CVS Pharmacy, Inc. v. Brown

CVS PHARMACY, Inc., Plaintiff, v. TIMOTHY M. BROWN Defendant.

C.A. No. 21-070 WES

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND

March 3, 2021

MEMORANDUM AND ORDER

Along with its Complaint, Plaintiff CVS Pharmacy filed an Emergency Motion for a Temporary Restraining Order and a Motion for Preliminary Injunction, ECF No. 3. In addition to his Opposition, ECF No. 12, Defendant Timothy Brown filed Motion to Dismiss or Transfer Venue, ECF No. 10. For the reasons that follow, the Motion to Dismiss or Transfer Venue is GRANTED, and the case is transferred to the Western District of Washington to cure lack of personal jurisdiction.

I. Background

In 2017, Timothy Brown began working at Aetna, which is headquartered in Connecticut. Compl. ¶ 4, ECF No. 1; Notice of Suppl. Authority 8 n.2, ECF No. 15. He served first as a Medicare General Manager and later as a Chief Medicare Officer for the Northwest and Mountain regions of the United States. Compl. ¶¶ 4, 28. In November 2018, Aetna was acquired by CVS. Id. ¶ 3.

After receiving $97,750 in restricted stock units from CVS, Brown signed a noncompete agreement, promising that he would not do certain types of work for any competitor for one year after leaving CVS. Id. ¶¶ 29-36. The contract stated that the stock options were contingent on his acceptance of the agreement. See Restrictive Covenant Agreement ¶ 1, ECF No. 1-1. In January 2021, Brown gave notice that he was leaving Aetna/CVS and accepted a position as Medicare Advantage Performance Officer, Managing Director, for Cigna, which competes with Aetna in the Medicare Advantage field. Compl. ¶¶ 37, 105. After failed negotiations between the parties and Cigna, CVS sued, seeking to enjoin Brown from working for Cigna in the Medicare Advantage field for twelve months. Id. ¶ 106 and page 33. CVS argues that Brown has confidential information regarding Aetna's business plans in the Medicare Advantage market. Id. ¶¶ 52-100.

On February 11, 2021, the Court held a conference and set an expedited briefing schedule. Brown then filed his Motion to Dismiss or Transfer Venue, as well as an Opposition to the Motion for Temporary Restraining Order. CVS filed a Reply to Defendant's Opposition to Emergency Motion for Temporary Restraining Order ("Reply"), ECF No. 13, responding to both the Opposition and the Motion to Dismiss or Transfer.¹

II. Discussion

Brown argues that the case should be dismissed based on lack of personal jurisdiction. Def.'s Mem. Supp. Mot. to Dismiss or Transfer Venue 5-11, ECF No. 11. "In determining whether a non-resident defendant is subject to its jurisdiction, a federal court exercising diversity jurisdiction is the functional equivalent of a state court sitting in the forum state." Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 51 (1st Cir. 2002). "Rhode Island's long-arm statute claims jurisdiction to the maximum extent permitted by the Fourteenth Amendment." Dennett v. Archuleta, 915 F. Supp. 2d 248, 251 (D.R.I. 2013). Thus, the sole question presented is whether personal jurisdiction over Brown would comport with the Due Process Clause. See id.

Because the basic facts underlying CVS's claim of jurisdiction are not disputed, the Court will utilize the prima facie method of determining personal jurisdiction. See Foster-Miller, Inc. v. Babcock & Wilcox Canada, 46 F.3d 138, 145 (1st Cir. 1995) (noting that prima facie method is ill-suited to cases "that feature conflicting versions of the facts").² "Under this standard, the court need only 'consider . . . whether the plaintiff has proffered evidence that, if credited, is enough to support findings of all facts essential to personal jurisdiction.'" Adelson v. Hananel, 510 F.3d 43, 48 (1st Cir. 2007) (quoting Foster-Miller, 46 F.3d at 145).

CVS claims that this Court has specific (as opposed to general) jurisdiction over Brown. See Reply 14. The First Circuit has identified three requirements for specific jurisdiction: "First, the claim underlying the litigation must directly arise out of, or relate to, the defendant's forum-state activities. Second, the defendant's in-state contacts must represent a purposeful availment of the privilege of conducting activities in the forum state, thereby invoking the benefits and protections of that state's laws and making the defendant's involuntary presence before the state's courts foreseeable. Third, the exercise ofjurisdiction must . . . be reasonable." PREP Tours, Inc. v. Am. Youth Soccer Org., 913 F.3d 11, 17 (1st Cir. 2019) (citation and quotations omitted). Brown focuses his arguments on the second prong: purposeful availment. Def.'s Mem. Supp. Mot. to Dismiss or Transfer Venue 10-11. The Court agrees that this requirement has not been met.³

For a court to exercise personal jurisdiction over an out-of-state defendant, "it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." United Elec., Radio and Mach. Workers of Am. v. 163 Pleasant St. Corp., 960 F.2d 1080, 1088 (1st Cir. 1992) (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)); see also Asahi Metal Indus. Co. v. Superior Court of California, Solano Cty., 480 U.S. 102, 112 (1987) (requiring "an action of the defendant personally directed toward the forum State."). This requirement is "akin to a rough quid pro quo, that is, when a defendant deliberately targets its behavior toward the society or economy of a particular forum, the forum should have the power to subject the defendant to judgment regarding that behavior." Bluetarp Fin., Inc. v. Matrix Const. Co., Inc., 709F.3d 72, 82 (1st Cir. 2013) (citation and quotations omitted). The focus of this requirement is "voluntariness and foreseeability." Astro-Med, Inc. v. Nihon Kohden Am., Inc., 591 F.3d 1, 10 (1st Cir. 2009) (citation and quotations omitted).

CVS argues that Brown purposefully availed himself of the privilege of conducting activities in Rhode Island because he signed a noncompete agreement stating that Rhode Island law governs any disputes arising from the contract;⁴ he attended a single multi-day CVS training in Rhode Island; he was employed by CVS, a Rhode Island corporation; and he received CVS stock through his employment. See Reply 16-17, 19.

The choice-of-law clause in the noncompete agreement supports CVS's contention that Brown should have expected to have the protection of Rhode Island law. However, a contract between theparties agreeing that the law of the forum state will govern the contract is not on its own sufficient to establish personal jurisdiction. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 482 (1985) (holding that a choice-of-law clause in a contract between Burger King and an out-of-state franchisee, "when combined with the 20-year interdependent relationship" between the parties, established personal jurisdiction over the franchisee). Thus, the question is whether CVS has established so-called "plus" factors sufficient to bolster the choice-of-law clause.

CVS's remaining evidence is that Brown worked for a Rhode Island company for two years, travelled to Rhode Island once, and accepted stock in CVS. In Walden v. Fiore, 571 U.S. 277 (2014), the Supreme Court held that "the plaintiff cannot be the only link between the defendant and the forum." Id. at 285. "Rather, it is the defendant's conduct that must form the necessary connection with the forum State that is the basis for its jurisdiction over him." Id. This holding deals a significant blow to CVS's evidence, which largely focuses on the fact Brown did work that benefitted CVS and that a breach of his contract could hurt CVS.

A survey of cases in which in-state companies sue their out-of-state former employees for breach of noncompete agreements shows that purposeful availment generally turns on the frequency and numerosity of contact - in-person or otherwise - between the out-of-state employee and in-state persons. Where the out-of-state employee had regular contact with in-state workers, personal jurisdiction exists. See, e.g., Tekway, Inc. v. Agarwal, 19-CV-6867, 2020 WL 5946973, at *6 (N.D. Ill. Oct. 7, 2020) (finding personal jurisdiction over out-of-state employee who reached out to in-state employees to apply for job, signed contract with choice-of-law clause, and communicated "regularly" by phone, email, and messaging applications with in-state employees); Hilb Group, LLC v. Rabinowitz, CV 18-00555 WES, 2019 WL 3543690, at *2 (D.R.I. Aug. 2, 2019) (Defendant who "allegedly purposefully stole clients" from his Rhode Island employer purposely availed himself because he "received benefits from employment in Rhode Island, corresponded daily and extensively with the Rhode Island office via email and telephone, relied heavily on Rhode Island employees for job-related tasks, and visited the Rhode Island office six times for work."); Lombard Med. Techs., Inc. v. Johannessen, 729 F. Supp. 2d 432, 437 (D. Mass. 2010) (finding jurisdiction where contract had choice-of-law clause and out-of-state employees received paychecks from the forum state, sent weekly expense reports and updates to employees in the forum state, and "would, from time to time, report in person"); Pro Edge, L.P. v. Gue, 374 F. Supp. 2d 711, 733 (N.D. Iowa 2005), modified, 411 F. Supp. 2d 1080 (N.D. Iowa 2006) (finding jurisdiction over employee who signed contract with choice-of-law clause, received "partnerships units" in the company, had a direct supervisor based in Iowa,contacted the main office by phone four to eight times per week, and travelled to Iowa twice); Prod. Group Intern., Inc. v. Goldman, 337 F. Supp. 2d 788, 792 (E.D. Va. 2004) (finding jurisdiction over out-of-state employee who signed employment contract with Virginia company, worked for the company for six years, communicated frequently with Virginia employees, and made three...