Bd. of Supervisors of La. State Univ. v. McCalmont

339 So.3d 1261

BOARD OF SUPERVISORS OF LOUISIANA STATE UNIVERSITY and Agricultural and Mechanical College, Plaintiffs-Appellants

v.Lauren E. MCCALMONT, M.D., Defendant-Appellee

No. 54,451-CA

Court of Appeal of Louisiana, Second Circuit.

Judgment rendered May 25, 2022.

BLANCHARD, WALKER, O'QUIN & ROBERTS, APLC, By: M. Thomas Arceneaux, Shreveport, Daniel J. Baker, Counsel for Appellants

DOWNER, JONES, MARINO & WILHITE, L.L.C., By: Allison A. Jones, Michael A. Marino, PUGH, PUGH & PUGH, L.L.P., By: Lamar P. Pugh, Shreveport, Counsel for Appellee

Before MOORE, PITMAN, and ROBINSON, JJ.

PITMAN, J.

The Board of Supervisors of Louisiana State University and Agricultural and Mechanical College ("LSU"), the governing body for Louisiana State University Health Science Center, Shreveport ("LSUHSC"), appeals the district/trial court's denial of a preliminary injunction it sought against Lauren E. McCalmont, M.D., based on a noncompetition clause in its employment contract with her. For the following reasons, we affirm.

FACTS

LSU filed a petition for preliminary and permanent injunction against Dr. McCalmont alleging that the parties had entered into a contract of employment (the "Contract") on April 24, 2020, signed electronically by the doctor on May 5, 2020. In the contract, LSUHSC hired Dr. McCalmont as an assistant professor of clinical obstetrics and gynecology ("OBGYN"). The Contract contained a noncompetition clause (the "Clause"), which stated:

As a condition of your employment, you agree that during your employment with LSU Health Shreveport (except in the course of your employment hereunder), and for a period of two (2) years following termination of your employment with LSU Health Shreveport by either party, for any or no reason, you will not directly or indirectly participate in any manner whatsoever in any business the same as or in competition with LSU Health Shreveport within Caddo or Bossier Parishes. You also agree that, during the term of your employment with LSUHSCS, and for a period of two (2) years thereafter, you will not directly or indirectly attempt to contact, solicit, divert, or appropriate any existing patient or employee of LSU Health Shreveport Department of Obstetrics and Gynecology for yourself or any other entity.

LSU alleged that on October 9, 2020, Dr. McCalmont gave notice of her resignation from LSUHSC. On October 12, 2020, she confirmed her resignation by email to Dr. David Lewis, Dean of LSUHSC, and to Dr. Charles J. Fox, vice chancellor of Clinical Affairs at LSUHSC. After her resignation, Dr. McCalmont began practicing with Willis-Knighton Medical Center ("WK") or an entity affiliated with WK in Caddo Parish in the practice of OBGYN.

LSU sent her a cease and desist letter on November 3, 2020, and demanded she cease violation of the Contract. It claimed that Dr. McCalmont was employed by WK in the same field and in direct competition with the OBGYN departments at LSUHSC, in violation of the Contract.

LSU filed the petition for injunctive relief pursuant to La. R.S. 23:921(H) and prayed that a preliminary injunction be issued prohibiting Dr. McCalmont from practicing OBGYN at WK or anywhere else in Caddo and Bossier Parishes for a period of two years and that a permanent injunction be issued thereafter. Dr. McCalmont answered interrogatories and denied that she was practicing at WK in the same area of medicine that she practiced at LSUHSC, and she also denied that the Contract prohibited her current employment or that she has ever violated the Contract. She also filed an opposition to the application for preliminary injunction and argued that LSU cannot meet its heavy burden to preclude her from being employed by WK because: 1) The state cannot enter into or enforce noncompetition agreements; 2) the Clause is overly broad and otherwise fails to comply with Louisiana's statutory requirements for a valid noncompetition agreement and cannot be reformed because the Contract contains no saving clause; and 3) even if the Clause were valid or otherwise enforceable, Dr. McCalmont's employment with WK cannot be considered a violation of the Clause because WK is not a competitor of LSUHSC, which is a "state actor." Dr. McCalmont also argued that her employment with WK does not have an adverse economic impact on LSUHSC since it accepts Medicaid patients, but she does not.

The trial court held a hearing on April 13, 2021. Dr. McCalmont testified that she attended medical school at LSUHSC and completed her residency in OBGYN there in the summer of 2020. Although she was interested in finding a placement out of state after her residency, the COVID-19 pandemic became a factor, and she was unable to be placed elsewhere. She stated she had spoken to Dr. Lewis about a position in Knoxville, Tennessee, and to Dr. Charles Eric McCathran, vice chairman of the department of OBGYN at LSUHSC, about employment in Shreveport. He offered her a job at LSUHSC, and they discussed the length of the Contract. She said she would be present for a year, but it was not discussed that she would have to complete the year. She stated that she received the Contract, read it, understood it and then signed it in May 2020. She stated that her job was to supervise residents in labor and delivery. She also supervised residents in the operating room performing and teaching surgeries such as hysterectomies. Her job also entailed faculty clinic, which she described as seeing patients and giving them the same care that she gave to her patients at WK—prenatal, labor and delivery, and post-partum. She conducted annual exams, practiced preventive medicine, treated pelvic pain, and performed surgery. She worked at free-standing clinics in communities that were not associated with any hospital and accepted Medicaid and free-care patients.

When asked if she considered her employment with WK as breaking the Contract, she replied that she believed her commitment was a "one way street" and that she made it clear to Dr. McCathran that it was not her intention to remain at LSUHSC long-term. She also stated that when she informed LSUHSC that she was leaving, it made her another offer with greater compensation in an effort to persuade her to stay.

She testified that her employment with WK was completely different from that at LSUHSC. She stated that the difference was more than who was paying the bills, although she did state that she does not accept Medicaid patients in her new practice.

Dr. Lewis stated that he was employed by LSUHSC as the dean of the School of Medicine and Chairman of the Department of OBGYN. He said he spoke with Dr. McCalmont about joining the faculty of LSUHSC. He did not speak directly with her about the Contract, but Dr. McCathran, who runs the day-to-day operations of the department, did. Dr. Lewis stated she was hired primarily to be a physician, but also to supervise residents.

Dr. Lewis opined that LSUHSC was in competition with private facilities, such as WK, both in hiring doctors and in acquiring patients. He could not state whether LSUHSC had lost revenue as a result of Dr. McCalmont's resignation.

Dr. Lewis further testified that he had no involvement in the writing of the Contract, although he stated he was aware that it contained the Clause. He also affirmed that he had signed the Contract.

Sheila Faour, chief financial officer of LSUHSC, produced exhibits from the financial information available to her. The purpose of her testimony was to describe the economic injury that occurred as a result of Dr. McCalmont's departure from LSUHSC. She stated that the damages included loss of profits that allegedly would have been attributable to Dr. McCalmont for services rendered on behalf of LSUHSC and additional payments it made for overtime staffing in the amount of $5,200 per month.

Dr. McCathran testified that as vice chairman of the OBGYN Department, he was responsible for making Dr. McCalmont's clinical assignments and taking care of her day-to-day needs as a faculty member. He stated that approximately 2½ days a week were dedicated to faculty clinic, and the faculty saw patients one-on-one as they would in private practice.

Dr. McCathran's recollection of the hiring process was different from Dr. McCalmont's. He testified that he knew she was looking for a job and suggested that she could work for LSUHSC. He spoke to Dr. Lewis about her, and Dr. Lewis told him that she would have to commit to a year. When he told Dr. McCalmont about the year commitment, she agreed and stated that it would not be a problem. He stated that it is difficult to find a replacement for someone who quits in the middle of the year because people in residency finish at the same time in July and start their new jobs in July or August.

On cross-examination, Dr. McCathran was asked about the Contract, and he stated that he had nothing to do with the language contained therein. The job description as the professor of clinical OBGYN is to teach residents and medical students and to provide clinical care to patients. He was not aware of any patients calling for Dr. McCalmont specifically or of any patients leaving LSUHSC to go to WK.

Although Dr. McCalmont moved for involuntary dismissal of the preliminary injunction, the trial court rendered judgment, stating it reviewed the record and considered the testimony of Dr. McCalmont, Dr. Lewis, Ms. Faour, and Dr. McCathran; the exhibits; applicable law; and the arguments. For the reasons stated on the record, the trial court granted the motion for involuntary dismissal and denied LSU's request for a preliminary injunction.¹

LSU filed an appeal seeking review of the denial of its request for a preliminary injunction based on the Clause.

DISCUSSION

LSU argues that the Clause is valid and enforceable pursuant to the governing statute and case law. It contends that the trial court required elements of proof that are above and beyond the standard for injunctive relief but were, nevertheless, proven by LSU at the...