Holton v. Physician Oncology Servs., LP

• Decision Date: 06 May 2013
• Docket Number: No. S13A0012.,S13A0012.
• Citation: 742 S.E.2d 702,292 Ga. 864
• Parties: HOLTON v. PHYSICIAN ONCOLOGY SERVICES, LP, et. al.
• Court: Georgia Supreme Court

292 Ga. 864

742 S.E.2d 702

HOLTON

v.PHYSICIAN ONCOLOGY SERVICES, LP, et. al.

No. S13A0012.

Supreme Court of Georgia.

May 6, 2013.

Peter Nathaniel Hall, David W. Long–Daniels, Michael James King, Greenberg Traurig LLP, Atlanta, for appellant.

R. Daniel Beale, Spencer F. Preis, Shannon Rutledge Creasy, McKenna, Long & Aldridge LLP, Atlanta, for appellee.

HUNSTEIN, Chief Justice.

In this case involving restrictive covenants in an employment agreement, Michael Holton appeals from the grant of an interlocutory injunction prohibiting him from working in an executive capacity for a particular competitor of his former employer for one year. He also challenges the trial court's ruling that he would inevitably disclose his former employer's trade secrets and confidential information in violation of the Trade Secrets Act and his confidentiality covenant if he went to work for the competing business. Because a stand-alone claim for the inevitable disclosure doctrine of trade secrets—untethered from the provisions of our state trade secret statute—is not cognizable in Georgia, we reverse the part of the order enjoining Holton from the inevitable disclosure and use of trade secrets. On the remaining issues, we dismiss as moot his challenge to the order enjoining him from working for the competitor until October 2012 and affirm the part of the order enforcing the confidentiality covenant.

Holton was hired in August 2009 as the vice president and chief operating officer of Physician Oncology Services, LP, which provides radiation therapy services to cancer patients. In that position and later as president, Holton was responsible for overseeing the operations of seven facilities then operating in the metro Atlanta area. As part of the hiring process, Holton executed an employment agreement that contained a one-year noncompete covenant in which he agreed not to provide similar services to a competing business within a 25–mile radius of the seven company locations. The agreement also had a two-year confidentiality covenant in which he agreed not to use, divulge, disclose, or make accessible any confidential or proprietary information of the business or any personal information, which is defined as “any information concerning the personal, social, or business activities of its officers, directors, principals, partners, shareholders, agents, and employees.”

In January 2011, Physician Oncology Services merged with Vantage Oncology, LLC, which operates 45 radiation oncology treatment centers in 12 states, including five in the Atlanta area. Following the merger, Holton continued to have oversight responsibilities for the operational facilities in Georgia and was the senior executive in charge of a project to integrate the two companies. In late May, Holton was removed from direct supervision of the day-to-day operations in Atlanta and became responsible for facilities in other states. On October 4, 2011, Vantage terminated Holton without cause, effective immediately.

A month later, Holton accepted employment with Ambulatory Services of America, Inc., to become the chief executive officer of its radiation oncology business, Radiation Oncology Services of America, Inc. (ROSA). ROSA is a competitor of Vantage and had four operating centers within the noncompete territory in Holton's employment agreement, none of which were to fall within Holton's day-to-day oversight. Vantage immediately sought a temporary restraining order and then an interlocutory injunction, alleging that Holton had violated his noncompete and confidentiality covenants, misappropriated trade secrets in violation of the Georgia Trade Secrets Act of 1990, and would inevitably disclose and use Vantage's trade secrets. Vantage sought an injunction to prevent Holton from working for ROSA, which the trial court granted. The trial court found that Holton had knowledge of the following trade secrets and confidential information: a company initiative on a new technology measuring radiation doses, a project to improve business and management processes, the details of a direct-to-patient marketing plan, the markets and physicians' practices targeted by Vantage for development or acquisition, and the company's “practice models.” The trial court's order enjoined Holton from (1) working for ROSA in any executive capacity from “the date of this Order through October 4, 2012,” (2) providing services that are substantially similar to the duties he performed for Vantage to any other competing business within a 25–mile radius of seven locations in metro Atlanta through October 4, 2012, and (3) using or disclosing confidential information or personal information that are trade secrets in perpetuity and those that do not qualify as trade secrets through October 4, 2013. Holton sought a stay of the injunction, which was denied. He appealed to the Court of Appeals, which transferred the case to this Court on the grounds that the appeal involves the legality and propriety of equitable relief. See Lee v. Environmental Pest & Termite Control, Inc., 271 Ga. 371(1) (516 S.E.2d 76 (1999)). Holton did not file a motion for supersedeas in this Court to try to prevent the appeal from becoming moot.

[292 Ga. 866]1. Holton first challenges the trial court's ruling that Vantage was likely to succeed on its claim that the noncompete covenant was valid under Georgia law and Holton's employment with ROSA would constitute a breach of that covenant. Since October 4, 2012, when his noncompete covenant expired, Holton has been working as ROSA's chief executive officer. At oral argument, Vantage acknowledged that it did not view Holton as violating the noncompete covenant as long as he abided by the confidentiality covenant. Because the injunction related to the one-year covenant not to compete has ended, we dismiss the appeal from that portion of the trial court's order as moot. See Kellman v. Guthman Laundry & Dry Cleaning Co., 147 Ga. 133, 92 S.E. 872 (1917) (question whether employer properly granted injunction became moot after time expired for enforcing terms of order).

2. Holton next challenges the trial court's ruling that Vantage was likely to prevail on the merits of its claim for the inevitable disclosure of trade secrets because Georgia has not adopted the inevitable disclosure doctrine and there is no evidence he has any Vantage documents or recalls any of its trade secrets. In its complaint, Vantage alleged as a separate claim that Holton “would inevitably misappropriate, disclose, and misuse” Vantage's trade secrets and other confidential information in violation of the state trade secrets law and his employment agreement and sought to enjoin him from serving in an executive capacity for ROSA for at least 12 months. Ruling in Vantage's favor, the trial court determined that there was a substantial likelihood that Vantage would prevail on the merits of its claim that Holton, if employed by ROSA, “would inevitably disclose the confidential information and trade secrets of Plaintiffs.”

The purpose of an interlocutory injunction is “to maintain the status quo pending a final adjudication on the merits of the case.” Hampton Island Founders v. Liberty Capital, 283 Ga. 289, 293(1)(a), 658 S.E.2d 619 (2008). A trial court has broad discretion in deciding whether to grant an interlocutory injunction. Byelick v. Michel Herbelin USA, 275 Ga. 505(1), 570 S.E.2d 307 (2002); OCGA § 9–5–8. Among the factors it considers are whether:

(1) there is a substantial threat that the moving party will suffer irreparable injury if the injunction is not granted; (2) the threatened injury to the moving party outweighs the threatened harm that the injunction may do to the party being enjoined; (3) there is a substantial likelihood that the moving party will prevail on the merits of her claims at trial; and (4) granting the interlocutory injunction will not disserve the public interest.

SRB Investment Services, LLLP v. Branch Banking and Trust Co., 289 Ga. 1, 5(3), 709 S.E.2d 267 (2011) (citation omitted). The trial court's decision will not be reversed on appeal “unless the trial court made an error of law that contributed to the decision, there was no evidence on an element essential to relief, or the court manifestly abused its discretion.” Id. (citation and punctuation omitted); see also Paramount Tax & Accounting, LLC v. H & R Block Eastern Enterprises, Inc., 299 Ga.App. 596, 597, 683 S.E.2d 141 (2009) (abuse of discretion may be found “where the trial court misinterpreted or misapplied the relevant law”).

The Georgia Trade Secrets Act of 1990 prohibits the actual or threatened misappropriation of trade secrets by a person who acquires knowledge of the trade secret “under circumstances giving rise to a duty to maintain its secrecy or limit its use.” OCGA §§ 10–1–761(2)(B)(ii)(II), 10–1–762. A trade secret is defined as:

... information, without regard to form, including, but not limited to, technical or nontechnical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, or a list of actual or potential customers or suppliers which is not commonly known by or available to the public and which information:

(A) Derives economic value, actual or potential, from not being generally known to, and not being readily ascertainableby proper means by, other persons who can obtain economic value from its disclosure or use; and

(B) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

OCGA § 10–1–761(4).

At the hearing on the interlocutory injunction, Vantage did not present evidence that Holton had shared any trade secrets, disclosed any confidential information, or shown an intent to use proprietary information. Holton testified that he did not have any documents related to Vantage's trade secrets in his possession and that ROSA had instructed him to abide by his...