Sherif Abdou v. Davita, Inc. ( 2018 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS AUG 14 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
SHERIF W. ABDOU, M.D.; AMIR S. No. 17-17490
BACCHUS, M.D., 18-15394
Plaintiffs-counter- D.C. No.
defendants-Appellants, 2:16-cv-02597-APG-CWH
v.
MEMORANDUM*
DAVITA, INC.; HEALTHCARE
PARTNERS HOLDINGS, LLC;
HEALTHCARE PARTNERS, LLC,
Defendants-counter-
claimants-Appellees.
Appeals from the United States District Court
for the District of Nevada
Andrew P. Gordon, District Judge, Presiding
Argued and Submitted July 10, 2018
San Francisco, California
Before: GRABER and TALLMAN, Circuit Judges, and LEMELLE,** District
Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Ivan L.R. Lemelle, United States District Judge for the
Eastern District of Louisiana, sitting by designation.
Doctors Sherif Abdou and Amir Bacchus (Abdou/Bacchus) appeal the
district court’s entry of a preliminary injunction forbidding them from engaging in
certain “Restricted Business” with three healthcare companies in Nevada, as well
as the district court’s subsequent denial of their motion to dissolve or modify the
injunction. We have jurisdiction under 28 U.S.C. § 1292, and we affirm.
1. The district court did not abuse its discretion by entering the
preliminary injunction. It correctly stated the Winter factors, see Winter v. Nat.
Res. Def. Council, Inc., 555 U.S. 7, 20 (2008), and its factual findings are not
clearly erroneous, see Adidas Am., Inc. v. Skechers USA, Inc., 890 F.3d 747, 753
(9th Cir. 2018).
Damage to a company’s goodwill and reputation can constitute irreparable
harm because this sort of harm is difficult to measure. Rent-a-Center, Inc. v.
Canyon Television & Appliance Rental, Inc., 944 F.2d 597, 603 (9th Cir. 1991);
Ellis v. McDaniel, 596 P.2d 222, 224 (Nev. 1979). DaVita presented evidence that
Abdou/Bacchus had extensive discussions with three of DaVita’s contractual
partners about creating an entity that would eventually compete with DaVita in
southern Nevada. They drafted a detailed business plan and strategized about how
to disrupt DaVita’s operations. By doing so, they both misappropriated the
goodwill for which DaVita paid handsomely when it acquired HealthCare Partners,
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LLC, and threatened DaVita’s goodwill and ability to develop and maintain third-
party relationships in the future.
Although Abdou/Bacchus did not actually launch a competing entity during
the Restricted Period, their discussions with the Restricted Parties clearly were
intended to lay the groundwork for such a launch. Allowing them to take
advantage of this preparation, which arguably violated the terms of the
noncompetes, is likely to cause DaVita precisely the type of irreparable harm that
noncompete agreements are intended to prevent.
Abdou/Bacchus’s argument that the district court impermissibly shifted the
burden of proof to them is unconvincing.
The district court did not abuse its discretion by finding that the balance of
equities favors DaVita. See Caribbean Marine Servs. Co. v. Baldridge, 844 F.2d
668, 673 (9th Cir. 1988). For the reasons explained above, DaVita faces
irreparable harm in the absence of an injunction. Abdou/Bacchus do not face
comparable harm if one is entered; they are simply being held to the terms of the
noncompetes that they signed voluntarily (and for which they were well
compensated).
Nor did the district court abuse its discretion by finding that the injunction is
in the public interest. “The public has an interest in seeing that competition is not
unreasonably limited or restricted, but it also has an interest in protecting the
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freedom of persons to contract, and enforcing contractual rights and obligations.”1
Ellis, 596 P.2d at 224. This observation is true even in the healthcare context. Id.Finally, the district court did not enter an overbroad injunction. Injunctive
relief “must be tailored to remedy the specific harm alleged.” Lamb-Weston, Inc.
v. McCain Foods, Ltd., 941 F.2d 970, 974 (9th Cir. 1991). Here, the specific harm
alleged is damage to DaVita’s goodwill, reputation, and third-party relationships.
The injunction, accordingly, forbids Abdou/Bacchus from doing business with the
parties with whom they actually had discussions during the Restricted Period in the
state those discussions targeted.
2. The district court did not abuse its discretion by refusing to dissolve or
modify the injunction. None of the new information presented along with
Abdou/Bacchus’s motion to dissolve “establish[ed] that a significant change in
facts or law warrant[ed] revision . . . of the injunction.” Sharp v. Weston, 233 F.3d
1166, 1170 (9th Cir. 2000).
Finally, the district court did not abuse its discretion by maintaining the
injunction as to the entire state of Nevada. DaVita does not currently operate a
provider network in northern Nevada, but there is conflicting evidence about the
possibility of DaVita expanding into that part of the state.
1
The district court did not explicitly mention competition in its order granting the
preliminary injunction, but it clearly considered Abdou/Bacchus’s arguments on
the subject.
4
The district court can review (and potentially narrow) the geographic scope
of the injunction after more complete discovery and briefing. But on this limited
record, it was not an abuse of discretion for the district court to maintain the
injunction covering the entire state.
AFFIRMED.
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