D
requirements.

This job did not require Mr. Marinelli to work intimately with information

relating to customers, strategic planning, or Medco’s bid strategy. He did not create, compile, or
17

Coventry took additional steps to ensure that Mr. Marinelli would not disclose Medco’s
protectable information. First, Ms. Cocozza instructed Mr. Marinelli not to share any such
information. (Hr’g Tr. at 225.) Second, in its discussions with Medco, Coventry offered to wall
Mr. Marinelli off from specific job responsibilities. (Id. at 224.)
22

work with this information on a daily basis. To the extent that Mr. Marinelli was exposed to
specific protectable information relating to customers, strategic planning, or bid strategy, he does
not specifically recall it. Referring to the terms of the stipulated temporary restraining order,18
Mr. Marinelli testified that of the confidential information enumerated in the order, he was
exposed to “very little” and that he remembers “virtually none of it.” (Hr’g Tr. at 185-86.)19
The Court credits this testimony.

Mr. Marinelli’s credible testimony that he remembers

“virtually none” of the confidential information recited by Medco, in tandem with the fact that
his job at Medco did not require him to work with the information closely, is sufficient to
establish that the non-compete covenant is not a reasonable prophylactic to safeguard Medco’s
confidential information.
ii.

Information Unrelated to Mr. Marinelli’s New Job

Even for protectable information with which Mr. Marinelli had some familiarity by
virtue of his job at Medco—in this category, the Court includes Medco’s EGWP-customer
pipeline, components of its EGWP strategy, its bid strategy, and proprietary information
regarding vendor management—the risk of disclosure is negligible because Mr. Marinelli’s new
responsibilities at Coventry would not be furthered by his using the information in the event that

18

The order defines confidential information as follows: “(i) strategy for growing its
prescription drug plan business, including its objectives, plan design, and capital projects; (ii)
prescription drug plan clients, including the customer pipeline; (iii) development, marketing or
sale of the Company’s products or services, including product and service pricing, pricing
strategy, and risks and opportunities to grow the business, (iv) budgets, including outsourcing
budgets, forecasts, and modeling; (v) actual and prospective business transactions, including
bidding strategies; (vi) formulary strategy; (vii) benefit design; (viii) financial results; and (ix)
margins and margin targets.” (Stipulation and Order [Dkt. # 38] at 1-2.)
19
Mr. Marinelli also testified, and the Court finds, that he does not have in his possession
any confidential materials. (Hr’g Tr. at 185.) Medco offered no evidence suggesting otherwise.
23

he actually remembers it.20

As Vice President of Medicare Operations for Coventry, Mr.

Marinelli is responsible for ensuring that Coventry’s PDPs comply with Medicare Part D
requirements. He does not assist with the marketing or sales of Coventry’s PDPs, rendering
Medco’s customer information useless. Mr. Marinelli is not “in charge of anything related to the
actual bid, the pricing,” such that Medco’s bid strategy has no significance to Mr. Marinelli’s
job. And in any event, information relating to Medco’s EGWP business is essentially immaterial
because Coventry primarily sponsors individual PDPs.21 With respect to vendor-management
information, as Coventry does not employ any outside vendor to perform compliance operations,
any proprietary business process involving vendor management is not threatened by Mr.
Marinelli’s job with Coventry. In short, Medco has failed to show that Mr. Marinelli’s new role
with Coventry entails a significant risk that confidential information will be used. Under these
circumstances, enforcing the non-compete clause is not “reasonably necessary” to protect
Medco’s legitimate interests in safeguarding its confidential information. Solari, 55 N.J. at 585.
iii.

Compliance Procedures

Nor can the non-compete clause be justified as a reasonable protection of Medco’s
processes, procedures, and business methods for complying with CMS’s regulations or obtaining
a high Star Rating.

Medco has not made a sufficient showing that its information about

compliance methods is protectable in the first place. See Jolly, 76 F.3d at 473 (movant must

20

Although Mr. Marinelli worked with this information, he did not create the most
sensitive parts of it—such as pricing strategy—and his use of this information was limited to that
which was necessary to support his oversight of Medicare operations.
21
The fact that Coventry might merge with Aetna does not change the Court’s analysis
because the timing of the merger is speculative, and there is insufficient evidence in the record
regarding (1) Aetna’s business model with respect to EGWPs, individual PDPs, and vendor
outsourcing, and (2) how, if at all, Mr. Marinelli’s role would change if the merger is completed.
See supra note 4.
24

make a “clear or substantial showing”). There is good reason to believe that it is not. First,
Medco regularly shared this information with Coventry and its other PBM clients. Second,
Medicare regulations are public information, and much of what Medco characterizes as
proprietary appears to be little more than operational common sense within the industry. See
Whitmyer, 58 N.J. 25 at 33-34 (“[M]atters of general knowledge within the industry may not be
classified as trade secrets or confidential information entitled to protection nor will routine or
trivial differences in practices and methods suffice to support restraint of the employee’s
competition.”). Third, when pressed to do so at the hearing, Medco could identify only one
specific example of a process that it regarded as competitively sensitive (see supra, page 11
(discussing Mr. Pim’s example about avoiding late-enrollment penalties)), and Medco never
suggested that even this information was not shared with Coventry or its other PBM customers.
Indeed, Ms. Cocozza’s testimony strongly suggested that Coventry and other such customers
fully expected Medco to share this and other ingredients of its so-called “secret sauce,” as this
was what these customers were paying for. (See Hr’g Tr. at 140-41.) Finally, even if Medco’s
business processes relating to Medicare compliance were confidential, the rapid pace at which
CMS issues new regulations and guidance likely renders these processes largely obsolete—and
therefore unnecessary to protect.
Especially in light of the clear evidence that Medco was motivated primarily by a desire
to limit competition, the Court declines to enforce a non-compete agreement that does not clearly
protect legitimate business interests. See Ingersoll-Rand, 110 N.J. at 635 (New Jersey courts
“will not enforce a restrictive agreement merely to aid the employer in extinguishing
competition, albeit competition from a former employee” because “knowledge, skill, expertise,
and information acquired by an employee during his employment become part of the employee’s

25

person,” and the former employee may “use those skills in any business or profession he may
choose, including a competitive business with his former employer”).
2.

Hardship on Mr. Marinelli

A covenant not to compete is only reasonable if it “imposes no undue hardship on the
employee.” Solari, 55 N.J. at 576. In determining whether a non-compete covenant would
impose undue hardship, a court should consider “the likelihood of the employee finding work in
his field elsewhere.” Karlin v. Weinberg, 77 N.J. 408, 423 (1978). The New Jersey Supreme
Court further explained that:
The trial court should examine also the reason for the termination of the
relationship between the parties to the employment contract. Where this occurs
because of a breach of the employment contract by the employer, or because of
actions by the employer detrimental to the public interest, enforcement of the
covenant may cause hardship on the employee which may fairly be characterized
as “undue” in that the employee has not, by his conduct, contributed to it. On the
other hand, where the breach results from the desire of an employee to end his
relationship with his employer rather than from any wrongdoing by the employer,
a court should be hesitant to find undue hardship on the employee, he in effect
having brought that hardship on himself. Ordinarily a showing of personal
hardship, without more, will not amount to an “undue hardship” such as would
prevent enforcement of the covenant.
Id. at 423-24.
Mr. Marinelli will suffer hardship if the non-compete clause is enforced against him. To
begin with, the covenant not to compete is broad enough that it would operate to bar Mr.
Marinelli from “finding work in his field [, i.e., Medicare Operations,] elsewhere.” Id. at 423.
(See also Key Employment Agreement, Ex. 508 (prohibiting Mr. Marinelli from “(as an
individual, principal, agent, employee, consultant, or otherwise), directly or indirectly in any
territory in which [Medco] and/or any of its affiliates does business and/or markets its products
and services, engag[ing] in activities competitive with, nor render[ing] services to any firm or
business engaged or about to become engaged in the Business of [Medco]”). And while Mr.
26

Marinelli earned a six-figure salary each of the past few years and is certainly not in dire
financial straits, he is nevertheless the sole breadwinner for a family with three children who
have not yet attended college. (Hr’g Tr. at 183-84.) Furthermore, Mr. Marinelli’s non-compete
clause does not have a “safety net” provision to mitigate the financial consequences to Mr.
Marinelli of being barred from pursing work in his field. The absence of such a safety net
distinguishes Mr. Marinelli’s situation from that in Campbell Soup, where the court found that
the safety net in the non-compete clause at issue in the case was material to the reasonableness of
the non-compete clause because it lessened the employee’s hardship. Campbell Soup, 58 F.
Supp. 2d at 490 (“Further reasonableness is found in the “safety net” provision, which cushions
the financial loss to the departing employee and which negates any intent to impose a
punishment upon him.”).22
Mr. Marinelli voluntarily resigned his position with Medco, a fact that ordinarily militates
against a finding of undue hardship.

See Karlin, 77 N.J. at 423-24; see also Nat’l

Reprographics, 621 F. Supp. 2d at 228 (“Where the breach results from the desire of an
employee to end his relationship with his employer rather than from any wrongdoing by the
employer, a court should be hesitant to find undue hardship on the employee.”). Here, however,
Mr. Marinelli’s resignation was prompted by significant layoffs at Medco’s New Jersey office,
which threw Mr. Marinelli’s job security into question. As Mr. Marinelli testified:
There have been substantial layoffs in the New Jersey office. I have a feeling -and in the corporate offices of Franklin Lakes and Montvale, I believe that the
amount is somewhere from 30 to maybe 50 percent of staff let go. And so I

22

The contract in Campbell Soup included a “‘safety net’ in case [the employee was]
unable to find employment with a non-competitor. [The employer] agree[d] in this safety net to
pay 100% of his base monthly salary (along with medical and dental benefits) beginning 90 days
after his last employment . . . and continuing for the 18-month duration of the non-competition
provision or until he finds a suitable position.” Campbell Soup, 58 F. Supp. 2d at 482.
27

certainly feared for my job. Also, after my resignation there was published reports
of significant salary reductions and that was clearly a fear.
(Hr’g Tr. at 164.) Although “a court should be hesitant to find undue hardship” for an employee
who chose to end her prior employment relationship, see Karlin, 77 N.J. at 423-24, the Court
believes that it would be inequitable to penalize an employee when he decides to leave based on
reasonable uncertainty about future job security. The Court therefore finds that Mr. Marinelli’s
non-compete clause is also unenforceable because it imposes an undue hardship on Mr.
Marinelli.
III.

Conclusion
For the reasons stated above, Medco’s Motion for Preliminary Injunction [Dkt. # 16] is

GRANTED IN PART and DENIED IN PART.
As Mr. Marinelli has agreed to abide by the Stipulation and Order [Dkt. # 38] currently
in place (Pl.’s Stipulations of Fact and Conclusions of Law [Dkt. # 53] ¶ 62), the Court hereby
maintains the injunction until this case is resolved. Specifically, it is HEREBY ORDERED that
Joseph Marinelli, and any person or entity in active concert or participation with him, shall not
directly or indirectly use or disclose to any person or entity any Confidential Information—
defined below—of Medco Health Solutions, Inc., its parent, subsidiary, sister, or other affiliated
entities (collectively the “Company”) learned by Mr. Marinelli in the course of his employment
with the Company. Confidential Information means information that is not readily available in
the public domain or industry. It includes information regarding the Company’s: (i) strategy for
growing its prescription drug plan business, including its objectives, plan design, and capital
projects; (ii) prescription drug plan clients, including the customer pipeline; (iii) development,
marketing or sale of the Company’s products or services, including product and service pricing,
pricing strategy, and risks and opportunities to grow the business; (iv) budgets, including
28

outsourcing budgets, forecasts, and modeling; (v) actual and prospective business transactions,
including bidding strategies; (vi) formulary strategy; (vii) benefit design; (viii) financial results;
and (ix) margins and margin targets. Confidential Information does not include information that
is readily available in the public domain or industry or Marinelli’s general knowledge, skills, or
information common to Marinelli’s trade or profession.
In all other respects, Medco’s motion for a preliminary injunction is denied. Finally, the
parties’ Rule 26(f) Report shall be filed within fourteen days of this Memorandum of Decision.

IT IS SO ORDERED.

/s/
Michael P. Shea, U.S.D.J.
Dated:

Hartford, Connecticut
June 13th, 2013

29