AAA INC. v. Allegheny General Hosp.
| Citation | 826 A.2d 886 |
| Parties | ALLEGHENY ANESTHESIOLOGY ASSOCIATES, INC., a Pennsylvania professional corporation, Appellant, v. ALLEGHENY GENERAL HOSPITAL, a Pennsylvania non-for-profit corporation, Appellee. Jacalyn F. Allera, Joann Atkinson, Nancy A. Hovanec Bellora, Heather Boden, Cheryl Bristol, Darlene Brown, Stephanie Caldwell, Mary Jane Cichowicz, Colleen Coyne, Roslyn Corton, Patricia M. Criste, Edward Falenski, Cynthia S. Ketchmark-Green, Susan Jurik, Heidi Hillman, James Horvath, Denise Imperio, Angie Kelly, Margaret Langer, Susan B. Leahy, Margaret McCague, Mary Anne McClain, Patricia Meinert, Marianne Neal, Christie Oblak, Tracy Osborne, Sandra Poureshmenantalemy, Helen E. Ringel, Imy Rosenblatt, Lianne Santilli, Nino Servello, Patricia Smith, Tom Squillo, Joan Sweda, Judy Van Ryn, Barbara Wells, Shirley Winkler, Appellees, v. Allegheny Anesthesiology Associates, Inc., a Pennsylvania professional corporation, Appellant. |
| Decision Date | 12 May 2003 |
| Court | Superior Court of Pennsylvania |
Kevin P. Lucas, Pittsburgh, for appellant.
Frederick W. Thieman, for Allera, etc., appellees.
David L. McClenahan, Pittsburgh, for Allegheny General Hosp., appellee.
¶ 1 Appellant, Allegheny Anesthesiology Associates, Inc. ("AAA"), appeals from an order entered June 20, 2002, in the Court of Common Pleas of Allegheny County. We affirm.
¶ 2 In June 1999, AAA entered into a contract with Allegheny General Hospital ("AGH") to provide anesthesia services at AGH through June 30, 2002. Pursuant to the agreement, employees of AAA, including physicians and certified registered nurse anesthetists ("CRNAs"), provided mutually agreed upon services to AGH's patients. In return, AGH reimbursed AAA for the salaries of the employees. The employment contracts between AAA and its CRNA employees contained the following non-compete covenant:
In the event of termination of Employee's employment hereunder for any reason, Employee expressly agrees to abide by and be subject to the following restrictive covenant:
(a) During the twenty-four (24) month period following termination, Employee shall not, directly or indirectly, as an owner, partner, lender, investor, shareholder, employee, officer, director or in any other capacity attempt to contract with, or compete against [AAA] at any facility where [AAA] has a contract to provide services, or at any facility at which [AAA] has provided services during the twelve (12) month period ending on the date of Employee's termination, including, but not limited to, [AGH] ... for the purpose of providing any anesthesia services and, further, Employee shall immediately resign from the staff of such medical facilities and agrees not to reapply for such staff privileges for a period of twenty-four (24) months.
Employment Contract, at 8, ¶ 20.
¶ 3 A dispute arose between AGH and AAA regarding AAA's refusal to participate in a health care reimbursement plan favored by AGH. In a letter to the AAA CRNAs dated April 8, 2002, AGH announced that AAA's continued non-participation would likely result in termination of AAA's contract. AAA and AGH ultimately agreed to allow their contract to expire, by its terms, on June 30, 2002.
¶ 4 AAA filed a complaint against AGH on April 15, 2002, accusing AGH of (1) tortiously interfering with the employment contracts between AAA and its anesthesiologist and CRNA employees; (2) materially breaching its agreement with AAA; and (3) conspiring with other entities to harm AAA's business. AAA also sought a preliminary injunction enjoining AGH "and all others in active concert or participation with it, from attempting to induce any anesthesiologist or CRNA employee of [AAA] to terminate his or her employment with AAA, or from attempting to induce any such employee to accept employment with [AGH] or any third party." Notice And Motion For Preliminary Injunction, 4/15/02. On May 20, 2002, AGH filed a Motion for Special and Preliminary Injunction seeking to enjoin AAA from enforcing the non-compete covenants in the physician and CRNA employment agreements or, in the alternative, enforcing the alleged covenant with regard to facilities other than those specifically provided for in the employment agreement. Motion For Preliminary Objection, 5/20/02.1 In an order dated May 23, 2002, the trial court required AAA, pursuant to its June 1999 agreement with AGH, to continue to provide anesthesiology services to AGH through June 30, 2002. The court also scheduled a hearing for June 17, 2002, to consider the enforceability of the non-compete covenant.
¶ 5 On May 23, 2002, AAA entered into a contract with University of Pittsburgh Medical Center ("UPMC") to provide anesthesia services at UPMC hospitals. Two days later, Dr. Stanley Weber, President of AAA, along with representatives of UPMC, offered positions at UPMC to each of the CRNAs employed at AGH. At a May 28, 2002 meeting, Dr. Weber and Andrea Badway, Chief Operations Officer of AAA, informed the CRNAs that: their employment would be terminated effective June 30, 2002, when the contract between AAA and AGH expired; AAA would be entering into a new affiliation with the UPMC network; UPMC would hire the CRNAs but only if they agreed to work for UPMC before the June 30, 2002, deadline; AAA intended to enforce the non-compete covenant to prevent the CRNAs from working at AGH; and that any of the CRNAs who desired to remain at AGH would be required to buy out their contract with AAA at the equivalent of two years' salary.
¶ 6 On June 3, 2002, thirty-seven CRNA employees of AAA who were then working at AGH filed a Motion to Intervene. The chancellor granted the motion of the CRNA employees to intervene on June 6, 2002. Shortly thereafter, the CRNAs filed a Complaint in Intervention and a Motion for Special and Injunctive Relief. Preliminary objections filed by AAA to the CRNAs' complaint are still pending.
¶ 7 The parties proceeded to the injunction hearing on June 17, 2002, as scheduled. At the conclusion of the hearing, the chancellor issued the following order from the bench:
And now, to-wit, the 17th day of June 2002, it's hereby ordered and decreed that AAA is preliminarily enjoined from enforcing the covenants not to compete between AAA and its employees, CRNAs only.
N.T. Injunction Hearing, 6/17/02, at 299:17-22. AAA's motion for injunctive relief was denied. The chancellor's decree was docketed in a final order on June 20, 2002, and AAA now appeals the issuance of preliminary injunctive relief in favor of the CRNAs.2 ¶ 8 AAA argues that the chancellor erred in issuing the preliminary injunction. Specifically, AAA raises the following issues:
I. The Record Establishes that the CRNAs did not Satisfy any of the Standards for the Issuance of a Preliminary Injunction.
II. Multiple Procedural Irregularities in the Proceedings Below Combined to Contribute Substantially to the Court's Erroneous Preliminary Injunction Ruling.
Brief for Appellant, at i-ii.
¶ 9 In reviewing the grant of a preliminary injunction, we are guided by the following principles:
As a preliminary consideration, we recognize that on an appeal from the grant or denial of a preliminary injunction, we do not inquire into the merits of the controversy, but only examine the record to determine if there were any apparently reasonable grounds for the action of the court below. Only if it is plain that no grounds exist to support the decree or that the rule of law relied upon was palpably erroneous or misapplied will we interfere with the decision of the Chancellor.
Shanaman v. Yellow Cab Co. of Philadelphia, 491 Pa. 516, 421 A.2d 664, 666 (1980) (citation omitted).
A preliminary injunction should be granted only if all of the following four "essential prerequisites" are proven: (i) a strong likelihood of success on the merits; (ii) a showing of immediate and irreparable harm that cannot be compensated by money damages; (iii) a showing that greater injury will result if preliminary injunctive relief is denied than if such injunctive relief is granted; and (iv) a showing that a preliminary injunction would restore the status quo.
Temple University of the Commonwealth System of Higher Education v. Allegheny Health Education and Research Foundation, 456 Pa.Super. 314, 690 A.2d 712, 718 (1997) (citations omitted).
¶ 10 AAA first argues that the CRNAs failed to satisfy the prerequisites for issuance of a preliminary injunction. In order to determine if there were any apparently reasonable grounds for the chancellor's decision to issue the challenged injunction, we shall address the prerequisites seriatim.
¶ 11 The first prerequisite involves the likelihood that the CRNAs would prevail on the merits in an action challenging the enforceability of the non-compete covenant in the CRNA employment contract. The CRNAs maintain that AAA's purported assignment of their contracts to UPMC as well as AAA's effective termination of the CRNAs rendered the non-compete covenant unenforceable. AAA counters that the contracts were never actually assigned and that it never officially terminated the employment of the CRNAs in writing, as is required by the terms of the employment agreement.3 ¶ 12 The chancellor rejected both of AAA's arguments, as is clearly evidenced by the following findings of fact entered on the record at the June 17, 2002 hearing:
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