United HealthCare Services, Inc. v. Louro

Background

United HealthCare Services, Inc. and UnitedHealth Group, Inc. sued Carlos Louro, a former United employee, asserting breach of contract and violations of federal, Minnesota, and Delaware trade-secret laws. Louro had worked for United since 2005 and most recently served as Vice President of Underwriting in the National Accounts segment. He worked from Connecticut, maintained contact with United personnel in Minnesota, and regularly traveled to Minnesota for work.

Louro accepted a position at Anthem, Inc., a United competitor, as Vice President of Local Accounts Underwriting. Before interviewing with Anthem, Louro disclosed that he had a non-compete agreement and provided Anthem with the relevant language. Anthem structured his position to avoid work involving United’s National Accounts segment, the Aon/Hewitt Exchange, Specialty, and Public Sector segments. Anthem and Louro also represented that he would not use or disclose United’s confidential information and that improper use or disclosure could result in termination.

The Agreements and Motion

Louro’s stock-option and restricted-stock-unit agreements contained confidentiality provisions, a one-year non-compete provision, and related forfeiture provisions. The non-compete applied nationwide and barred Louro from directly or indirectly participating in activities competing with company activities, products, or services in which he had engaged, participated, or possessed confidential information during his last 36 months of employment.

The plaintiffs asked for a preliminary injunction, which is a temporary court order intended to preserve the situation while a case continues. They sought to prevent Louro from taking his planned Anthem role or another role that violated the restrictive covenants for 12 months, and to prevent him from using or disclosing their trade secrets or confidential information. The court had previously issued a temporary restraining order barring Louro from using or disclosing the information and requiring advance notice before he began working at Anthem.

Analysis

The court applied four factors for preliminary injunctive relief: the plaintiffs’ likelihood of success, the threat of irreparable harm, the balance of harms, and the public interest.

On the contract claim, the court found that the 12-month duration and nationwide geographic scope were reasonable and that United had a legitimate interest in protecting confidential information and its market position. But the court found the covenant’s language about “activities,” “engaged in,” and “participated in” broad and undefined. The court was concerned that the plaintiffs’ interpretation could prevent an executive from working in a similar field even in a different business segment. Because Louro’s Anthem position was different from his United role and was designed to exclude the relevant United business segments, the court found that the plaintiffs had not shown a strong likelihood of proving a contract breach.

On the trade-secret claims, the plaintiffs relied partly on the theory of “inevitable disclosure.” That theory seeks relief based on a claimed high probability that an employee will disclose trade secrets even if no disclosure has yet occurred. The court found that the plaintiffs had not shown actual misappropriation or improper use or disclosure, and had not met the high standard for inevitable disclosure. The court relied on Anthem’s and Louro’s representations that Louro would be prohibited from using or disclosing United’s information and noted that the plaintiffs had not shown improper motives by Louro.

The court also found that the plaintiffs had not shown irreparable harm, meaning harm that cannot adequately be remedied with money damages. The court concluded that the evidence did not establish a sufficient likelihood of inevitable disclosure or contract breach and that money damages would likely be adequate if a breach were later proven. The balance of harms favored Louro because an injunction would restrict his ability to pursue his chosen career, while Anthem and Louro had adopted safeguards against misuse of United’s information. The public-interest factor was neutral.

Disposition

Chief Judge John R. Tunheim ordered that the plaintiffs’ motion for a preliminary injunction was DENIED. The temporary restraining order issued on January 7, 2021, was DISSOLVED. The order did not resolve the ultimate merits of the plaintiffs’ claims.