Brown v. Best Home Health & Hospice, LLC

2021 WY 83

JENNIFER BROWN f/k/a JENNIFER STRINGER, NORA YOUNGREN and CAROL WOLFE, Appellants (Defendants), v. BEST HOME HEALTH & HOSPICE, LLC, a Wyoming limited liability company, Appellee (Plaintiff).

No. S-20-0270

Supreme Court of Wyoming

July 15, 2021

Appeal from the District Court of Uinta County The Honorable Joseph B. Bluemel, Judge

Representing Appellants:

Clark Stith, Rock Springs, Wyoming.

Representing Appellee:

Sarah E. Tollison, DeFazio Law Office, LLC, Jackson, Wyoming.

Before FOX, C.J., and DAVIS ^[-] , KAUTZ, BOOMGAARDEN, and GRAY, JJ.

KAUTZ JUSTIC .

[¶1] Jennifer Brown (f/k/a Jennifer Stringer), Nora Youngren, and Carol Wolfe (collectively referred to as the Nurses) are registered nurses who worked for Best Home Health &amp Hospice, LLC (Best Home). After they left Best Home's employ and began working for a competing company, Best Home sued them for breach of the non-compete provision in their employment contracts and requested a preliminary injunction to prohibit them from working for its competitors. After refusing to allow the Nurses to present evidence on how enforcement of the non-compete provision would harm the public interest, the district court granted Best Home a preliminary injunction. We reverse and remand.

ISSUES

[¶2] The issues^[1] in this case are:

1. Did the district court abuse its discretion by enjoining the Nurses from working for Best Home's competitors?

2. Did the district court abuse its discretion by refusing to allow the Nurses to present evidence the public would be injured by enforcing the non-compete provision?

FACTS

[¶3] Best Home provides home health care to clients in Unita County, Wyoming. In 2016, Best Home started requiring its employees to sign a written employment agreement (the Agreement). The Agreement stated employees were "at-will" and Best Home had the "right to hire or fire" them in its "sole discretion." The Agreement also contained a non-compete provision imposing "restrictions on post-employment activities" "to protect [Best Home], its employees and its customers against former employees using company information, ideas contacts or relationships against it." The provision prohibited employees from "directly or indirectly" competing with Best Home by providing home health care services "similar to or which could be substituted for [its] services." The non-compete provision was effective for 24 months after termination of employment and applied "in an area covering in all directions 50 (fifty) miles from the office or locations" where the employees worked for Best Home. The Agreement required employees to handle company information in a confidential manner and prohibited them from soliciting Best Home's employees to work for its competitors or Best Home's clients to use a competing company for their home health needs. In the event a former employee violated the Agreement, Best Home was authorized to seek injunctive relief to enforce it.

[¶4] Ms. Youngren and Ms. Brown were already employed by Best Home when they signed the Agreement on June 1 and June 8, 2016, respectively. Ms. Wolfe signed the Agreement at the time of her hire in 2017.^[2] Ms. Wolfe quit working for Best Home in October 2018, Ms. Brown left in December 2018 or January 2019, and Ms. Youngren followed in January 2020. The Nurses went to work for Uinta Home Health, one of Best Home's competitors.

[¶5] Best Home filed a complaint asserting the Nurses violated the Agreement and petitioned the district court for a preliminary injunction to prohibit them from working for its competitors during the pendency of the litigation. The Nurses opposed the preliminary injunction, arguing the non-compete provision of the Agreement was unenforceable. The district court ruled the provision was "valid and enforceable" and enjoined the Nurses from working for Best Home's competitors.^[3] The Nurses appealed. We will provide additional facts as necessary for discussion of the issues.

STANDARD OF REVIEW

[¶6] Injunctive relief is authorized by statute. Wyo. Stat. Ann. §§ 1-28-101 through 111 (LexisNexis 2021). Section 1-28-101 defines an injunction as "a command to refrain from a particular act." Section 1-28-102 sets out the general standard for injunctions:

When it appears by the petition that the plaintiff is entitled to relief consisting of restraining the commission or continuance of some act the commission or continuance of which during the litigation would produce great or irreparable injury to the plaintiff, or when during the litigation it appears that the defendant is doing, threatens to do, or is procuring to be done some act in violation of the plaintiff's rights respecting the subject of the action and tending to render the judgment ineffectual, a temporary order may be granted restraining the act.

[¶7] The purpose of a preliminary injunction during the pendency of litigation is "'to preserve the status quo until the merits of an action can be determined.'" CBM Geosolutions, Inc. v. Gas Sensing Tech. Corp., 2009 WY 113, ¶ 7, 215 P.3d 1054, 1057 (Wyo. 2009) (quoting Weiss v. State ex rel. Danigan, 434 P.2d 761, 762 (Wyo. 1967)). "'[A] [preliminary] injunction^[4] rests upon an alleged existence of an emergency, or a special reason for such an order, before the case can be regularly heard.'" Id. (footnote added). "'[T]he award of a [preliminary] injunction is an extraordinary remedy which will not be granted except upon a clear showing of probable success [on the merits of the suit] and possible irreparable injury to the plaintiff, lest the proper freedom of action of the defendant be circumscribed when no wrong has been committed.'" Id. "An injury is irreparable where it is of a peculiar nature, so that compensation in money cannot atone for it." Polo Ranch Co. v. City of Cheyenne, 2003 WY 15, ¶ 26, 61 P.3d 1255, 1264 (Wyo. 2003) (citations and internal quotation marks omitted). See also, Dunmire v. Powell Family of Yakima, LLC (In re Kite Ranch, LLC), 2008 WY 39, ¶ 22, 181 P.3d 920, 926 (Wyo. 2008) (harm is irreparable when there is no adequate remedy at law to compensate for it).

¶8] Even though injunctions are statutorily authorized, they are, by nature, discretionary requests for equitable relief. CBM Geosolutions, ¶ 10, 215 P.3d at 1058 (citing Weiss v. Pedersen, 933 P.3d 495, 498-99 (Wyo. 1997)). We do not interfere with the district court's preliminary injunction decision "unless it has been guilty of a clear abuse of discretion." Id., ¶ 11, 215 P.3d at 1058 (citing Weaver v. Richardson, 21 Wyo. 343, 132 P. 1148, 1151 (1913)). A court abuses its discretion when it "acts in a manner which exceeds the bounds of reason under the circumstances." Lemus v. Martinez, 2021 WY 66, ¶ 32, 486 P.3d 1000, 1011 (Wyo. 2021) (citation omitted). See also, Kidd v. Jacobson, 2020 WY 64, ¶ 13, 463 P.3d 795, 798 (Wyo. 2020).

[¶9] When a district court's preliminary injunction order is appealed, we review its factual findings for clear error and its conclusions of law de novo. See Hart v. Nat'l Collegiate Athletic Ass'n, 550 S.E.2d 79, 83 (W.Va. 2001). See also, Anita G, LLC v. Centennial Bank, 575 S.W.3d 561, 567 (Ark. Ct. App. 2019) (the trial court's factual findings from a preliminary injunction proceeding will not be set aside unless they are clearly erroneous); 36 C.J.S. Fed.Cts. § 616 (2021) (a district court's factual determinations made in determining whether to issue a preliminary injunction are reviewed for clear error). C.f. Weaver, 132 P. at 1151 (a preliminary injunction will not be reversed absent an abuse of discretion showing the district court disregarded the facts or made an error of law). "[A] finding of fact is clearly erroneous . . . when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Pagel v. Franscell, 2002 WY 169, ¶ 7, 57 P.3d 1226, 1229 (Wyo. 2002) (citations and quotation marks omitted). In reviewing a district court's factual findings for clear error, we review the evidence in the light most favorable to the prevailing party. Wyo-Ben, Inc. v. Van Fleet, 2015 WY 146, ¶¶ 20, 31, 361 P.3d 852, 858, 861 (Wyo. 2015).

DISCUSSION

1. Preliminary Injunction to Enforce the Non-Compete Provision

[¶10] The district court ruled Best Home was entitled to a preliminary injunction to prohibit the Nurses from violating the non-compete provision of the Agreement. "Two principles, the freedom to contract and the freedom to work conflict when courts test the enforceability of covenants not to compete." Hopper v. All Pet Animal Clinic, Inc., 861 P.2d 531, 539 (Wyo. 1993). Over half a century ago, we stated "sound public policy encourages employees to seek better jobs from other employers or to go into business for themselves." Ridley v. Krout, 63 Wyo. 252, 180 P.2d 124, 127 (1947) (citations and quotation marks omitted). Contracts which hinder them from doing so are "strictly construed and rigidly scanned and are declared void unless necessary for the reasonable protection of the employer." Id. (citations and quotation marks omitted). See also, Hopper, 861 P.2d at 539 (a non-compete agreement restrains trade, and the common law policy against contracts in restraint of trade is firmly established (citing Restatement (Second) of Contracts §§ 185-188 (1981) (Introductory Note at 35) and Dutch Maid Bakeries v. Schleicher, 58 Wyo. 374, 131 P.2d 630, 634 (1942))). A non-compete provision "is prima facie invalid, and . . . to establish its validity it is incumbent on the [employer] to prove that there existed some special circumstances which rendered it reasonably necessary for the protection of the [employer's] business." Ridley, 180 P.2d at 129 (citation and some quotation marks...