United States District Court, D. South Carolina, Florence Division
Synthes USA, LLC; DePuy Spine, LLC; and DePuy Synthes Sales, Inc., Plaintiffs,
Stephen N. Davis, Jr.; Jeffrey A. Domico; and K2M Incorporated, Defendants.
ORDER AND LIMITED PRELIMINARY INJUNCTION
BRYAN HARWELL, UNITED STATES DISTRICT JUDGE.
matter is before the Court on Plaintiffs' motion for
preliminary injunction and motion for expedited discovery.
See ECF Nos. 5 & 6. The Court held a hearing on
the motions on November 28, 2017, and took them under
advisement. See ECF No. 37. The Court now grants in
part and denies in part the motions as set forth below.
Motion for Preliminary Injunction
explained below, the Court will grant in part and deny in
part Plaintiffs' motion for preliminary injunction and
issue a Limited Preliminary Injunction Order. In so
ruling, the Court makes the following findings of fact and
conclusions of law as required by Federal Rules of Civil
Procedure 52(a)(2) and 65(d). To the extent that any findings
of fact constitute conclusions of law, or vice-versa, they
shall be so regarded.
three plaintiffs-Synthes USA, LLC, DePuy Spine, LLC, and
DePuy Synthes Sales, Inc. (collectively,
“Plaintiffs” or “DePuy Synthes”)-are
a family of companies that design, manufacture, and sell
medical devices used in orthopedic surgeries. See
Verified Complaint [ECF No. 1] at ¶ 2. The two
individual defendants-Stephen N. Davis, Jr. and Jeffrey A.
Domico-are longtime friends and until recently were employed
by DePuy Synthes as sales consultants with the principal
responsibility of selling implants used in spinal surgeries.
Id. at ¶ 3. The corporate defendant, K2M
Incorporated (“K2M”), is a competitor company
that likewise designs, manufactures, markets, and sells
implants used in spinal surgeries. Id. at ¶ 5.
Davis and Domico recently left employment with DePuy Synthes
and now work for K2M as sales consultants selling spinal
implants. Id. at ¶¶ 5-6.
began his employment with DePuy Synthes in October 2002, and
Domico began his employment with DePuy Synthes in October
2005. See Davis Aff. [ECF No. 11-4] at ¶ 2;
Domico Aff. [ECF No. 11-1] at ¶ 3. At the beginning of
their respective employment, both men signed a document
entitled “Synthes® Spine Sales Consultant
Confidentiality, Non-Solicitation, and Non-Competition
Agreement” (hereinafter, “the Agreements”).
See ECF Nos. 1-1, 1-2, 11-2, & 11-5. These
Agreements contain several restrictive covenants, including
non-competition and non-solicitation clauses,  and a
choice-of-law provision selecting Pennsylvania law. During
their employment with DePuy Synthes, Davis was responsible
for accounts in the Charleston and Beaufort areas, while
Domico was responsible for the Florence and (later) southern
North Carolina areas.
September 28, 2017, Domico resigned from DePuy Synthes and
began working for K2M the next day (September 29). ECF No.
11-1 at ¶¶ 30, 35. Domico's new K2M territory
encompasses the Charleston and Beaufort areas. Id.
¶ 37. On October 2, 2017, Davis resigned from DePuy
Synthes and began working for K2M the next day (October 3).
ECF No. 11-4 at ¶¶ 29, 31. Davis's new K2M
territory encompasses the Florence, Conway, and Myrtle Beach
areas, including McLeod Regional Hospital in Florence.
Id. at ¶ 33. In essence, Davis and Domico now
work for K2M in the other's previous territory to which
they were assigned while working for DePuy Synthes.
October 25, 2017, Plaintiffs commenced this action pursuant
to 28 U.S.C. § 1332 by filing a verified complaint, a
motion for a preliminary injunction, and a motion for
expedited discovery. See ECF Nos. 1, 5, & 6.
Plaintiffs asserted four causes of action: breach of
fiduciary duty, breach of contract, aiding and abetting
breach of fiduciary duty, and tortious interference with
contract. See ECF No. 1 at pp. 20-28. On November 8,
2017, Domico and Davis jointly filed a response in opposition
to both motions, and K2M filed a response in opposition to
the preliminary injunction motion. See ECF Nos. 11,
14, & 15. That same day (November 8), Plaintiffs'
counsel called the Clerk's Office, left a voice message,
and sent an email stating: “Given that counsel for
Defendants have now made their appearance, Plaintiffs
respectfully request that a hearing on Plaintiffs' Motion
for Preliminary Injunction be set at the Court's earliest
convenience.” ECF No. 32 at p. 9. On November 15, 2017
(the deadline for filing a reply), Plaintiffs filed a reply
in further support of their motion for preliminary
injunction. See ECF No. 20. Two days later,
the Court scheduled a hearing on Plaintiffs' preliminary
injunction motion, as well as their motion for expedited
discovery; the Court set the hearing for November 28, 2017
(the week after Thanksgiving), stated it would rule on
Plaintiffs' motions based on affidavits, briefs, and
arguments from the lawyers, and permitted the parties to file
additional affidavits up until the day before the hearing.
See ECF Nos. 22 & 23.
hearing, Plaintiffs' counsel presented a proposed order
to the Court narrowing the limited injunctive relief they
sought. Plaintiffs' counsel informed the Court
that, at the present time, Plaintiffs were seeking an
injunction only against Davis and Domico and not against
Plaintiffs' counsel further informed the Court that
Plaintiffs were still seeking limited expedited discovery,
notwithstanding the November 8 email requesting a hearing on
the preliminary injunction hearing. The Court took the
preliminary injunction motion (and expedited discovery
motion) under advisement after the hearing ended.
Preliminary Injunction Standard
Rule of Civil Procedure 65 establishes the procedure for
federal courts to grant preliminary injunctions. See
Fed. R. Civ. P. 65. The usual purpose “of a preliminary
injunction is to protect the status quo and to prevent
irreparable harm during the pendency of a lawsuit ultimately
to preserve the court's ability to render a meaningful
judgment on the merits.” Pashby v. Delia, 709
F.3d 307, 319 (4th Cir. 2013) (citation omitted). Because of
the extraordinary nature of injunctive relief, the United
States Supreme Court has admonished that preliminary
injunctions “may only be awarded upon a clear showing
that the plaintiff is entitled to such relief.”
Winter, 555 U.S. at 22.
plaintiff seeking a preliminary injunction must satisfy each
of the following four factors: (1) that the plaintiff is
likely to succeed on the merits, (2) that the plaintiff is
likely to suffer irreparable harm in the absence of
preliminary injunctive relief, (3) that the balance of
equities tips in the plaintiff's favor, and (4) that the
injunction is in the public interest. League of Women
Voters of N. Carolina v. N. Carolina, 769 F.3d 224, 236
(4th Cir. 2014) (citing Winter, 555 U.S. at 20). A
plaintiff must make a clear showing that it is
likely to succeed on the merits of its claim.
Winter, 555 U.S. at 20-22. Likewise, a plaintiff
must make a clear showing that it is likely to be
irreparably harmed absent injunctive relief. Id.
Only then may the court consider whether the balance of
equities tips in the plaintiff's favor. Real Truth
About Obama, Inc. v. Fed. Election Comm'n, 575 F.3d
342, 346-47 (4th Cir. 2009), vacated on other
grounds, 559 U.S. 1089 (2010), reissued in
part, 607 F.3d 355 (4th Cir. 2010), overruling
Blackwelder Furniture Co. of Statesville v. Seilig Mfg.
Co., 550 F.2d 189 (4th Cir. 1977). Finally, the court
must pay particular regard to the public consequences of
employing the extraordinary relief of injunction.
Id. at 347.
The purpose of a preliminary injunction is merely to preserve
the relative positions of the parties until a trial on the
merits can be held. Given this limited purpose, and given the
haste that is often necessary if those positions are to be
preserved, a preliminary injunction is customarily granted on
the basis of procedures that are less formal and evidence
that is less complete than in a trial on the merits. A party
thus is not required to prove his case in full at a
preliminary-injunction hearing, and the findings of fact and
conclusions of law made by a court granting a preliminary
injunction are not binding at trial on the merits.
Univ. of Texas v. Camenisch, 451 U.S. 390, 395
(1981) (internal citations omitted). “Because
preliminary injunction proceedings are informal ones designed
to prevent irreparable harm before a later trial governed by
the full rigor of usual evidentiary standards, district
courts may look to, and indeed in appropriate circumstances
rely on, hearsay or other inadmissible evidence when deciding
whether a preliminary injunction is
warranted.” G.G. ex rel. Grimm v. Gloucester Cty.
Sch. Bd., 822 F.3d 709, 725-26 (4th Cir. 2016),
vacated and remanded on other grounds, 137 S.Ct.
order granting a preliminary injunction “must: (A)
state the reasons why it issued; (B) state its terms
specifically; and (C) describe in reasonable detail-and not
by referring to the complaint or other document-the act or
acts restrained or required.” Fed.R.Civ.P. 65(d)(1). A
district court cannot issue a preliminary injunction unless
“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 or
restrained.” Fed.R.Civ.P. 65(c).
Likelihood of Success on the Merits - Breach of Contract
first Winter factor requires Plaintiffs to clearly
show they are likely to succeed on the merits of at least one
of the claims for which they seek preliminary injunctive
relief. See Pashby, 709 F.3d at 321, 328;
Handsome Brook Farm, LLC v. Humane Farm Animal Care,
Inc., 193 F.Supp.3d 556, 566 (E.D. Va. 2016)
(“Under the standard analysis, a plaintiff must make a
‘clear showing' that it is likely to succeed on the
merits of at least one of its claims at trial.”),
aff'd, 700 Fed.Appx. 251 (4th Cir. 2017).
“Although this inquiry requires plaintiffs seeking
injunctions to make a ‘clear showing' that they are
likely to succeed at trial, Real Truth, 575 F.3d at
345, plaintiffs need not show a certainty of success.”
Pashby, 709 F.3d at 321. As explained below, and
only for the limited purpose a preliminary injunction, the
Court concludes Plaintiffs have clearly shown a likelihood
that they will succeed at least to some extent on their
breach of contract claim that they assert against Davis
regarding the non-solicitation of a customer with whom he had
“direct” responsibility while working for DePuy
Synthes (namely, Dr. Christopher Paramore). As to both Davis
and Domico, no serious argument can be made regarding the
enforceability of the respective territory restrictions set
forth in their Agreements and implicitly recognized in their
offer letters from K2M. Accordingly, the Court need not
discuss Plaintiffs' likelihood of success on their three
remaining claims (i.e., breach of fiduciary duty, aiding and
abetting breach of fiduciary duty, and tortious interference
with contract). See, e.g., Handsome Brook
Farm, 193 F.Supp.3d at 574 (“Because a plaintiff
need only show a likelihood of success on one claim to obtain
an injunction, the Court will not address the sufficiency of
Plaintiff's [other] claims.”).
Court has diversity jurisdiction over this action pursuant to
28 U.S.C. § 1332. As a federal court sitting in
diversity, the Court must apply the choice of law rules of
the forum state-South Carolina. Klaxon Co. v. Stentor
Elec. Mfg. Co., 313 U.S. 487, 496-97 (1941); CACI
Int'l, Inc. v. St. Paul Fire & Marine Ins. Co.,
566 F.3d 150, 154 (4th Cir. 2009). South Carolina law looks
favorably on choice of law clauses and enforces them except
in unusual circumstances. Team IA, Inc. v. Lucas,
717 S.E.2d 103, 108 (S.C. Ct. App. 2011). The Agreements
state they “will be governed by Pennsylvania law
applicable to contracts entered into and performed in
Pennsylvania.” ECF Nos. 1-1 & 1-2 at p. 5. The
Supreme Court of Pennsylvania has explained:
In Pennsylvania, restrictive covenants are enforceable if
they are incident to an employment relationship between the
parties; the restrictions imposed by the covenant are
reasonably necessary for the protection of the employer; and
the restrictions imposed are reasonably limited in duration
and geographic extent. Our law permits equitable enforcement
of employee covenants not to compete only so far as
reasonably necessary for the protection of the employer.
However, restrictive covenants are not favored in
Pennsylvania and have been historically viewed as a trade
restraint that prevents a former employee from earning a
Hess v. Gebhard & Co. Inc., 808 A.2d 912, 917
(Pa. 2002) (internal citations and quotation marks omitted).
under South Carolina choice of law principles, if the parties
to a contract specify the law under which the contract shall
be governed, the court will honor this choice of law.”
Nucor Corp. v. Bell, 482 F.Supp.2d 714, 728 (D.S.C.
2007). “However, a choice-of-law clause in a contract
will not be enforced if application of foreign law results in
a violation of South Carolina public policy.”
Id. Other judges in the District of South Carolina
have “held a post-employment agreement not to solicit
employees or customers to the same standards as a covenant
not to compete.” Id. at 730 (Judge
Norton's order relying on Judge Duffy's decision in
Rockford Mfg., Ltd. v. Bennet, 296 F.Supp.2d 681,
690 (D.S.C. 2003)). “Accordingly, before applying
[Pennsylvania's] rule of contract construction, the court
must first consider whether this rule violates South Carolina
public policy. Id. at 728.
South Carolina Supreme Court has held that a covenant
restricting the activities of an employee after the
termination of his employment is not violative of public
policy only if it is ‘ partial or restrictive in its
operation, either as to time or place,  on some good
consideration, and  [is] reasonable, that is, it afford[s]
only a fair protection to the interests of the party in whose
favor it is made.'” Id. at 728
(alterations in original) (quoting Standard Register Co.
v. Kerrigan, 238 S.C. 54, 65, 119 S.E.2d 533, 539
(1961)). At this juncture, and for the limited purpose of
considering the propriety of preliminary injunctive relief,
the Court notes the Agreements (including the noncompetition
and non-solicitation restrictive covenants) appear to be
law governs Plaintiffs' claim for breach of contract. The
elements for a breach of contract claim in Pennsylvania are
“(1) the existence of a contract, including its
essential terms, (2) a breach of the contract; and, (3)
resultant damages.” Meyer, Darragh, Buckler,