Athenahealth, Inc. v. Cady

31 Mass. L. Rptr. 346
CourtMassachusetts Superior Court
DecidedMay 2, 2013
DocketNo. SUCV201301098C
StatusPublished

This text of 31 Mass. L. Rptr. 346 (Athenahealth, Inc. v. Cady) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Athenahealth, Inc. v. Cady, 31 Mass. L. Rptr. 346 (Mass. Ct. App. 2013).

Opinion

Kaplan, Mitchell H., J.

Plaintiff, Athenahealth, Inc. (Athena) filed this action seeking to enforce a restrictive covenant contained in an employment agreement with its former employee, defendant Thomas F. Cady. The complaint asserts tort and statutory claims against Cady and his new employer, defendant Care-Cloud Corporation (CareCloud). The case is before the [347]*347court on Athena’s motion for a preliminary injunction. For the reasons that follow, Athena’s motion is denied.

BACKGROUND

“By definition, a preliminary injunction must be granted or denied after an abbreviated presentation of the facts and the law.” Packaging Indus. Group, Inc. v. Cheney, 380 Mass. 609, 616 (1980). The court bases the following factual statement on the preliminary injunction record, which consists of the complaint, affidavits from both parties and the exhibits attached to them, and the reasonable inferences that it draws from the record evidence.

Athena is an information technology company that designs and provides electronic health record, practice management, and care coordination services to physician practices and health systems. It designs systems that allow physicians to store, access, and use medical records for clinical, billing, and management purposes. Unlike the majority of Athena’s competitors, Athena’s services are “cloud-based,” meaning that its applications and services are delivered over the Internet, rather than accessed through software installed by the client. CareCloud is one of Athena’s few direct competitors that is also cloud-based.

Athena counts as one of its key competitive advantages its “Professional Services,” which Athena defines as the methods that Athena uses to configure and implement its products for small, medium, large, and enterprise clients so that they can “go live” on Athena’s services as quickly as possible. This set of approaches shortens the implementation cycle, manages implementation costs, and improves customer experience.1 Athena pre-configures its services for each client, and then tracks and optimizes their use after implementation. The coordination and sequencing of multiple discrete tasks in a precise order constitute the detailed blueprint of Athena’s client implementation model that Athena contends is a trade secret.2

Prior to his employment at Athena, Cady spent eighteen years at IDX Corporation, a company that developed software and solutions for healthcare systems and group practices, where he implemented revenue cycle management systems for medical groups around the country. He began his career at Athena as a Regional Vice President of Sales for the Northeast region in 2002; in that position he focused exclusively on sales. At the outset of Cady’s employment with Athena he signed an employment agreement. The agreement stated that Cady will serve in his present position, or in such other positions as he may be assigned. As a part of that agreement, Cady agreed not to disclose any confidential information, broadly defined in the agreement, and not to “render any services in any capacity to any person or entity engaged in any business competitive with [Athena]” for a period of one year following termination of his employment in the United States and Canada (the non-compete agreement). The employment agreement contained an integration clause that stated that it could not be modified except by a writing signed by the parties, “provided however that compensation levels may be adjusted by assent of the parties” and the employee’s assent will be established by his “acceptance ... of compensation at such adjusted level.”

In March 2007, Cady’s position with Athena changed. Athena made him Vice President of Professional Services leading teams responsible for assisting customers with the implementation process. In this position, Cady was no longer responsible for sales, nor did he have contact with the customers; he also reported to a different person. Notably, his compensation was reduced by about twenty-five percent.3 At the time of this new assignment, Cady was given a one-page “Offer of Employment” form which he signed (the form). It set out his new title and his new compensation and benefits, and confirmed that he was an at-will employee. The form made no reference to his employment agreement or to the non-disclosure and non-competition covenants contained in it.

In 2012, Athena adopted a new stock option plan granting stock options based on a percentage of salary, rather than on performance and job level. As a result, Athena eliminated Cady’s opportunity to earn about seventy-five percent of the options that he had previously been receiving. In the fall of 2012 Cady, concerned about his reduced compensation and increased family expenses, asked for the opportunity to be promoted to a Senior Vice President position. He explained that, absent that possibility, financial considerations might force him to seek alternative employment. Meetings with Athena’s Chief Executive Officer, Jonathan Bush, and Chief Operating Officer, Edward Park, did not resolve the issue: Athena offered Cady a new role with the company but Cady declined the offer because he believed that it lacked an opportunity for upward mobility and financial incentives.

On December 13, 2012, at one of his monthly company-wide meetings with employees (the December 13 meeting), Bush discussed CareCloud and its competition with Athena. He addressed the issue of employees leaving Athena to work for CareCloud stating, inter alia, as follows;

I think that. . . it’s a form of flattery to be copied. It’s flattering to have people, . .. colleagues wanted badly by other companies. And it means that we are who we are because we want to be . . . we’re here because we want to be, not because we couldn’t go get a similar job somewhere else ... I believe that this is evidence that our decision ... to make the culture of the place the most valuable asset is a wise one, because people can leave, and code becomes obsolete, and healthcare rules can change, but the feeling you get when you’re here, like this, with us, you need us for . . . So, we are not going to do anything about anyone who leaves, anybody else who wants to go, you know, you’re allowed. There’s [348]*348no team... the Allscripts legal team will not be after you to sue you. You have non-competes . . . Don’t take your . . . You have a non-compete, you can’t take your sales prospects list that we spent $500,000 collecting and then go over and give it to the other team.4

Although Cady was working offsite at the time Bush delivered these remarks, upon his return to the office he listened to the recording of the meeting which was posted on Athena’s internal website.

In January 2003, Cady’s work load increased when the person to whom he reported was reassigned, and he assumed some of her job responsibilities while a search for her replacement was undertaken, but his compensation did not increase. At his annual review in February, Cady received only a standard raise. Cady tendered his resignation to Park on March 6, 2013, and informed Park that he had accepted a position at CareCloud. He returned all Athena’s property and asserted that he did not remove any files or information from his office at Athena. While Athena alleges that Cady could have done so, it offers no evidence that he did. On March 18, 2013, Cadyjoined CareCloud as Vice President of Professional Services, a position substantially similar to that which he held at Athena.

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Bluebook (online)
31 Mass. L. Rptr. 346, Counsel Stack Legal Research, https://law.counselstack.com/opinion/athenahealth-inc-v-cady-masssuperct-2013.