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AM MEDICA COMMUNICATIONS GROUP v. KILGALLEN

April 29, 2003

AM MEDICA COMMUNICATIONS GROUP, PLAINTIFF, AGAINST SUZANNE KILGALLEN, DEFENDANT.


The opinion of the court was delivered by: VICTOR Marrero, United States District Judge.

DECISION AND AMENDED ORDER

Plaintiff AM Medica Communications Group ("AMM") filed a motion for a preliminary injunction and temporary restraining order on March 26, 2003 (the "Motion") seeking to bar defendant Suzanne Kilgallen ("Kilgallen"), a former employee of AMM, from using confidential information of AMM, providing services to clients of AMM in connection with her current employment, or providing similar products or services as are provided by AMM to any person.

Following an evidentiary hearing held before the Court on April 11, 2003 (the "Hearing"), the Court issued an Order dated April 14, 2003 denying the Motion and indicating that its findings, reasoning and conclusions would be set forth in a separate decision to be made available to the parties. Accordingly, for the reasons set forth below, the Motion is DENIED.

I. FACTS

Kilgallen was hired by AMM in February of 1995, first as an assistant and later as a meetings planner, a job in which she planned medical conferences for AMM's clients. In April of 1999, Kilgallen entered into an employment contract (the "Contract") with AMM, and remained employed by AMM until December of 2002, when she voluntarily resigned in order to work for Agenda West, LLC ("Agenda"), a competitor of AMM. Kilgallen started her employment for Agenda in January of 2003.

AMM alleges that in the course of her work for Agenda, Kilgallen violated two covenants in her Contract. The first one stated:

[Kilgallen] acknowledges that the services to be rendered by [her] to AMM are of a special and unique character. [Kilgallen] agrees that . . . [she] will not . . . until two (2) years from the date of termination of [her] employment with AMM other than without cause . . . solicit or entice away any of the clients or customers or active prospects of AMM . . ., either on [her] own account or for any other person, firm, corporation or organization, or attempt to sell, license or provide to any person the same or similar products or services as are provided by AMM . . .
(Contract, attached as Exh. B to Affidavit of Katherine Dietzen in Support of Plaintiff's Motion for Temporary Restraining Order and Preliminary Injunction Pursuant to Fed. R. Civ. P. 65, dated March 24, 2003 ("Dietzen Aff."), at § 2.1 (ii).)

AMM contends that this covenant (hereinafter, the "Restrictive Covenant") forbids Kilgallen from soliciting or working with any clients of AMM for a period of two years following termination of her employment with AMM. AMM argues that Kilgallen violated the Restrictive Covenant by leaving AMM to work for Agenda and primarily handling Agenda's work for Pfizer, Inc. ("Pfizer"), a client of Agenda's which is also a client of AMM. In particular, AMM complains that Kilgallen's work for Agenda consists mainly of organizing the American Urological Association's Annual Meeting and Exhibition (the "Meeting"), which was scheduled to begin on April 26, 2003, in connection with which Pfizer is a sponsor and principal exhibitor. AMM had submitted a bid to Pfizer this year to organize the Meeting, which AMM had run for the previous two years after Agenda had run it in 2000, but AMM lost the bid to Agenda.

The second covenant that AMM accuses Kilgallen of violating states that for seven years following the termination of her employment, Kilgallen has to "treat all confidential material of AMM . . . with strict confidence" and is not allowed to disclose such material to people not affiliated with AMM, remove such material from AMM's premises, or use such material in a way considered deterimental to AMM (the "Confidentiality Covenant"). (Dietzen Aff. Exh. B, at § 1.) The Confidentiality Covenant defines "confidential material" as information related to AMM's business that is not generally available to the public. (Id.) AMM does not specifically allege how Kilgallen has breached the confidentiality Covenant, other than to note that she had access to confidential information about internal pricing information and Viagra, one of Pfizer's products on which AMM worked (Id. at ¶¶ 18-19), and is currently running a medical conference for Pfizer that is similar to the types of conferences she ran for Pfizer while at AMM. (Diezen Aff., at ¶ 29.)

Kilgallen responds that the Restrictive Covenant is unenforceable because it is not reasonably limited in time and geographic scope, is unduly burdensome on her livelihood, and its enforcement is unnecessary to protect a legitimate interest of AMM. Furthermore, Kilgallen argues that AMM has no right to a preliminary injunction because it has failed to demonstrate that it would be irreparably harmed if she is not enjoined, and even if it did have any injuries, money damages would sufficiently compensate it. Finally, Kilgallen asserts that AMM has failed to demonstrate a likelihood of success on the merits. Barring a full dismissal by the Court, Kilgallen asks for the matter to be stayed and referred to arbitration in accordance with the Contract's arbitration clause.

II. LEGAL DISCUSSION

A. PRELIMINARY INJUNCTION AND TEMPORARY RESTRAINING ORDER

1. Standard of Review

In order to prevail on a motion for a preliminary injunction and/or temporary restraining order, a party must establish irreparable harm and either (1) a likelihood of success on the merits of the underlying claim or (2) sufficiently serious questions going to the merits of the claim and a balance of hardships tipping decidedly in ...


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