HR STAFFING CONSULTANTS, LLC et al v. BUTTS

Filing 39

CORRECTED OPINION (REDACTED FOR PUBLIC FILING). Signed by Judge Kevin McNulty on 6/2/15. (sr, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

HR STAFFING CONSULTANTS, LLC, and
Upstream Healthcare Management
New Jersey, LLC,
Plaintiffs,

Civ. No. 2:15-3155
(KM)(SCM)

CORRECTED OPINION

V.

REDACTED FOR PUBLIC
FILING

Richard BUTTS,
Defendant.

KEVIN MCNULTY, U.S.D.J.:
This matter comes before the Court on the motion (ECF Nos. 4, 7,
17’) of Plaintiffs HR Staffing Consultants, LLC (“HR Staffing”) and
Upstream Healthcare Management of New Jersey, LLC (“Upstream”),
pursuant to Fed. R. Civ. P. 65, for a preliminary injunction against
Defendant Richard Butts. HR Staffing and Upstream request that this
Court enjoin Butts from working for CarePoint Health Management
Associates, LLC (“CarePoint”) in violation of the non-compete clause of
his employment agreement with HR Staffing.
2
On Friday, May 8, 2015, I heard oral argument on HR Staffing’s
application for a temporary restraining order. On Monday, May 11, 2015,
I entered an order granting limited temporary relief protecting certain
1 have considered Plaintiffs’ TRO submissions (ECF Nos. 4, 7) and
supplemental letter brief (ECF No. 17) in connection with this preliminary
injunction application.
1

This Court exercises jurisdiction pursuant to 28 U.S.C. § 1332 as the
parties are diverse and the amount in controversy exceeds $75,000.
2

I

allegedly confidential information. I authorized the parties to take
expedited discovery and set the matter down for a hearing.
On May 22, 2015, I held an evidentiary hearing on Plaintiffs’
motion for a preliminary injunction. By stipulation, affidavits submitted
by both sides were accepted by the Court in lieu of direct testimony. I
heard live testimony from three witnesses: Jennifer Dobin, Richard
Butts, and Christopher Howard. Both sides submitted documentary
exhibits, as well as designations from the depositions.
For the reasons set forth below, this Court is persuaded that HR
Staffing and Upstream have met their burden of showing that an
injunction is warranted. Their motion for a preliminary injunction will
therefore be GRANTED.

2

I.

FINDINGS OF FACT
3
a. Agreements between HR Staffing, Upstream, and
CarePoint

1..

CarePoint is a New Jersey for-profit hospital system operating three
hospitals: Christ Hospital, Hoboken University Medical Center, and
Bayonne Medical Center. (Howard Deci. ¶10.)

2.

Upstream, a New Jersey limited liability corporation, co-manages
healthcare service lines for hospital systems, including CarePoint’s
hospitals. (Id. ¶J4—7, 10.)

3.

Upstream and CarePoint are parties to a Master Management
Services Agreement (“MMSA”). (IcL ¶ 11.)
Citations to the record are abbreviated as follows:

Butts Deci. = Declaration of Richard Butts, dated May 8, 2015,
submitted in opposition to the motion of plaintiffs, Upstream and HR Staffing,
for a temporary restraining order and preliminary injunction (ECF No. 6—2)
Butts Supp. Decl. Supplemental Declaration of Richard Butts, dated
May 20, 2015, submitted in opposition to motion for a preliminary injunction
(ECF No. 19—2)
Dobin Decl. = Declaration of Jennifer Dobin, dated May 8, 2015,
submitted in opposition to motion for a temporary restraining order and
preliminary injunction (ECF No. 6—1)
Employment Agreement = Employment Agreement between HR Staffing
and Butts, Plaintiffs’ Ex. 2, attached as Exhibit A to the Howard Deci.
Howard Deci. = Declaration of Christopher Howard, dated May 6, 2015,
submitted in support of motion for a temporary restraining order and a
preliminary injunction, Plaintiffs’ Ex. 1 (ECF No. 4-2) (All Exhibits to the
Howard Declaration are available at ECF No. 4-2.)
Howard Supp. Deci. = Supplemental Declaration of Christopher Howard,
dated May 18, 2015, submitted in support of motion for a temporary restraining
order and a preliminary injunction, Plaintiffs’ Ex. 8 (ECF No. 18) (All Exhibits to
the Supplemental Howard Declaration are available at ECF No. 18.)
Ingledue Decl. = Declaration of Paul Ingledue, dated May 20, 2015,
submitted in support of motion for a preliminary injunction, Plaintiffs’ Ex. 12
(ECF No. 17-6)
PT Tr. = Transcript of evidentiary hearing on plaintiffs’ motion for a
preliminary injunction, held in open court on May 22, 2015.
PSSA = Preferred Staffing Services Agreement between HR Staffing and
CarePoint, Plaintiffs’ Ex. 27, attached as Exhibit A to the Dobin Deci.

3

4.

Co-management services “usually entail[] recommending the adoption
of new, and/or the amendment of the hospitals existing: (a) evidencebased medicine policies, procedures and protocols, in order to
measurably improve quality of care; and (b) administrative and
operational policies and procedures in order to be more costefficient.” (Id. ¶6.)

5.

HR Staffing is a healthcare staffing company that provides personnel
to hospitals and healthcare facilities. (Id. ¶5.)

6.

HR Staffing’s primary resource is its personnel. (Id. ¶26.)

7.

Paul Ingledue and Christopher Howard own and operate Upstream
and HR Staffing. (Id. ¶3.)

8.

Pursuant to a Preferred Staffing Services Agreement (“PSSA”) between
HR Staffing and CarePoint, HR Staffing has provided employees,
including high-level management employees, to CarePoint. (Id. ¶j 10,
11, Pis. Ex. 27.)

9.

HR Staffing and Upstream also provide employees for various joint
ventures between Upstream, CarePoint, and others. (Id. ¶11.)

10. HR Staffing recruits, trains, and develops the employees that it places
at its joint ventures between Upstream, CarePoint, and others. (Id.
¶j13, 15, 33.) It is responsible for facilitating staffing and
recruitment service, adherence to performance metrics, maintaining
licensure and credentials, compliance with laws and regulations,
maintaining insurance, providing pre-screened staff, and providing
training. (PSSA

§ II).

11. HR Staffing bears the costs of recruitment, training, and
development. (Howard Deci. ¶33.)
12. Upstream and HR Staffing assigned employees to work in various
management level positions within CarePoint’s hospitals. Assigned
personnel remained employed by HR Staffing and were paid by HR
Staffing, although the ultimate source of their salaries was the fee

4

paid by CarePoint under the Staffing Services Agreement. (Id. ¶11;
see also PT Tr. 64:19—65:1.) For permanent (LTP) staff, CarePoint paid
HR Services on a cost-plus basis (PSSA Ex. B)
13. Richard Butts was one of the employees HR Staffing trained and
assigned to work as a high-level executive at CarePoint. (Howard
Deci. ¶12.)
14. At this time, Upstream and HR Staffing are in related litigation with
CarePoint in the Superior Court of New Jersey, Law Division, Hudson
County. Upstream Healthcare Management of New Jersey, LLC v.
CarePoint Health Management Associates, LLC, No. HUD-L-1 143-15
(Ingledue Deci. Ex. F, ECF No. 17-12; PIs. Ex. 18.)
b. Butts’s agreement with HR Staffing
15. Butts, a North Carolina resident, was an HR Staffing employee. He
was placed by HR Staffing at Peninsula Heart and Vascular Services,
LLC (“PHVS”). (Howard Decl. ¶J12—14.)
16. PHVS is a co-management joint venture owned by Upstream,
CarePoint, and various physicians. (Id. ¶12.)
17. Butts became the Executive Director of PHVS in 2011. (Id. ¶14.)
18. On February 17—18, 2014, HR Staffing and Butts entered into the
Employment Agreement. (Id. ¶23; Employment Agreement.)
19. Under the Employment Agreement, Butts agreed to provide services
for “Client Engagements” to which he would be assigned by HR
Staffing. (Employment Agreement

§ I.)

20. Pursuant to the Employment Agreement, HR Staffing placed Butts as
the Vice President of Cardiovascular Services for CarePoint’s
Hospitals. (Howard Decl. ¶24.)
21. Butts’s Employment Agreement includes the following non
competition covenant, referred to by all parties as “the non-compete”:
Employee acknowledges that if he/she were to compete with
Company in the furnishing of the Services as contemplated
herein it would cause serious harm to Company. Employee
5

also acknowledges that the furnishing of the Services
requires a significant commitment of time, that the
marketplace for the services is extremely competitive, and
that Company competes against other providers of Services
located throughout the region.
Therefore, in consideration of, among other things, the
compensation to be paid by Company to Employee
hereunder and as a material condition and inducement for
Company to enter into this Agreement, and without in any
manner limiting the other restrictions imposed against
Employee under other provisions of this Agreement,
Employee hereby covenants and agrees that throughout the
term of this Agreement and during the twelve (12) month
period immediately following the expiration, termination or
non-renewal of this Agreement for any reason (collectively,
the “Restriction Period”), Employee shall not, except with
Company’s prior written consent,
engage in the
furnishing of any aspect of the Services as contemplated
under this agreement and/or provide or enter into any
contractual relationship relating to any aspect of such
Services with any Client, hospital, health care facility,
medical group, or other party or entity to provide consulting,
management and/or other directorship services to, or
participate in the management, operation or development of,
any medical practice, hospital or other health care facility
that provides such professional medical services, at any
health care facility or other location (e.g., hospital, health
care facility, medical office, etc.) anywhere with Hudson
County and the surrounding counties (Bergen, Passaic,
Union, and Essex Counties) in which Employee provided
Services during the term of the Agreement at least twenty
(20) percent of the time.
.

(Employment Agreement, Amendment

.

.

§ II.)

22. Butts’s Employment Agreement also includes the following nonsolicitation provision:
During the term of this Agreement and for a period of twelve
(12) months following the termination of this Agreement,
except with the prior written consent of Company’s
President or Managing Partner, which may be provided or
withheld at his sole discretion. Employee shall not, anywhere
in the United States, directly or indirectly, whether as an
employee, consultant, owner, partner, director, officer,
6

shareholder, member or in any other capacity for his/her
account or for the benefit of any third person or entity which
he/she is, or becomes, associated: (a) Solicit, direct,
influence, or attempt to influence a Client for whom
Employee provided Services under this Agreement, or with
whom Employee became familiar as a result of Employee’s
relationship with Company under this Agreement, to: (i)
employ, hire or do business with Employee or any third
party with which Employee is associated for the provision or
development of services or products that are the same as,
similar to, or otherwise competitive with any of those offered,
provided or performed by Company.
(Employment Agreement, Amendment to

§ IX.)

23. Section VIII of the Employment Agreement, titled Term and
Termination, provides that “Employee may terminate this Agreement
at any time on thirty (30) days written notice to the Company.”
(Employment Agreement

§ VIII.)

24. The Employment Agreement also includes the following provision,
titled Injunctive Relief, warning that HR Staffing will seek injunctive
relief in the event of a breach:
The parties agree that a breach of the agreements set forth in
Sections VII and IX of this Agreement may cause irreparable
damage to Company, the extent of which may be difficult to
ascertain, and that the award of damages may not be
adequate relief. Therefore. Employee agrees that, in the event
of a breach or threatened breach of any provision of Section
III or IX of this Agreement, Company may institute an action
to compel the specific performance of such provision, and
Employee agrees not to assert adequacy of money damages
as a defense and agrees that such a remedy shall be
cumulative, not exclusive, and in addition to any other
available remedies.
(Employment Agreement

§ X.)

25. The Employment Agreement also included a provision titled Entire
Agreement, Waiver, Modification and Notices, which provides:
This Agreement, including the Addendum, constitutes the
complete and entire agreement of the parties with respect to

7

its subject matter and supersedes and replaces any other
written or oral agreement or understanding between the
parties. This Agreement may be amended, modified,
supplemented or waived only by a written instrument signed
by both parties.
(Employment Agreement

§ XIX.)

26. Butts has resided in North Carolina and traveled some 600 miles to
New Jersey almost every week in connection with his employment at
HR Staffing and CarePoint. (PT Tr. 95:13—16; 96:2—97:3.) He has not
looked into alternative employment within a similar distance from his
home. (Butts Supp. Decl. ¶J11—13; PT Tr. 97:8—2 1.)
c. Butts’s resignation

27. In or about March 2015, Butts had discussions with Ingledue and
Howard about CarePoint’s interest in hiring him directly. (Butts Deci.
¶23—24.)
28. At that time, CarePoint was in the process of offering positions to
certain HR Staffing employees. (Id. ¶28.)
29. In or about March 2015, Butts met with Jennifer Dobin, Executive
Vice President of Human Resources for CarePoint, to discuss his
potential employment with CarePoint. (Id. ¶j27, 30.)
30. Butts advised Dobin that he was subject to a non-compete clause in
his Employment Agreement with HR Staffing. (Id. ¶3 1.)
31. Dobin advised Butts to seek a waiver of his non-compete clause from
HR Staffing. (Id. ¶33.)
32. On March 22, 2015, Butts signed a document in which he
acknowledged that he was subject to a non-compete covenant under
the Employment Agreement. (Howard Deci. Ex. E; Pis. Ex. 6.) The
document, titled Notice of Meeting with CarePoint, includes the
following paragraph:
We take this opportunity to remind you that your
employment agreement with HR Staffing contains several
restrictions, including a non-compete provision. The non

8

compete provision in your agreement with HR Staffing is
meant to limit your ability to work for HR Staffing’s clients,
including CarePoint. Your meeting with CarePoint is not
meant to limit or restrict HR Staffing’s rights in any way, and
HR Staffing reserves all of its rights, including its right to
enforce the non-compete provisions of your employment
agreement and any other rights it may have.
(Id.)
33. On March 31, 2015, CarePoint made an offer of employment to Butts.
(Butts. Deci. ¶34.)
34. After receiving the offer, Butts disclosed it to Ingledue and Howard
and asked them for a written waiver of the non-compete clause in his
Employment Agreement. (IcL

¶ 35.)

35. Howard and Ingledue replied to Butts that they would not waive the
non-compete clause in his Employment Agreement. (Id. ¶36.)
36. At first, Butts declined CarePoint’s offer of employment. (Butts. Dccl.
¶37.)
37. However, Butts later accepted CarePoint’s offer. Butts says he did so
because, in Butts’s opinion, Ingledue and Howard were asking Butts
to engage in “disruptive conduct to somehow further the goals” of a
lawsuit initiated by HR Staffing and Upstream against CarePoint in
New Jersey state court. (Id. ¶39.)
38. Butts filled out an employment application with CarePoint, dated May
1, 2015, and signed May 3, 2015. Although formally an application,
the document states that Butts has already “received and executed”
CarePoint’s employment offer. (Pls. Ex. 34.)
39. On his employment application with CarePoint, Butts marked a box
indicating that an agreement with a previous or existing employer
includes a restriction on his ability to compete with that employer.
(Id.)
40. On May 1, 2015, Butts sent Howard and Ingledue a resignation
email, in which he wrote:

9

I am resigning my position from HR Staffing effective today. I
would like to have communicated this in person, but I did
not want to wait any longer for obvious reasons. I will
forward the letter to you by this evening, and I’d be happy to
discuss any transition plan that would be beneficial to all
parties. I will be continuing in my capacity as VP of
[cardiovascularj services with [CarePoint].
(Howard Decl. Ex. C; Pis. Ex. 4.)
41. Butts sent a formal resignation letter that same day. (Howard Dccl.
Ex. D; Pis. Ex. 5.)
42. Before resigning from HR Staffing, Butts provided CarePoint’s
Executive Director of Human Resources, Jennifer Dobin, with the
personal email addresses of several HR Staffing employees. (Howard
Deci. ¶53, Ex. F; Pis. Ex. 7.)
43. Sometime after Butts’s communications with Dobin (see paragraph
42), CarePoint informed one HR Staffing employee that she was “one
of the employees to be transitioned over from HR Staffing to
CarePoint.” (Howard Deci. ¶53, Ex. 0.)
d. Butts’s access to certain information of Upstream and
HR Staffing and its potential clients
44. Upstream and HR Staffing provide services to healthcare providers
other than CarePoint, such as
(Howard Supp. Decl.
¶13.)
45.

(Id.)
46. HR Staffing and Upstream shared with Butts their confidential plans
to develop a

at
(Id. ¶1115—17, 22, Ex. A (HRSOO67-HRSOO71,

HRSOO82-HRSOO87, HRS0464-HRS0466); Pls. Ex. 9.)
47. HR Staffing and Upstream’s plans included a “white paper explaining
10

the structure of the clinical co-management company joint venture,
including the underlying business objectives, clinical alignment and
legal analysis for compliance” with state and federal laws. (Id. ¶17
(citing Ex. A (HRSOO67—HRSO071, HRSOO82—HRSOO87, HRS0464—
HRS0466); Pis. Ex. 9.)
48. The contents of that “white paper” were substantially copied from
sources publicly available on the internet. (P1 Tr. 123—39; Marino
Deci. Ex. D.)
49. HR Staffing and Upstream planned for Butts to operate the
cardiovascular service line at
(Howard Supp. Deci.
.

¶J17, 22.)
50. Butts has considerable experience, including a 2-year nursing
degree; training by his previous employer (MedCath Partners, LLP) as
well as HR Staffing in management within the clinical co—
management model; and management of the cardiovascular service
line at CarePoint’s hospitals. (Butts Supp. Deci. ¶J1—2; Howard Deci.
¶J12—13.)
51. Butts states, however, that his lack of experience operating a
cardiothoracic surgical initiative would have disqualified him from
personally exploiting the business opportunities disclosed to him by
HR Staffing. (Butts Supp. Decl. ¶8; P1 Tr. 103:9—104:8.)
52. The cardiovascular service line at

would compete with

CarePoint for patients and physicians. (Howard Supp. Deci. ¶18.)
53. HR Staffing and Upstream also have plans to develop Clinically
Integrated Networks (CINs) for
(Id. ¶24.)
54. The CIN initiative would be operated in hospitals that compete with
CarePoint. (Id. ¶32.)
55. HR Staffing and Upstream shared the CIN initiative plans with Butts.
(Id. ¶1128—30.)
56. HR Staffing and Upstream have also discussed joint ventures with
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which own and operate acute care hospitals in New
Jersey, among other states. (Id. ¶34, 37.)
57.

‘s hospitals in New Jersey compete with CarePoint.
(Id. ¶35.)

58. The

plans have also been shared with Butts. (Id.

¶36.)
59. The evidence did not indicate that the plans with these other
hospitals have proceeded past the discussion stage, and the Court is
not in a position to assess the likelihood that these plans would be
consummated.
e. HR Staffing’s Preferred Staffing Services Agreement with
CarePoint
60. Jennifer Dobin is the Executive Vice President of Human Resources
for Care Point. (Dobin Deci. ¶1.)
61. Dobin was responsible for negotiating a Preferred Staffing Services
Agreement between CarePoint and HR Staffing, dated August 1, 2014
(“PSSA”). (Id. ¶2 (citing Ex. A); Pis. Ex. 27.)
62. Pursuant to Preferred Staffing Services Agreement, HR Staffing would
identify, screen, recruit, and place within CarePoint per diem and
long-term staff. (PSSA.)
63. Section 1(d) (“Existing LTP Staff’) of the PSSA provides that:
Staffing Company has previously supplied certain long term
permanent staff to CarePoint as listed in Exhibit D (“Existing
LTP Staff’). Upon notice by CarePoint, these Existing LTP
Staff can be hired directly by CarePoint without payment of a
placement fee. CarePoint may, in its sole discretion, assume
PTO liability for such employees.
(PSSA

§ 1(d).)

64. Butts is one of the employees listed in Exhibit D (“Existing LTP
Staff’). (PSSA Ex. D.)
65. Section VI(a) of the PSSA, titled “Non-Solicitation,” reads as follows:

12

During the term of this Agreement and for a period of six (6)
months following the termination of this Agreement, except
with the prior written consent of the other party, which may be
provided or withheld at that party’s sole discretion, neither
CarePoint nor Staffing Company may solicit, direct, influence
or attempt to influence or hire, any employee or independent
contractor of the other party who was employed or engaged by
that party within the preceding six (6) months, to (i) become
employed or retained by the soliciting party or (ii) discontinue
employment or engagement with one party for the benefit of the
soliciting party or any third party.
(PSSA

§ VI(a).)

64. CarePoint has terminated one joint venture with Upstream and HR
Staffing, and has notified HR Staffing that the PSSA will terminate in
August 2015. (Howard Supp. Deci. ¶44.)
II.

ANALYSIS/CONCLUSIONS OF LAW
“A plaintiff seeking a preliminary injunction must establish (1)

that he is likely to succeed on the merits, (2) that he is likely to suffer
irreparable harm in the absence of preliminary relief, (3) that the balance
of equities tips in his favor, and (4) that an injunction is in the public
interest.” Winter v. Natural Res. Def Council, Inc., 555 U.S. 7, 20 (2008)
(numbering added); accord American Express Travel Related Servs., Inc. v.
Sidamon-Eristoff 669 F.3d 359, 366 (3d Cir. 2012). Upstream and HR
Staffing argue that the four preliminary injunction factors weigh in their
favor and that this Court should enjoin Butts from working for
CarePoint, in violation of the non-compete in his Employment
Agreement.
I find that HR Staffing and Upstream are entitled to injunctive
relief.
a. Likelihood of success on the merits
Upstream and HR Staffing bring claims against Butts for (1) breach
of contract; (2) breach of the covenant of good faith and fair dealing; (3)
13

breach of fiduciary duty; (4) misappropriation of trade secrets; (5) breach
of the duty of loyalty; (6) unfair competition; (7) civil conspiracy; and (8)
conversion. (Compi., ECF No. 1.) Upstream and HR Staffing focus on
injunctive relief to prevent Butts from breaching his Employment
Agreement. I therefore focus my analysis on the breach of contract claim
and the non-compete clause in the Employment Agreement.
To establish a breach of contract claim, HR Staffing and Upstream
must show (1) “that the parties entered into a valid contract”; (2) “that
the defendant failed to perform [itsj obligations under the contract”; and
(3) “that the plaintiff sustained damages as a result.” Murphy v. Implicito,
920 A.2d 678, 689 (N.J. Super. Ct. App. Div. 2007).4
The parties do not disagree that a valid contract existed. Their
dispute focuses on the second prong: Butts’s alleged breach of the noncompete.

“[Ijn a diversity action, a district court must apply the choice of law rules
of the forum state to determine what law will govern the substantive issues of a
case.” Warriner v. Stanton, 475 F.3d 497, 499—500 (3d Cir. 2007) (citing Klaxon
Co. v. StentorElec. Mfg. Co., 313 U.S. 487, 496 (1941)). New Jersey uses the
most-significant-relationship test, which consists of two prongs. Mariiscalco v.
Brother Int’l Corp. (USA), 793 F. Supp. 2d 696, 704 (D.N.J. 2011), affd, 709
F.3d 202 (3d Cir. 2013). First, the court must determine whether a conflict
actually exists between the potentially applicable laws. P. V. v. Camp Jaycee,
197 N.J. 132, 143, 962 A.2d 453, 460 (2008) (“Procedurally, the first step is to
determine whether an actual conflict exists. That is done by examining the
substance of the potentially applicable laws to determine whether there is a
distinction between them.”) (internal quotations omitted). “[Ijf no conflict exists,
the law of the forum state applies.” Snyder v. Farnam Companies, Inc., 792 F.
Supp. 2d 712, 717 (D.N.J. 2011) (quotingP.V., 197 N.J. at 143, 962 A.2d at
453). If a conflict exists, the court then moves to the second prong: it must
determine “which state has the ‘most significant relationship’ to the claim at
issue by weighing the factors” in the applicable section of the Restatement
(Second) of Conflict of Laws. Gilbert Spruance Co. v. Pennsylvania Mfrs. Ass’n
Ins. Co., 134 N.J. 96, 102, 629 A.2d 885, 888 (1993).
The parties seem to agree that New Jersey law applies in this diversity
action. At any rate, they point to no aspect in which the application of nonforum law would change the result. Having been directed to no applicable
conflict, I apply general principles of New Jersey contract law.

14

Butts argues that (1) the non-compete is unreasonable in that it is
not necessary to protect any legitimate interests of HR Staffing, imposes
an undue hardship on Butts, and would be injurious to the public; and
(2) HR Staffing waived the non-compete and provided written consent for
Butts to work for CarePoint in its Preferred Staffing Services Agreement
with CarePoint. I do not find these arguments persuasive.
i.

Whether the non-compete is reasonable

Non-competition covenants, while enforceable, are scrutinized
closely because they operate in derogation of free competition and the
individual’s right to exploit his skills and labor. A non-compete is not
valid if its only purpose is to restrict competition, but it may be valid to
the extent it furthers some other legitimate goal of the employer. See
Solarilndus., Inc.

ii.

Malady, 264 A.2d 53 (N.J. 1970); Whitmyer Bros. v.

Doyle, 274 A.2d 577 (N.J. 1971).
Under the approach of the Solari/ Whitmyer line of cases, a noncompete “is enforceable to the extent that it is reasonable under all of the
circumstances of the case.” Karlin v. Weinberg, 390 A.2d 1161, 1166
(N.J. 1978). A non-compete will be found reasonable if it “(1) protects the
legitimate interests of the employer, (2) imposes no undue hardship on
the employee, and (3) is not injurious to the public.” Id. (numbering
added; internal quotations and citations omitted); see also The Cmty.
Hosp. Grp., Inc. v. More, 869 A.2d 884, 897 (N.J. 2005) (citing Karlin). I
find that the non-compete in Butts’s Employment Agreement is
reasonable and that it is likely to be found enforceable.
1. Legitimate interests of HR Staffing
Upstream and HR Staffing have stated that the non-compete
protects two legitimate business interests: protection of confidential
information and the prevention of “disintermediation.” Although the first
concern is legitimate, I place more weight on the second.

15

Confidential information
New Jersey courts considering non-compete covenants “‘recognize
as legitimate the employer’s interest in protecting trade secrets,
confidential information, and customer relations.” Campbell Soup Co. v.
Desatnick, 58 F. Supp. 2d 477, 489 (D.N.J. 1999) (quoting Ingersoll-Rand
Co. v. Ciavatta, 542 A.2d 879, 888 (N.J. 1988)).
[Ejmployers 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.
Ingersoll-Rand, 542 A.2d at 894.
HR Staffing and Upstream have an interest in protecting their
confidential information from CarePoint. Specifically, HR Staffing and
Upstream have shared with Butts three business opportunities involving

(Howard Supp. Deci. ¶‘J13, 15—18, 22, 24, 28—30, 32, 34—
37.) These three ventures would compete with CarePoint’s hospitals for
patients and physicians. (Howard Supp. Decl. ¶J17, 22, 32, 35.)
It is true that Upstream and HR Staffing’s agreements with
CarePoint bar them from “operationalizing” the ventures they are
discussing. (See PT Tr. 139:14—140:25.) However, Upstream and HR
Staffing’s relationship with CarePoint is not stable, as evidenced by the
parties’ ongoing litigation in state court. (See Ingledue Decl. Ex. F, ECF
No. 17-12; Pis. Ex. 18.) CarePoint has terminated one joint venture with
Upstream and HR Staffing; Upstream and HR have the right to terminate
their agreements with CarePoint at any time; and CarePoint has notified
HR Staffing that the PSSA will terminate three months from now, in

16

August 2015. (Howard Supp. Deci. ¶44; P1 Tr. 141:22—142:9.) Therefore,
it is reasonable to conclude that Upstream and HR Staffing are
legitimately entertaining the possibility of entering into ventures with
hospitals that compete with CarePoint.
Butts, if permitted to continue on as an employee of CarePoint,
would be in a position to inform CarePoint of Upstream and HR Staffing’s
plans and undermine these plans for CarePoint’s benefit. Upstream and
HR Staffing thus have a legitimate interest in keeping Butts from
disclosing to CarePoint the confidential information to which he has been
exposed.
I do not find, however, that Upstream and HR Staffing have a
legitimate interest in the confidentiality of the business methods
described in the “white paper,” which derive from public sources. (See
¶J47—48, supra.) Mr. Howard’s testimony that other, joint venture related
business methods are confidential was not supported by any specific
information.
There was a lively dispute over the extent to which Mr. Butts owes
his management skills to the training he received at HR Staffing. It is
unnecessary to resolve it, at least for present purposes. While I would
enforce a non-compete to protect confidential information, I would not
enforce it in the interest of preventing Mr. Butts from exploiting his
general expertise or the skills that he honed while in HR Staffing’s
employ. See generally Rohm & Haas Co. v. ADCO Chemical Co., 689 F.2d
424, 432 (3d Cir. 1982) (applying NJ law). And Mr. Butts, whether or not
he would have personally been qualified to head up the new ventures
(see ¶j49—51, supra), is still in a position to damage HR Staffing by
informing CarePoint of them.
Disintermediation
Upstream and HR Staffing have a legitimate interest in preventing

17

what they have called ccdisintermediation_that is, cutting out the middle
5
man. HR Staffing’s main resource is its personnel. (Howard Deci. ¶26.)
“In order to keep its business going, HR Staffing must attract train,
develop, invest in, and deploy qualified people.” (Id.) It earns its fee by
placing personnel in health care operations such as CarePoint. Like any
broker or middleman, HR Staffing must by contract prevent others from
exploiting its efforts while cutting HR out of the process.
CarePoint’s agreements with HR Staffing allow it to enjoy the
benefit of HR Staffing’s efforts to find, train, and place personnel. Those
personnel remain HR Staffing employees, and their salaries are paid by
HR Staffing. For those services, CarePoint pays HR Staffing a fee.
It is immediately apparent that, absent some contractual
protection, CarePoint or any client could immediately hire away the
personnel placed in its operation by HR Staffing, thereby reaping the
benefit of HR Staffing’s efforts while denying HR Staffing all or part of its
fee. The departing employee, for his or her part, would be cutting off any
benefit to HR Staffing, but only after enjoying the benefit of HR Staffing’s
training and placement efforts.
Upstream and HR Staffing analogize to Consultants & Designers,
Inc. v. Butler Serv. Grp., Inc., 720 F.2d 1553 (11th Cir. 1983).6 In that
case, the Eleventh Circuit found that protection against
disintermediation was a legitimate interest of a technical service firm, a
variant of an employment agency. Such a firm serves as a middleman
The meaning of this unusual word may be illustrated by an analogy to
the business of a real estate agent. The agent’s ability to earn a commission
would be defeated if the buyer and seller, having been brought together by the
agent, could simply sign their own contract of sale. Cutting out the agent would
be an example of “disintermediation,” as I understand the parties to be using
the term.
6

The Eleventh Circuit, considering the laws of Alabama, Tennessee, and
New Jersey, concluded that there was “no significant difference in the law of the
three states” on these issues. Id. at 1557.

18

and provides information in the market for workers in technical fields.
The workers are then recruited by client firms, who usually need shortterm employees. The technical service firm thus brings together workers
with client firms. In upholding the technical service firm’s non-compete
provision, the Eleventh Circuit reasoned that
[the firm] had to compete with: (1) all other technical service
firms; (2) conventional employment agencies; and (3)
disintermediation by firms and workers. Disintermediation is
the actualization of the ever-present cry to eliminate the
middleman, i.e., direct solicitation, negotiation and
contracting between the firm and the worker. Eliminating the
middleman is at first blush a facile and attractive alternative.
However, middlemen exist because they provide a useful and
highly-valued service. If [the firm’s] covenant with its
[workers] is to have any justification, that justification must
be to protect [the firm’s] role as a middleman in the market
for information between [workers] and client firms.
Id. at 1558.
HR Staffing plausibly argues that its one year non-compete, like
the covenant upheld in Consultants & Designers, is crucial to
maintaining its business. In Mr. Howard’s words:
[O]ne year allows us lead time to attract, train, and develop a
replacement for a former employee without unfair
competition from the employee who has departed.
Additionally, in the fluid healthcare field, there is also the
added protection that a one-year covenant ensures that a
former employee cannot use the cutting edge information
and training that they obtain from us. Sometimes strategies
and information can become stale.
(Howard Deci. ¶30.)
HR Staffing’s non-compete protects its role as a middleman
between its employees and its client hospitals, such as CarePoint. In
finding, training, and placing its employees, HR Staffing provides a
service, one for which clients are willing to (promise to) pay. To freely
allow disintermediation would threaten to destroy HR Staffing’s business.

19

Butts maintains that prevention of disintermediation is not a
legitimate, protectable business interest. He argues that Consultants &
Designers was decided before the New Jersey Supreme Court’s decisions
in Ingersoll-Rand Co. v. Ciavatta, 542 A.2d 879 (N.J. 1988) and The Cmty.
Hosp. Grp., Inc. u. More, 869 A.2d 884 (N.J. 2005). Those later cases, he
says, restrict an employer’s legitimate interests to the protection of trade
secrets, confidential information, customer relations, and “highly
specialized, current information not generally known in the industry.”
542 A.2d at 894. In particular, he quotes Ingersoll’s statement that
“[m]ost courts have limited the legitimate protectable interests of an
employer to trade secrets and other proprietary information

.

.

.

and

customer relations.” Id. at 893.
I do not read Ingersoll and More so narrowly. Trade secrets and
such are commonly the subjects of non-compete protection, but they are
not the only possible subjects. What is required is that the interest being
protected be a legitimate one, distinct from the restriction of competition
per

Se.

Both Ingersoll and More relied on a seminal New Jersey case,
Whitmyer Bros., Inc. v. Doyle, 274 A.2d 577 (N.J. 1971). As the Whitmyer
court explained:
Corbin of course recognized that the legitimate interests of
the employer would include protection of his trade secrets
and confidential business information along with his
customer relationships but would not include the prevention
of competition as such; as he put it, a postemployment
restriction on an employee requires special justification
which is nonexistent where cthe harm caused by service to
another consists merely in the fact that the new employer
becomes a more efficient competitor just as the first
employer did through having a competent and efficient
employee. A restraint on the employee is illegal when its
purpose is the prevention of competition, except when the
methods of competition to be prevented are methods
commonly regarded as improper and unfair.’

20

274 A.2d at 582 (citing 6A Corbin, Contracts

§ 1394 at 100 (1962)).

In this case, Upstream and HR Staffing do not seek merely to
prevent Butts, CarePoint, or anyone else from becoming a more efficient
competitor. That is, they do not seek to restrict competition as such.
Rather, they seek to prevent the destruction of their business model—to
forestall others from appropriating gratis the benefit of the service they
sell. I regard that as a legitimate business interest.
HR Staffing’s non-compete may alternatively be viewed as
protecting one of the interests specifically enumerated in Ingersoll:
protection of customer relationships. See Ingersoll, 542 A.2d at 893.
CarePoint may be poaching Butts, but Butts is also poaching CarePoint,
which is HR Staffing’s customer. Indeed, if HR Staffing’s employees could
jump to the client immediately after being placed there, HR Staffing’s
relationships with its clients would likely disintegrate.
Butts next argues that Upstream and HR Staffing have waived the
non-compete by permitting other employees to defect to CarePoint. (Def.
P.1. Opp. 17—19, ECF No. 19.) He contends that if Upstream and HR
Staffing “were truly interested in preventing ‘disintermediation,’ they
would not have waived their non-competition agreements with everyone
except Butts.” (Butts P.1. Opp. 19, ECF No. 19.) I am unpersuaded. It is
reasonable for Upstream and HR Staffing to exercise some selectivity
when incurring the trouble and expense of enforcing the non-compete
provisions. As the Vice President of the cardiovascular service line at
CarePoint, Butts was a high-level and valuable employee. It makes sense
that Upstream and HR Staffing would focus their disintermediation
prevention efforts on his case. See Laidiciw, Inc. v. Student Transp. of
Am., Inc., 20 F. Supp. 2d 727, 751 (D.N.J. 1998) (“Defendants’ suggestion
would require an employer to enforce every restrictive covenant, without
regard to cost-effectiveness or individual circumstances. This is
impractical and unfair.”). I address and reject the remainder of Butts’s
21

argument regarding waiver in Section II(a)(ii), infra.
I conclude that Upstream and HR Staffing’s interests in protecting
their confidential business plans and preventing disintermediation are
legitimate interests, independent of the suppression of competition, that
are worthy of protection by enforcement of the non-compete provision.
2. Undue hardship
Second, Butts argues that enforcing the non-compete would
impose an undue hardship upon him. The scope of the non-compete,
however, is reasonable. I add that any hardship Butts may be incurring
is almost entirely attributable to himself.
Butts’s non-compete is narrow in both temporal and geographic
scope. He is restricted from working in five counties in New Jersey for
one year. (Employment Agreement, Amendment, Section II.) Although
each covenant must be evaluated on its own terms, I do note that similar
non-compete clauses have routinely been upheld as reasonable. See, e.g.,
The Cmty. Hosp. Grp., Inc. v. More, 869 A.2d 884, 897 (N.J. 2005)
(enforcing a two-year covenant covering a thirty-mile radius); Platinum
Mgmt., Inc.

t.’.

Dczhms, 666 A.2d 1028, 1040 (N.J. Super. Ct. Law Div.

1995) (enforcing a restrictive covenant with a one-year term); Schuhalter
v. Salerno, 653 A.2d 596, 599 (N.J. Super. Ct. App. Div. 1995) (“covenant
duration of two years is generally held to be reasonable” (internal
quotation and citation omitted)); Hogan v. Bergen Brunswig Corp., 378
A.2d 1164 (N.J. Super. Ct. App. Div. 1977) (enforcing one-year restriction
covering Essex and Union counties); Nat’l Reprographics, Inc. v. Strom,
621 F. Supp. 2d 204, 224-25 (D.N.J. 2009) (enforcing one-year, 50-mile
restriction under New Jersey law).
One year appears to be a reasonable time for HR Staffing to train a
replacement. The five counties are a reasonable approximation of the
area in which CarePoint and its competitors operate. (See ¶j1, 5—11, 52,

22

54, 57, supra; see also PT Tr. 9 1—94, 104—06.) For one year, Butts may
find similar employment anywhere outside of those five New Jersey
counties. Once the year has elapsed, he may work anywhere, and for
anyone—including Carepoint—that he chooses. I am therefore satisfied
that Butts’s non-compete is “narrowly tailored to ensure the covenant is
no broader than necessary to protect the employer’s interests.” More, 869
A.2d at 897.
Courts evaluating the hardship prong have considered “the
likelihood of the employee finding work in his field elsewhere.” Karlin,
390 A.2d at 1169. As to that factor, the employee’s own role in bringing
about his hardship is important:
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.; see also More, 869 A.2d at 898 (“If the employee terminates the
relationship, the court is less likely to find undue hardship as the
• employee put himself or herself in the position of bringing the restriction
into play.”).
Butts testified that he lives in North Carolina and has traveled to
New Jersey almost every week in connection with his employment here.
(See ¶26, supra; P1 Tr. 95:13—16; 96:2—97:7.) In support of his contention

23

that alternative employment is unobtainable, Butts declared that “[tihere
is only one major health care system within reasonable commuting
distance to my residence in North Carolina.” His “commuting distance”
now, however, is about six hundred miles. He acknowledged on crossexamination that he had not looked into employment opportunities
within a six hundred mile radius of his home. (Butts Supp. Deci.

¶J 11—

13; P1 Tr. 97:8—2 1.)
In the larger sense, of course, this non-compete did not stand in
the way of this employee’s leaving for greener pastures. Butts remains
precisely where he was, as Vice President of Cardiovascular Services at
CarePoint. By doing nothing, he could have continued to enjoy his
7
present position and salary indefinitely. He has swapped bosses, not
jobs. The practical effect of his departure is to remove HR Staffing from
the chain of command.
Finally, I consider the equities of Butts’s departure. Butts actually,
subjectively knew he was subject to the non-compete. He sought, and
was denied, a waiver of the non-compete. He acknowledged the existence
of the non-compete in writing in several places, including his very
application for employment at CarePoint.

(VJ 21, 30—35, 39.) Having left

without giving the required 30 days’ notice (J23, supra), he can hardly
complain that he has been subjected to an emergent application for
injunctive relief. In short, Butts transferred his loyalties to CarePoint,
knowingly violated the non-compete provision, and took a chance that
HR Staffing would not enforce it. For this reason, too, any hardship Butts
That is not to say that Butts had no reasons for what he did. At the time,
disputes between HR Staffing and CarePoint over, inter cilia, unpaid invoices,
were escalating. Butts felt he was being placed in the middle of unfair or even
unethical pressure tactics by HR Staffing. I make no findings as to those
intercorporate disputes, which are the subject of state court litigation. (See ¶ 14,
supra.) I state only that the disputes between HR Staffing and CarePoint do not
tip the equities as between HR Staffing and Butts. And Butts’s feeling that
things had grown “hostile” (PT Tr. 62) does not excuse his failure to give the
required 30 days’ notice.
24

may be suffering cannot be fairly characterized as “undue.”
Therefore, the “hardship” factor weighs in favor of enforcing the
non-compete.
3. Public interest
The public interest factor weighs in favor of granting a preliminary
injunction.
The Karlin court identified two significant public interest factors a
court should consider: “the demand for the services rendered by the
employee and the likelihood that those services could be provided by
other [employees] already practicing in the area.” Karlin, 390 A.2d at
1169—70 (Karlin involved a physician). The New Jersey Supreme Court
has also recognized the public’s interest “in safeguarding fair commercial
practices and in protecting employers from theft or piracy of trade
secrets, confidential information, or, more generally, knowledge and
techniques in which the employer may be said to have a proprietary
interest.” Ingersoll, 542 A.2d at 894.
Butts argues that a preliminary injunction would undermine “the
safe and efficient operation of a hospital system.” (Def. P.1. Opp. 22.)
However, as Upstream and HR Staffing point out, Butts is an
administrator, not a doctor. (Pls. TRO Mot. 8—9, ECF No. 4.) There is no
indication that patient care would suffer, that he is irreplaceable at
CarePoint, or that others could not perform his current executive
8
functions.
The public has an interest in upholding reasonable, bargained-for
provisions of contracts. See Manhattan Associates, Inc. v. Ruderman, No.

CarePoint maintains that it knew nothing of Butts’s non-compete until
relatively late in the process, perhaps not until April 2015. There is no dispute,
however, that it took Butts on with the understanding that he was subject to a
non-compete with HR Staffing. (Butts Decl. ¶J31, 33.) Thus, this preliminary
injunction does not come without warning to those it may harm.

8

25

CIV. 05-3928 (GEB), 2005 WL 2290297, at *7 (D.N.J. Sept. 20, 2005).
The public has an interest in safeguarding an employer’s confidential
information. And the public has an interest in protecting Upstream and
HR Staffing’s business model. As the Eleventh Circuit noted, “middlemen
exist because they provide a useful and highly-valued service.”
Consultants & Designers, Inc., 720 F.2d at 1558.
I find that the public interest prong weighs in favor of enforcing the
non-compete.
ii.

Whether HR Staffing waived Butts’s non-compete

Butts has not established that HR Staffing waived the non-compete
in his Employment Agreement, either by its statements or by virtue of the
PSSA between HR Staffing and CarePoint.
“Waiver is the voluntary and intentional relinquishment of a known
right.” Cole v. Jersey City Med. Ctr., 72 A.3d 224, 231 (N.J. 2013)
(internal quotations and citation omitted.) “[A] party need not expressly
state its intent to waive a right; instead, waiver can occur implicitly if the
circumstances clearly show that the party knew of the right and then
abandoned it, either by design or indifference.” Id. (internal quotations
and citation omitted). However, “[s]uch a waiver must be done clearly,
unequivocally, and decisively.” Id. (internal quotations and citation
omitted). The evidence in the record shows that HR Staffing did not waive
Butts’s non-compete.
Butts first focuses on the PSSA between HR Staffing and
CarePoint, arguing that it overrode or waived the non-compete in his own
Employment Agreement. (Butts P.1. Opp. 10—11; 20—21.) Section 1(d) of
the PSSA Section 1(d) (“Existing LTP Staff’) provides as follows:
Staffing Company has previously supplied certain long term
permanent staff to CarePoint as listed in Exhibit D (“Existing
LTP Staff’). Upon notice by CarePoint, these Existing LTP
Staff can be hired directly by CarePoint without payment of a

26

placement fee. CarePoint may, in its sole discretion, assume
PTO liability for such employees.
This provision, says Butts, independently authorizes CarePoint to hire
him, irrespective of his non-compete.
Butts, however, was not a party to the PSSA, and the PSSA does
not purport to settle the rights of Butts and HR Staffing vis-à-vis each
other. The agreement Butts did sign—his Employment Agreement, which
contains the non-compete—provides that it may be modified “only by a
written instrument signed by both parties.” (Employment Agreement

§

XIX.) The PSSA is not a contract “signed by both parties” (i.e., by HR
Staffing and Butts); Butts is not a party to the PSSA at all. And Butts
acknowledges that he never received a written waiver of the noncompete, as required by the Employment Agreement. (E.g., ¶J31—35,
supra; Butts Deci. ¶J35—36; P1 Tr. 76:2.)9
Butts next focuses on his oral conversations with Ingledue and
Howard which, he says, led him to believe that the non-compete was
waived. As established above, Butts’s Employment Agreement can only
be modified or waived by a written instrument signed by both parties.
Whatever doubts Butts may have had about a potential waiver should
have been cleared up by (1) the document he signed on March 22, 2015,
acknowledging that he was subject to a non-compete (Howard Deci. Ex.
E; Pis. Ex. 6); and (2) Ingledue and Howard’s explicit refusal to provide
Butts with a written waiver of the non-compete (Jj3 1—35, supra; Butts
Deci. ¶J35—36; P1 Tr. 76:2.)
I find that HR Staffing has not agreed to waive the non-compete
clause of Butts’s Employment Agreement.

A violation of the PSSA, moreover, might well give rise to a cause of
action as between CarePoint and HR Staffing, but it does not affect HR
Staffing’s rights as against its employee, Butts. I do not analyze the claim of
breach of the PSSA here.
27

b. Irreparable harm
Upstream and HR Staffing have established that they will suffer
irreparable harm if Butts continues to work for CarePoint and the noncompete in his Employment Agreement is not enforced.
Harm is considered “irreparable” if it is not redressable by money
damages at a later date, in the ordinary course of litigation. Instant Air
Freight Co. u. C.F. Air Freight, Inc., 882 F.2d 797, 801 (3d Cir. 1989)
(citing Sampson v. Murray, 415 U.S. 61, 90 (1964)).
First, Butts has been exposed to confidential information regarding
Upstream and HR Staffing’s potential business ventures that would
compete with CarePoint. (Howard Supp. Deci.

VT 13,

15—18, 22, 24, 28—

30, 32, 34—37.) Butts’s position at CarePoint enables him to inform
CarePoint about Upstream and HR Staffing’s plans, to CarePoint’s benefit
and to Upstream and HR Staffing’s detriment. The loss of these business
opportunities would irreparably harm Upstream and HR Staffing.
Second, HR Staffing would be irreparably harmed by Butts’s
continued employment in violation of his non-compete. This lawsuit will
likely span more than one year, at which point the enforcement of Butts’s
non-compete will become moot. Allowing Butts to remain at CarePoint
would irreparably harm Upstream and HR Staffing’s efforts to prevent
disintermediation. Effectively, CarePoint would have eliminated the
middleman at the cost of maintaining this lawsuit.
Thus, the irreparable harm prong warrants granting a preliminary
injunction.
c. Balancing the equities and the public interest
The final two prongs, balancing of the harms and the interest of
the public, also weigh in favor of granting injunctive relief.

28

As I have explained in Section II(a)(i)(3), the public interest
warrants enforcement of the non-compete provision of Butts’s
employment contract and enjoining him from working for CarePoint.
I have also discussed Butts’s hardship in Section Il(a)(i)(2), supra.
Within the next year, Butts may seek employment anywhere outside of
five counties in New Jersey, after one year he may seek employment with
CarePoint or any other entity. At the time of his resignation, Butts was
aware of his non-compete and knew that HR Staffing did not formally
waive it. He took a calculated risk in resigning from HR Staffing, and it
did not pay off. Any hardship Butts may endure was brought upon
himself. See Kos Phw-m., Inc. v. Andrx Corp., 369 F.3d 700, 728 (3d Cir.
2004) (“[T]he injury a defendant might suffer if an injunction were
imposed may be discounted by the fact that the defendant brought that
injury upon itself.” (internal quotation and citation omitted)).
For the reasons discussed above, HR Staffing and Upstream have a
legitimate interest in maintaining their business model (preventing
disintermediation) and keeping their confidential information from
potential competitors. Equity therefore favors granting injunctive relief.
III.

SECURITY

Pursuant to the Federal Rules, this Court “may issue a preliminary
injunction

.

.

.

only if the movant gives security in an amount that the

court considers proper to pay the costs and damages sustained by any
party found to have been wrongfully enjoined.

.

.

.“

Fed. R. Civ. P. 65(c).

Therefore, I will require Upstream and HR Staffing to give security
in the amount of Butts’s annual salary at CarePoint. Butts will document
that amount to HR Staffing, if necessary.
IV.

INJUNCTIVE RELIEF

In light of the foregoing, I will grant Upstream and HR the following
injunctive relief:
29

Defendant Richard Butts shall be restrained from:
1. Violating the non-compete and non-solicitation provisions of
his Employment Agreement with HR Staffing, including, but
not limited to, being employed by CarePoint Health
Management Associates, LLC, and/or any of its related
entities (collectively, “CarePoint”); and,
2. Violating the confidentiality provisions of his Employment
Agreement with HR Staffing, including, but not limited to,
disclosing to CarePoint any confidential or proprietary
information, or trade secrets of Plaintiffs.
V.

CONCLUSION

For the foregoing reasons, Plaintiffs’ motion for a preliminary
injunction (ECF Nos. 4, 7, 17) is GRANTED. By Monday, June 1, after
consultation with counsel for Defendant, Plaintiffs’ counsel shall
(1) submit a form of preliminary injunction, which shall include the
amount of bond and require the posting of such security within 30 days;
(2) propose redactions so that a version of this sealed Opinion may
be filed publicly.
Dated: May 29, 2015
[as corrected 6/1/2015 and redacted 6/2/2015]

KEVIN MCNULTY
United States District Judge

30