CVS Pharmacy, Inc. v. Lavin

384 F. Supp. 3d 227
CourtDistrict Court, D. Rhode Island
DecidedJune 18, 2019
DocketC.A. No. 19-204-JJM-PAS
StatusPublished
Cited by1 cases

This text of 384 F. Supp. 3d 227 (CVS Pharmacy, Inc. v. Lavin) is published on Counsel Stack Legal Research, covering District Court, D. Rhode Island primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
CVS Pharmacy, Inc. v. Lavin, 384 F. Supp. 3d 227 (D.R.I. 2019).

Opinion

JOHN J. MCCONNELL, JR., United States District Judge

This case involves the propriety and application of a non-compete agreement. John Lavin worked for CVS Pharmacy, Inc. as a senior executive for 27 years. He signed a Restrictive Covenant Agreement ("Agreement") in 2017. Within two years of signing the Agreement, Mr. Lavin resigned from CVS and started employment with the PillPack unit of Amazon ("PillPack").

CVS sued Mr. Lavin and the Court granted a temporary restraining order to maintain the status quo. CVS now seeks a preliminary injunction. ECF No. 27. The parties have fully briefed and argued this matter, ECF Nos. 27, 33, 36, All parties waived presentation of testimony but filed substantial and extensive evidence by affidavits attached to their papers. ECF No. 27-1 through 27-8, 30, 33-1 through 33-3, 38, 39.

Because the Court finds the Agreement enforceable and applicable to Mr. Lavin's new employment with PillPack, the Court GRANTS CVS's Motion for a Preliminary Injunction. ECF No. 27.

I. BACKGROUND

Mr. Lavin was a Senior Vice President responsible for leading CVS Caremark's Retail Network. He began work there in the early 1990s. His team totaled 250 employees.

Mr. Lavin negotiated with retail pharmacies on behalf of CVS Caremark, a Pharmacy Benefits Manager ("PBM"). PBMs manage prescription benefits for their clients (insurance companies, employers, unions, governments) ("Payers"). The PBMs negotiate with retail pharmacies and mail-order distributors to get the best deal for the Payers and the Payers' subscribers. The parties describe this three-tiered system (Payers-PBMs-Pharmacies) as a complex structure applicable to the pharmaceutical industry. ECF No. 27 at 6. CVS owns both a PBM (CVS Caremark) and thousands of retail pharmacies throughout the country. CVS Caremark also has a mail-based pharmacy that competes in the retail market.

In addition to negotiating with retail pharmacies, the Executive Committee tasked Mr. Lavin with analyzing the terms it had with mail-in retail pharmacies for his last three years at CVS Caremark. He took part in "executive-level strategy" with other CVS executives in both the PBM and retail business. This mattered to CVS because of Amazon's entry into the pharmacy *230business through its acquisition of PillPack, a mail-in retail pharmacy.

Mr. Lavin signed the Agreement with CVS in 2017. ECF No. 27-4 at 10-18. In exchange for signing the Agreement, CVS awarded Mr. Lavin Restricted Stock Units ("RSUs") that had a value of $157,500. Id. at 1-8. The RSU agreement states that the "award of RSU's ... is expressly subject to and contingent upon the requirement that [Mr. Lavin] shall have fully executed and delivered [to CVS] the Restrictive Covenant Agreement provided by [CVS]." Id. at 7, § 12. The Agreement, under the section captioned "Consideration for Agreement" states that CVS "has awarded [Mr. Lavin] restricted stock units contingent on the execution of this Agreement and compliance with its terms." Id. at 10, § 1.

The Agreement mandates that during his employment with CVS and for 18 months thereafter, Mr. Lavin will not "directly or indirectly" engage in Competition with a Competitor.

Competition is described as "providing services to a Competitor of [CVS] ... that: (i) are the same or similar in function or purpose to the services [he] provided to [CVS] at any time during the last two years of [his] employment by [CVS]; or (ii) will likely result in the disclosure of Confidential Information to a Competitor or the use of Confidential Information on behalf of a Competitor." Id. at 10, § 2(a).
• A Competitor is defined as any entity that "competes with one or more of the business offerings of [CVS] ... includ[ing] (i) [PBMs] ... (ii) retail ...." Id. at 10, § 2(b).

The year after he signed the Agreement and received the RSUs, Mr. Lavin began discussions with PillPack about employment. He interviewed with both PillPack and Amazon executives. PillPack offered Mr. Lavin a job as "Director [of] Third-Party Networks & Contracting" reporting directly to PillPack CEO TJ Parker. ECF No. 27-8 at 37.

Exactly what Mr. Lavin would be doing with PillPack seems to be a moving target. His role and responsibilities at PillPack seem to ebb and flow with this litigation.1 While PillPack now asserts that Mr. Lavin would be negotiating only with PBMs (excluding CVS Caremark)2 on behalf of PillPack, the original job description of the position for which PillPack hired Mr. Lavin also included negotiating with Payers. ECF No. 27-8 at 37-38.

Mr. Lavin is also expected to contribute to PillPack's overall growth strategy and help drive its long term disruptive strategy. PillPack CEO TJ Parker stated that he expected Mr. Lavin to "contribute significantly to [PillPack's] procurement efforts ... and help [PillPack] develop a long term disruptive strategy." Id. at 35. Mr. Lavin told one of his job interviewers from PillPack that he was "excited about the opportunity for disruption and the strategic components of the work." Id. at 34.

II. STANDARD OF REVIEW

To obtain a preliminary injunction, the burden is on CVS to establish that (1) it is likely to succeed on the merits, (2) it is likely to suffer irreparable harm with no preliminary relief, (3) the balance of equities tips in its favor, and (4) an injunction is in the public interest. See *231Winter v. Nat. Res. Def. Council Inc. , 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). The court should not award the "extraordinary and drastic remedy" of a preliminary injunction unless CVS meets its burden of persuasion with "substantial proof." See Mazurek v. Armstrong , 520 U.S. 968, 972, 117 S.Ct. 1865, 138 L.Ed.2d 162 (1997) (internal quotation marks omitted); see also Voice of the Arab World, Inc. v. MDTV Med. News Now, Inc. , 645 F.3d 26, 32 (1st Cir. 2011) (describing a preliminary injunction as an extraordinary remedy).

III. DISCUSSION

The Court must first determine if Mr. Lavin's new position with PillPack violates the Agreement-will the new job have Mr.

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CVS Pharmacy, Inc. v. Lavin
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Bluebook (online)
384 F. Supp. 3d 227, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cvs-pharmacy-inc-v-lavin-rid-2019.