Sherif Abdou v. Davita, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: August 14, 2018
• Docket: 17-17490
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS AUG 14 2018 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

SHERIF W. ABDOU, M.D.; AMIR S. No. 17-17490 BACCHUS, M.D., 18-15394

Plaintiffs-counter- D.C. No. defendants-Appellants, 2:16-cv-02597-APG-CWH

v. MEMORANDUM* DAVITA, INC.; HEALTHCARE PARTNERS HOLDINGS, LLC; HEALTHCARE PARTNERS, LLC,

Defendants-counter- claimants-Appellees.

Appeals from the United States District Court for the District of Nevada Andrew P. Gordon, District Judge, Presiding

Argued and Submitted July 10, 2018 San Francisco, California

Before: GRABER and TALLMAN, Circuit Judges, and LEMELLE,** District Judge.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Ivan L.R. Lemelle, United States District Judge for the Eastern District of Louisiana, sitting by designation. Doctors Sherif Abdou and Amir Bacchus (Abdou/Bacchus) appeal the

district court’s entry of a preliminary injunction forbidding them from engaging in

certain “Restricted Business” with three healthcare companies in Nevada, as well

as the district court’s subsequent denial of their motion to dissolve or modify the

injunction. We have jurisdiction under 28 U.S.C. § 1292, and we affirm.

1. The district court did not abuse its discretion by entering the

preliminary injunction. It correctly stated the Winter factors, see Winter v. Nat.

Res. Def. Council, Inc., 555 U.S. 7, 20 (2008), and its factual findings are not

clearly erroneous, see Adidas Am., Inc. v. Skechers USA, Inc., 890 F.3d 747, 753

(9th Cir. 2018).

Damage to a company’s goodwill and reputation can constitute irreparable

harm because this sort of harm is difficult to measure. Rent-a-Center, Inc. v.

Canyon Television & Appliance Rental, Inc., 944 F.2d 597, 603 (9th Cir. 1991);

Ellis v. McDaniel, 596 P.2d 222, 224 (Nev. 1979). DaVita presented evidence that

Abdou/Bacchus had extensive discussions with three of DaVita’s contractual

partners about creating an entity that would eventually compete with DaVita in

southern Nevada. They drafted a detailed business plan and strategized about how

to disrupt DaVita’s operations. By doing so, they both misappropriated the

goodwill for which DaVita paid handsomely when it acquired HealthCare Partners,

2 LLC, and threatened DaVita’s goodwill and ability to develop and maintain third-

party relationships in the future.

Although Abdou/Bacchus did not actually launch a competing entity during

the Restricted Period, their discussions with the Restricted Parties clearly were

intended to lay the groundwork for such a launch. Allowing them to take

advantage of this preparation, which arguably violated the terms of the

noncompetes, is likely to cause DaVita precisely the type of irreparable harm that

noncompete agreements are intended to prevent.

Abdou/Bacchus’s argument that the district court impermissibly shifted the

burden of proof to them is unconvincing.

The district court did not abuse its discretion by finding that the balance of

equities favors DaVita. See Caribbean Marine Servs. Co. v. Baldridge, 844 F.2d

668, 673 (9th Cir. 1988). For the reasons explained above, DaVita faces

irreparable harm in the absence of an injunction. Abdou/Bacchus do not face

comparable harm if one is entered; they are simply being held to the terms of the

noncompetes that they signed voluntarily (and for which they were well

compensated).

Nor did the district court abuse its discretion by finding that the injunction is

in the public interest. “The public has an interest in seeing that competition is not

unreasonably limited or restricted, but it also has an interest in protecting the

3 freedom of persons to contract, and enforcing contractual rights and obligations.”1

Ellis, 596 P.2d at 224. This observation is true even in the healthcare context. Id.

Finally, the district court did not enter an overbroad injunction. Injunctive

relief “must be tailored to remedy the specific harm alleged.” Lamb-Weston, Inc.

v. McCain Foods, Ltd., 941 F.2d 970, 974 (9th Cir. 1991). Here, the specific harm

alleged is damage to DaVita’s goodwill, reputation, and third-party relationships.

The injunction, accordingly, forbids Abdou/Bacchus from doing business with the

parties with whom they actually had discussions during the Restricted Period in the

state those discussions targeted.

2. The district court did not abuse its discretion by refusing to dissolve or

modify the injunction. None of the new information presented along with

Abdou/Bacchus’s motion to dissolve “establish[ed] that a significant change in

facts or law warrant[ed] revision . . . of the injunction.” Sharp v. Weston, 233 F.3d

1166, 1170 (9th Cir. 2000).

Finally, the district court did not abuse its discretion by maintaining the

injunction as to the entire state of Nevada. DaVita does not currently operate a

provider network in northern Nevada, but there is conflicting evidence about the

possibility of DaVita expanding into that part of the state.

1 The district court did not explicitly mention competition in its order granting the preliminary injunction, but it clearly considered Abdou/Bacchus’s arguments on the subject.

4 The district court can review (and potentially narrow) the geographic scope

of the injunction after more complete discovery and briefing. But on this limited

record, it was not an abuse of discretion for the district court to maintain the

injunction covering the entire state.

AFFIRMED.