Millennium Health, LLC v. David Barba ( 2021 )

FILED
NOT FOR PUBLICATION
OCT 7 2021
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
MILLENNIUM HEALTH, LLC, No. 21-35314
Plaintiff-Appellee, D.C. No. 3:20-cv-02035-HZ
v.
MEMORANDUM*
DAVID BARBA; JUSTIN MONAHAN,
Defendants-Appellants,
and
NEPENTHE LABORATORY
SERVICES, LLC,
Defendants.
Appeal from the United States District Court
for the District of Oregon
Marco A. Hernandez, Chief District Judge, Presiding
Argued and Submitted September 2, 2021
San Francisco, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: RAWLINSON and BYBEE, Circuit Judges, and CARDONE,** District
Judge.
Appellants David Barba and Justin Monahan appeal the district court’s order
granting Millennium Health, LLC’s motion for a preliminary injunction. We
review the district court’s issuance of a preliminary injunction for an abuse of
discretion. Adidas Am., Inc. v. Skechers USA, Inc., 890 F.3d 747, 753 (9th Cir.
2018). The district court abuses its discretion “if its decision is based on either an
erroneous legal standard or clearly erroneous factual findings.” Negrete v. Allianz
Life Ins. Co. of N. Am., 523 F.3d 1091, 1096 (9th Cir. 2008). “The legal issues
underlying the injunction are reviewed de novo because a ‘district court would
necessarily abuse its discretion if it based its ruling on an erroneous view of law.’”
GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1204 (9th Cir. 2000) (quoting
Brookfield Commc’ns v. W. Coast Ent. Corp., 174 F.3d 1036, 1046 (9th Cir.
1999)). The district court’s factual findings are reviewed for clear error. Lahoti v.
VeriCheck, Inc., 586 F.3d 1190, 1195–96 (9th Cir. 2009). We have jurisdiction
pursuant to 28 U.S.C. § 1292, and we affirm.
Barba and Monahan only challenge the district court’s finding that
Millennium has a likelihood of success on the merits in enforcing the
**
The Honorable Kathleen Cardone, United States District Judge for the
Western District of Texas, sitting by designation.
2
non-competition agreements against them. Appellants argue that an employee
seeking to void a “voidable” non-competition agreement cannot be preempted by
their employer’s effort to enforce the covenant, especially where, as here, the
employee has not yet formally left their employment or violated the agreement.
Their argument is not supported by Oregon law.
1. Oregon treats non-competition agreements that do not comply with
the statutory requirements of Oregon Revised Statue § 653.295 as “presumptively
valid rather than void ab initio.” Bernard v. S.B., Inc., 350 P.3d 460, 464 (Or. Ct.
App. 2015). Neither Barba nor Monahan received notice that a non-competition
agreement would be a condition of their employment two weeks prior to
commencing their employment. Thus, their non-competition agreements were
voidable. Or. Rev. Stat. § 653.295(1)(a)(A).
The district court relied on a fair reading of the Oregon Court of Appeals’
decision in Bernard in finding that Oregon courts would treat a voidable non-
competition agreement as valid and enforceable if the employee has not taken
affirmative steps to void the agreement at the time the employer seeks to invoke
the non-competition agreement. 350 P.3d at 465 (“[B]ecause [the agreement] had
not been voided at the time that defendant sought to invoke the contract, the
agreement was valid and in effect.”); see also Brinton Bus. Ventures, Inc. v. Searle,
3
248 F. Supp. 3d 1029, 1035 (D. Or. 2017) (“[T]he Oregon Court of Appeals
interpreted O.R.S. 653.295 to require a plaintiff to void a non-competition
agreement prior to the defendant’s effort to enforce the agreement.”).
2. The district court’s finding that Millennium Health’s September 22,
2020 letters to Barba and Monahan were an attempt to invoke its rights under the
non-competition agreements is not clearly erroneous. In Bernard, the court held
that an employer sufficiently “sought to invoke” a non-competition agreement by
making “contact with both plaintiff and her new employer, reminding them of
plaintiff’s contractual obligations to defendant.” 350 P.3d at 461. And in Brinton,
the employer sufficiently “sought to invoke” its rights by making a threat of legal
action, including “the enforcement of an alleged non-competition agreement.”
248 F. Supp. 3d at 1035.
Millennium’s general counsel sent both Barba and Monahan letters
“advis[ing] Barba and Monahan of the continuing, post-employment obligations
[they] owe Millennium,” including the non-compete clauses. The letters warned
Barba and Monahan that Millennium expected them to “fully honor [their]
contractual obligations,” and was “prepared to defend its rights should [they]
choose to breach those obligations in any way.” At that point, Barba and Monahan
4
had resigned, effective October 2, 2020, and had “concrete plans” to work for
Nepenthe Laboratory Services LLC.
The district court did not abuse its discretion in concluding the letters were
an effort to enforce Millennium’s rights under the non-competition agreements,
forestalling Barba’s and Monahan’s subsequent attempts to void the agreements.
Because Millennium had a likelihood of success on the merits, the district court did
not err in granting Millennium’s motion for a preliminary injunction.
AFFIRMED.
5