Cardinal Health 414, Inc. v. Adams

• Decision Date: 10 October 2008
• Docket Number: Case No. 3:07-00691.
• Citation: 582 F.Supp.2d 967
• Parties: CARDINAL HEALTH 414, INC., Plaintiff, v. Daniel ADAMS, Allen B. Townsend, Jr., and Mid-South Nuclear Pharmacy, Inc., d/b/a Music City Nuclear Pharmacy, Defendants.
• Court: U.S. District Court — Middle District of Tennessee

582 F.Supp.2d 967

CARDINAL HEALTH 414, INC., Plaintiff, v. Daniel ADAMS, Allen B. Townsend, Jr., and Mid-South Nuclear Pharmacy, Inc., d/b/a Music City Nuclear Pharmacy, Defendants.

Case No. 3:07-00691.

United States District Court, M.D. Tennessee, Nashville Division.

October 10, 2008.

COPYRIGHT MATERIAL OMITTED

Chandra N.T. Flint, Gerald David Neenan, A. Scott Ross, Neal & Harwell, Nashville, TN, for Plaintiff.

Brian Casper, Douglas Edward Jones, Barbara Jones Perutelli, Gary Steven Rubenstein, Schulman, LeRoy & Bennett, Nashville, TN, Marshall T. Cook, Bone, McAllester & Norton, PLLC, Hendersonville, TN, Anne C. Martin, Erica Stiff-Coopwood, Stephen J. Zralek, Bone, McAllester & Norton, PLLC, Nashville, TN, for Defendants.

MEMORANDUM

ALETA A. TRAUGER, District Judge.

Pending before the court is the plaintiff Cardinal Health 414, Inc.'s ("Cardinal's") Motion for Partial Summary Judgment (Docket No. 42), the defendant Daniel Adams' Motion For Summary Judgment (Docket No. 86), and the defendants Allen B. Townsend and Mid-South/Music City Nuclear Pharmacy's (collectively "Townsend/Music City's") Motion for Summary Judgment (Docket No. 95). For the reasons discussed herein, all these motions will be granted in part and denied in part. Also pending is Cardinal's Motion to Strike the Affirmative Defenses of Illegality and Laches or in the Alternative for Summary Judgment on These Defenses. (Docket No. 92.) This motion will be granted as a motion for summary judgment. Finally, Townsend/Music City's Motion For Attorney's Fees (Docket No. 103) will be denied.

FACTUAL BACKGROUND

This case concerns e-mail snooping in Nashville's nuclear pharmacy industry.¹ A nuclear pharmacy compounds and dispenses radioactive materials for use in nuclear medicine procedures, and, therefore, a nuclear pharmacy only serves a select group of customers, i.e., hospitals and clinics with nuclear medicine departments. In the entire mid-South area covering Middle Tennessee, Southern Kentucky, Bowling Green, Memphis, Knoxville, and Huntsville, Alabama, there are only about fifty potential customers for a nuclear pharmacy serving the mid-South.

Cardinal is a company that provides nuclear pharmacy services in this mid-South area. More than twenty-five years ago, defendant Townsend began working in Nashville's nuclear pharmacy industry for Cardinal's nuclear pharmacy predecessor company, Syncor, and remained with Cardinal's nuclear pharmacy division until the end of 2004. With that experience, Townsend gained an understanding of the customers in the mid-South nuclear pharmacy market and the prices they paid for nuclear pharmacy products. Defendant Adams is a licensed nuclear pharmacist who worked in the Nashville Syncor/Cardinal lab from 1997 until his resignation from Cardinal in February 2005. Like Townsend, Adams, through his years at Cardinal, gained an understanding of who the customers were in the mid-South's nuclear pharmacy market, the prices they paid, and what their needs were.

In the spring of 2003, Adams, while not losing his job at Cardinal, was replaced in the position of pharmacy manager by Robert "Greg" Young. To assist in the transition of pharmacy manager responsibilities, Young and Adams exchanged the username and password information that they each used to log onto the Cardinal web server to access e-mail and other workrelated materials stored on-line.

In late 2004, Townsend decided to leave Cardinal to start his own nuclear pharmacy that would provide direct competition to Cardinal for the mid-South customer base. At this time, there was no competing nuclear pharmacy in the Nashville area. Townsend resigned from Cardinal in December 2004 on generally good terms with the people at Cardinal, and started Music City Nuclear Pharmacy ("Music City") in February 2005. Independently, Adams, who was friendly with Townsend, also decided to leave Cardinal in February 2005. Adams took a job at PETNET, which is located at Vanderbilt University in Nashville. PETNET provides a nuclear pharmacy service different from the service Adams provided at Cardinal, and PENET does not engage in direct competition with Cardinal for Cardinal's nuclear pharmacy business to anywhere near the extent that Townsend/Music City now competes with Cardinal. Adams had a tense and "unpleasant" departure from Cardinal and did not have a final meeting with Young, who was out of the country at the time Adams left. In addition to taking the job at PETNET, Adams started a side business providing "health physics services" to nuclear pharmacy customers, and, for about a dozen hours over 2005 and 2006, Adams worked as a relief pharmacist at Music City.

Despite leaving Cardinal, Adams continued to log on to the Cardinal employee email system. While Adams' access to his own Cardinal e-mail account had been terminated as of the day of his departure, Adams continued to log on to the system using Young's username and password, reading and reviewing the messages that Young received in his e-mail account. Adams also used the username and password of Marni Gardner, another Cardinal employee, whose log-on information Adams had obtained while at Cardinal. In his deposition, Adams testified that he accessed Cardinal e-mails from the time he left Cardinal until August 2006, when Cardinal changed Young's username and password information. It is not disputed that Cardinal's log-on page explicitly told visitors that the content therein was for Cardinal employees only.

Sometime in the late spring or early summer of 2005, Adams had a telephone conversation with Townsend, in which he told Townsend of his continued ability to log on to the Cardinal web server and to read the e-mails of Robert Young. Adams proposed the idea of sending some of these e-mails to Townsend. Adams and Townsend testified in their depositions that Adams thought Townsend might "enjoy" the e-mails because they concerned Cardinal employees that Adams and Townsend both knew. Townsend testified that, when Adams told him he wanted to give him these e-mails, Townsend said "okay."

There is no question that Adams and Townsend had a continuing relationship over the course of the next year, in which Adams sent Townsend certain e-mails that he pulled from Young's account. There is also no question that Townsend reviewed certain e-mails Adams sent, and there is also no question that Townsend discussed the content of certain e-mails with the people at Music City. There remains ample dispute, however, as to the frequency of these practices, as to the number of e-mails involved, and as to the content of the e-mails. Early in discovery in this matter, Cardinal submitted the affidavit of nuclear pharmacy technician Tim Kirkland, who had left Cardinal in December 2004 to work with Townsend at Music City. Kirkland left Music City in July 2006, and, in conjunction with seeking another job with FWCardinal, Kirkland told Robert Young about the e-mail snooping. In his sworn affidavit, Kirkland stated that, on a weekly basis from "early 2005" to November 2005, he picked up a "stack" of Cardinal e-mails from Adams at PETNET and delivered them to Townsend at Music City. According to Kirkland, after November 2005, Adams still prepared the weekly delivery for Townsend, but Adams provided Kirkland with the documents in a sealed envelope, so Kirkland was no longer privy to the content of the deliveries. Kirkland also stated that, on a weekly basis from early 2005 to July 2006, Adams faxed Cardinal materials to Townsend's fax machine at Music City. Kirkland stated that he observed Cardinal's profit and loss statements, customer pricing information, and other private and confidential information of a sensitive nature passing from Adams to Townsend over this year-and-one-half period.

The defendants vigorously challenge the details of Kirkland's account. They point out that Kirkland offered deposition testimony somewhat inconsistent with his affidavit. At one point in his deposition, Kirkland agreed with the proposition that he saw only "ten to twenty" illicitly obtained e-mails in total. Kirkland also testified that his motivation behind tipping off Young was to "get [Townsend]" because Townsend "pissed me off" about how raises were dispensed at Music City. While Kirkland was hazier in his deposition about the nature and volume of the deliveries and the content of the e-mails, he also explained that his declaration testimony was provided when the information was "fresh" in his mind. Overall, a full review of the substance and implications of the Kirkland deposition testimony that the court was provided indicates that a substantial amount of Cardinal-related e-mails were passed from Adams to Townsend, with the common understanding that the information exchanged was important.

Adams and Townsend paint a very different picture of the scope and severity of the e-mail snooping. Adams claims that, after he left Cardinal, he went on the Cardinal e-mail system from "time to time," but not on a regular basis such that he would have a "stack" of e-mails ready for Townsend or Kirkland each week. Adams claims he engaged in the e-mail snooping out of a sense of "personal curiosity," and, while he knew Cardinal would not want him to do what he was doing, he did not feel that what he was doing was wrong or illegal. In addition to accessing and reading the e-mails from "time to time," Adams admits that he eventually told Townsend what he was doing and that he "occasionally" passed on material to Townsend. Adams softens this by claiming that the information he reviewed and passed on was not "confidential or proprietary in nature" but was rather pure "gossip." Adams claims that, in total, over the year and one-half that this conduct went on, he passed on as few as five illicitly obtained e-mails and no more than twenty.

For his part, Townsend admits receiving and reviewing a "few" Cardinal emails from Adams. Townsend claims that he did not...