CPS SOLUTIONS LLC v. SARLE et al

Filing 24

ORDER on Motion to Dismiss denying 15 Motion to Dismiss. By JUDGE NANCY TORRESEN. (slg)

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
CPS SOLUTIONS, LLC,
Plaintiff,
v.
BENJAMIN SARLE and JEFFREY
NEWTON,
Defendants.

)
)
)
)
) Docket No. 2:23-cv-00269-NT
)
)
)
)
)

ORDER ON MOTION TO DISMISS
Before me is a motion to dismiss brought by Defendants Benjamin Sarle and
Jeffrey Newton (ECF No. 15). For the reasons stated below, the motion is DENIED.
FACTUAL BACKGROUND 1
Plaintiff CPS Solutions, LLC (“CPS”) is a nationwide pharmacy services
provider. Compl. ¶¶ 1, 11 (ECF No. 1). Its employees include pharmacy industry
experts who partner with hospitals and other healthcare facilities “to optimize
pharmacy operations.” Compl. ¶ 1. CPS invests heavily in a variety of proprietary
systems and processes, as well as intellectual property, which it uses to operate its

The following facts are drawn from the record material properly before me—the Complaint
and redacted versions of Benjamin Sarle and Jeffrey Newton’s (together, the “Defendants’)
employment agreements. See Schatz v. Republican State Leadership Comm., 669 F.3d 50, 55 (1st Cir.
2012) (explaining that documents attached to a complaint may be considered on a motion to dismiss).
The Defendants ask me to consider factual material outside of this record, namely, affidavits from
each Defendant and unsupported assertions made in their brief. See Mot. to Dismiss of Defs. Sarle &
Newton (“MTD”) 3–7, Exs. A & B (ECF Nos. 15, 15-1 & 15-2). But these items do not fall within any
of the categories of material I may properly consider on a motion to dismiss, see Schatz, 669 F.3d at
55–56, so I do not consider them. Because I am excluding this improperly-submitted material, I
continue to treat this as a motion to dismiss under Rule 12(b)(6), and not as a motion for summary
judgment under Rule 56. See Fed. R. Civ. P. 12(d).
1

clients’ pharmacies. Compl. ¶¶ 6, 18, 20. This work is specific and customized. With
each client it serves, CPS tailors its approach to the individualized needs of the
facility. Compl. ¶¶ 1, 18. At each pharmacy it operates, CPS devises and implements
management systems, recruits and hires employees, and trains them on CPS’s
proprietary systems. Compl. ¶¶ 2, 18–19.
Since at least 2017, CPS was the exclusive pharmacy services provider for
Central Maine Healthcare Corporation (“CMH”). Compl. ¶ 1. CPS provided
pharmacy management services at three different CMH facilities. Compl. ¶ 1. About
80 CPS employees worked on-site at CMH pharmacies. Compl. ¶ 2. CPS recruited,
hired, and trained these employees, including on CPS’s proprietary systems and how
to operate CMH’s multiple pharmacies, which included in-patient, out-patient, and
retail locations. Compl. ¶¶ 2, 19. This work required “significant upfront investment”
by CPS. Compl. ¶ 5.
Benjamin Sarle and Jeffrey Newton (together, the “Defendants”) worked as
pharmacy managers for CPS at CMH facilities. Compl. ¶¶ 12–13. In their
management and supervisory roles, Sarle and Newton “were provided with access to
and used CPS’s confidential information and intellectual property for purposes of
running CMH’s multiple pharmacies.” Compl. ¶ 19. In the spring of 2022, Newton
and Sarle each signed an Employee Restrictive Covenant Agreement with CPS (the
“Employment Agreements”). Compl. ¶¶ 21–23; Employment Agreements (ECF
Nos. 1-1 & 1-2). These Employment Agreements barred them from disclosing certain

2

confidential CPS information. 2 Compl ¶ 24; Employment Agreements ¶ 1. They also
barred them from working for a competing business anywhere in the United States
for 18 months following their separations from CPS (the “Noncompete Clauses”).
Compl. ¶¶ 25, 27; Employment Agreements § 8.
In 2021, CPS began negotiating with a new leadership team at CMH about
continuing their service arrangement. Compl. ¶ 3. CPS made significant cost
concessions in these negotiations, and received repeated assurances from CMH that
their relationship would continue. Compl. ¶ 3. However, in early 2023, CMH informed
CPS that it had decided to terminate their relationship, effective May 1, 2023. Compl.
¶ 3. Cardinal Health Inc. (“Cardinal”) would replace CPS as CMH’s pharmacy
services provider. Compl. ¶ 3.
CPS was surprised by this news because Cardinal had not historically provided
pharmaceutical operation services. Compl. ¶¶ 4, 31. Cardinal’s primary business was
pharmaceutical product distribution. Compl. ¶¶ 4, 31. In fact, during the years that
CPS ran CMH’s pharmacies, CPS dealt with Cardinal as a distributor to make sure
CMH’s pharmacies were properly stocked. Compl. ¶ 4. But now, Cardinal would
apparently supply and operate CMH’s pharmacies. Compl. ¶ 4.
CPS doubted that Cardinal had the infrastructure or personnel necessary to
deliver pharmacy operation services to CMH. Compl. ¶¶ 5, 31. Just after learning
“Confidential Information” under the Employment Agreements includes “corporate
information” like plans and strategies; “marketing information” like customer identities; “financial
information” like performance data and price lists; “operational and technological information” like
manuals, templates, and formulas; and “personnel information” like resumes and performance
evaluations. Employee Restrictive Covenant Agreements (“Employment Agreements”) § 1 (ECF
Nos. 1-1 & 1-2).
2

3

that Cardinal was replacing it, CPS began receiving reports that CMH and Cardinal
were recruiting its employees to come work for Cardinal. Compl. ¶ 32. Cardinal and
CMH began interviewing CPS employees, making job offers, and seeking disclosure
of confidential CPS information necessary to run CMH’s pharmacies. Compl. ¶ 34.
CPS reminded employees of their contractual requirements, including their
nondisclosure of confidential information and noncompete obligations. Compl. ¶ 33.
Despite these reminders and their contractual duties, Sarle and Newton
accepted jobs with Cardinal providing the same services, at the same CMH pharmacy
locations, as they had for CPS. Compl. ¶ 35. In these new roles, Sarle and Newton
provided confidential CPS information to Cardinal and CMH. Compl. ¶ 43. Cardinal
was therefore able to shortcut the type of significant upfront investment CPS had to
make to provide pharmacy operation services to CMH, and instead just extract
confidential CPS information from its former employees. Compl. ¶¶ 18–19, 34–35, 43.
In the midst of these hires, CMH terminated its relationship with CPS on April 15,
2023, two weeks ahead of schedule. Compl. ¶ 36. As a result of Sarle and Newton’s
breaches of their Employment Agreements, CPS sustained a series of losses,
including loss of profits, goodwill, competitive advantage, and business opportunities.
Compl. ¶ 44.
On July 11, 2023, CPS filed this lawsuit against Sarle and Newton for breach
of contract. Within a single breach of contract claim, CPS alleges that the Defendants
violated their nondisclosure of confidential information and noncompete obligations.
Compl. ¶¶ 39–43. In its Complaint, CPS seeks a judgment against Sarle and Newton;

4

injunctive relief barring them from using confidential CPS information or working
for Cardinal, CMH, or another competitor; and a variety of monetary damages and
relief. Compl. at 10. Sarle and Newton have moved to dismiss the Complaint pursuant
to Rule 12(b)(6) of the Federal Rules of Civil Procedure.
LEGAL STANDARD
“To survive a motion to dismiss for failure to state a claim under Rule 12(b)(6),
‘a complaint must provide a short and plain statement of the claim showing that the
pleader is entitled to relief, with enough factual detail to make the asserted claim
plausible on its face.’ ” Legal Sea Foods, LLC v. Strathmore Ins. Co., 36 F.4th 29, 33
(1st Cir. 2022) (quoting Cardigan Mtn. Sch. v. N.H. Ins. Co., 787 F.3d 82, 85 (1st Cir.
2015)). A complaint’s well-pleaded facts are accepted as true, and all reasonable
inferences are drawn in the plaintiff’s favor. Lawrence Gen. Hosp. v. Cont’l Cas. Co.,
90 F.4th 593, 598 (1st Cir. 2024). In this process, courts set aside and “do not
credit . . . legal labels or conclusions, or statements that merely rehash elements of
the cause of action.” Halsey v. Fedcap Rehab. Servs., Inc., --- F.4th ---, 2024 WL
911754, at *5 (1st Cir. 2024) (quoting Lemelson v. Bloomberg L.P., 903 F.3d 19, 23
(1st Cir. 2018)). Instead, they focus on whether “the complaint’s non-conclusory, nonspeculative factual allegations . . . plausibly narrate a claim for relief.” Pitta v.
Medeiros, 90 F.4th 11, 17 (1st Cir. 2024) (quoting Cheng v. Neumann, 51 F.4th 438,
443 (1st Cir. 2022)).

5

DISCUSSION
I.

Breach of Contract: Disclosure of Confidential Information
CPS alleges that Newton and Sarle shared confidential CPS information with

Cardinal and CMH, in violation of their Employment Agreements. Compl. ¶ 43.
Newton and Sarle maintain that CPS has failed to state a claim with respect to
disclosure of confidential information. The Defendants’ main argument is that the
allegations in the Complaint are too conclusory to support the claim. Mot. to Dismiss
of Defs. Sarle & Newton (“MTD”) 4 (ECF No. 15). They also fault CPS for not seeking
relief sooner and, in reply, contend that CPS failed to allege that it took affirmative
steps to protect the information in question. MTD 4; Defs.’ Reply in Supp. of Their
Mot. to Dismiss (“Reply”) 3 (ECF No. 21). 3
With respect to their main argument, the Defendants maintain that CPS
“paints with the broadest brush” when it comes to allegations that Newton and Sarle
breached their obligations not to disclose confidential CPS information. MTD 4. On a
motion to dismiss, it is true that I must set aside mere labels and conclusions. Zell v.
Ricci, 957 F.3d 1, 7 (1st Cir. 2020). But the Complaint here contains more than that.
CPS alleges that it invested heavily in developing proprietary systems and processes,
intellectual property, and employee training tailored to CMH’s needs. Compl. ¶¶ 18–
19. And despite its specialty in providing pharmacy management services, it lost the
CMH contract to Compass, a company that specializes in distributing pharmaceutical
3
As mentioned above, Newton and Sarle also attached affidavits to their motion to dismiss in
an attempt to counter CPS’s factual allegations about their use of confidential information. MTD 4–5,
Exs. A & B. These affidavits are not properly before me on a motion to dismiss, so I have not considered
them.

6

products, not running actual pharmacies. Compl. ¶¶ 1–4, 31. CPS further alleges that
Cardinal made up for its lack of know-how by hiring CPS employees like Newton and
Sarle, getting them to divulge confidential CPS information, and making use of that
information to run CMH’s pharmacies. Compl. ¶¶ 5, 30–35, 37, 43. That, CPS’s theory
goes, is how Cardinal was able to provide tailored pharmacy management services to
CMH, when Cardinal’s track record did not otherwise suggest it was qualified to do
so. Whether this theory bears out remains to be seen, but at the pleading stage, CPS
has plausibly alleged that Newton and Sarle breached their agreements not to
disclose confidential information. 4
Next, Newton and Sarle maintain that CPS’s delay in seeking to enforce the
nondisclosure of confidential information terms in the Employment Agreements
undercuts the claim. MTD 4. Specifically, they assert that CPS’s decision to wait
three months after the end of its engagement with CMH (and six months after it
learned CMH had decided to terminate the contract) to file suit “disproves any claim
that it truly perceives that it has confidential information at risk.” Reply 3; see MTD
1, 4. Relatedly, they criticize CPS’s decision not to file a motion for a preliminary
injunction, which they contend CPS would have done if its claim had merit. Reply 3.
Newton and Sarle do not support these contentions with any relevant legal citations.
In any event, a party may have any number of legitimate reasons not to file a motion
The Defendants’ citation to Sodexo Operations, LLC v. Abbe, 382 F. Supp. 3d 162 (D. Mass.
2019) does not call for a different result. MTD 4. There, the court found that the plaintiff failed to carry
its burden on the likelihood-of-success preliminary injunction factor because it did not offer adequate
proof on what information it deemed confidential or why it was entitled to protected status. Sodexo,
382 F. Supp. at 165–66. But here, at the motion to dismiss stage, plausible allegations are sufficient.
CPS does not yet have to offer proof.
4

7

for a preliminary injunction, which is a form of “extraordinary relief.” Cushing v.
Packard, 30 F. 4th 27, 35 (1st Cir. 2022). Nor do I find anything unusual about the
months-long delay here in filing suit, particularly where CPS alleges that it tried
unsuccessfully to resolve this matter informally before bringing it to court. Compl.
¶ 10.
The Defendants also assert that CPS failed to allege that it took affirmative
steps to protect the information it now claims is confidential. Reply 3. This argument
is a non-starter. CPS alleges that it “takes numerous steps to protect the value of its
confidential information,” and that “[o]ne of the most important” steps it takes is
requiring that “CPS employees, including those working on-site at CMH’s facilities”
sign nondisclosure agreements. Compl. ¶¶ 20–21. These allegations are sufficient at
the motion to dismiss stage.
II.

Breach of Contract: Violation of Noncompete Clauses
CPS alleges that Newton and Sarle breached the Noncompete Clauses in their

Employment Agreements by accepting positions with Cardinal to perform the same
functions, at the same location, where they previously worked for CPS. Compl. ¶ 35.
Newton and Sarle argue that this claim should be dismissed because the Noncompete
Clauses are unenforceable. Their central contention is that the Noncompete Clauses
do not protect any legitimate business interest of CPS. MTD 2–6.
In 2019, the Maine Legislature enacted “An Act to Promote Keeping Workers
in Maine,” codified at 26 M.R.S. §§ 599-A, 599-B. L.D. 733 (129th Legis. 2019). Under
this law, “[n]oncompete agreements are contrary to public policy.” 26 M.R.S. § 599-

8

A(2). 5 They are enforceable only if “they are reasonable and are no broader than
necessary to protect one or more . . . legitimate business interests of the employer.”
Id. The law lists three legitimate business interests: the employer’s trade secrets,
confidential information, and goodwill. Id. For the no-broader-than-necessary
requirement, the law provides that “[a] noncompete agreement may be presumed
necessary if the legitimate business interest cannot be adequately protected through
an alternative restrictive covenant, including but not limited to a nonsolicitation
agreement or a nondisclosure or confidentiality agreement.” Id. 6
Here, CPS alleges that the Noncompete Clauses were necessary to protect its
confidential information and goodwill, which are both “legitimate business interests”
under § 599-A(2). Newton and Sarle counter that because CPS lost the contract with
CMH, it no longer has any business interests to protect. MTD 4. Relatedly, they argue
that CPS cannot use noncompete provisions to protect itself from “future speculative
competition.” MTD 2. The problem for Newton and Sarle is that their argument relies
on facts not properly before me. Their brief inserts a series of unsupported factual
assertions about CPS’s business, including where it operates and who it can employ,
rather than sticking, as they must, to the factual assertions in the Complaint. MTD
5–7. For its part, CPS maintains that the new facts in the Defendants’ brief “are

The law defines “noncompete agreement” as “a contract or contract provision that prohibits an
employee or prospective employee from working in the same or a similar profession or in a specified
geographic area for a certain period of time following termination of employment.” 26 M.R.S. § 599A(1)(B).
5

6
Though not applicable here, Maine’s law also prohibits noncompete agreements altogether for
employees earning wages at or below 400% of the federal poverty level and licensed veterinarians who
do not have ownership interests in their facilities. 26 M.R.S. § 599-A(3).

9

simply wrong, or at the very least heavily disputed.” Pl.’s Opp’n to Mot. to Dismiss
(“Opp’n”) 2 (ECF No. 20); see also Opp’n 1–2, 7–11.
Based only on the factual assertions properly before me, CPS has plausibly
alleged that the Noncompete Clauses are necessary to protect its confidential
information and goodwill. CPS contends that in order to serve clients like CMH, it
invests heavily in designing a variety of proprietary systems and processes and
intellectual property. Compl. ¶¶ 18–19. And, it alleges that Newton and Sarle, as
pharmacy managers, had access to, and were trained on, this proprietary information
for the purpose of running CMH’s pharmacies. Compl. ¶ 19. CPS further alleges that
in working for a competitor, Newton and Sarle funneled this confidential information
to a company with limited-to-no experience running pharmacies, and as a result, CPS
lost a contract to the otherwise-unqualified competitor. Compl. ¶¶ 2–5, 19, 34–35, 42–
43. At this stage, CPS has plausibly alleged that the Noncompete Clauses are
necessary to protect legitimate businesses interests recognized under Maine’s law. 7
However, as this case proceeds, CPS will have the burden to prove that Newton
and Sarle’s Noncompete Clauses were “no broader than necessary” to protect CPS’s
confidential information and goodwill. See 26 M.R.S. § 599-A(2). Indeed, the
Noncompete Clauses are not enforceable if there was a less drastic way for CPS to

7
The Defendants accurately point out that CPS cannot use noncompete provisions to prevent
them from using their general pharmacy management knowledge and skill with a different employer.
Defs.’ Reply in Supp. of Their Mot. to Dismiss (“Reply”) 1–2 (ECF No. 21) (citing Bernier v. Merrill Air
Eng’rs, 2001 ME 17, ¶¶ 17–18, 770 A.2d 97). The line between the use of general professional knowhow and specific CPS confidential information can be explored further in discovery. For purposes of
this motion, CPS has plausibly alleged that the Noncompete Clauses were necessary to prevent the
Defendants from using confidential information specific to CPS.

10

protect its legitimate business interests. In discovery, Newton and Sarle will have the
opportunity to explore, for example, whether the nondisclosure of confidential
information term in their Employment Agreements was itself adequate to protect
these interests. Id. 8 But for now, CPS has plausibly stated a claim for breach of
enforceable noncompete provisions.
CONCLUSION
For the reasons stated above, the Defendants’ motion to dismiss (ECF No. 15)
is DENIED.

SO ORDERED.
/s/ Nancy Torresen
United States District Judge
Dated this 27th day of March, 2024.

The Defendants make passing references to the broad scope of the Noncompete Clauses—18month, nationwide restrictions on working for any competitor—and generally assert that noncompete
agreements are unfair if they restrict employees’ ability to support themselves in their chosen
professions. MTD 3, 7; Reply 4. They contend that I should declare the Noncompete Clauses
unenforceable based only on the facts pled in the Complaint. MTD 3. Their legal support for this
contention does state that the reasonableness of a noncompete provision is a question of law for the
court, but then goes on that “[t]he reasonableness of a specific covenant must be determined by the
facts developed in the case as to its duration, geographic area, and the interests sought to be protected.”
OfficeMax Inc. v. Cnty. Qwick Print, Inc., 709 F. Supp. 2d 100, 107–08 (D. Me. 2010)); see MTD 3. The
Defendants rely on cases where the parties have engaged in at least some discovery, often in the
context of a motion for a preliminary injunction. They have not provided any examples of courts
dismissing breach of noncompete claims at the pleading stage. The scope of the Noncompete Clauses
here do seem quite broad, and it will be CPS’s burden to prove that they are “reasonable” under 26
M.R.S. § 599-A(2). This may be an uphill battle for CPS, but on the Complaint and briefing before me,
I am not prepared to say they fail as a matter of law. Moreover, I question whether case law predating
Maine’s 2019 noncompete law, which by statute declares that noncompete agreements are “are
contrary to public policy,” 26 M.R.S. § 599-A(2), are still good authority. But this question will wait for
another day.

8

11