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Great Lakes Anesthesia, P.C. v. O'Bryan

Court of Appeals of Indiana

April 4, 2018

Great Lakes Anesthesia, P.C., Appellant-Defendant/Counterclaimant,
Kyle O'Bryan and Megan O'Bryan, Appellees-Plaintiffs/Counterclaim-Defendants.

          Interlocutory Appeal from the Grant Circuit Court The Honorable Mark E. Spitzer, Judge Trial Court Cause No. 27C01-1703-CT-22

          ATTORNEYS FOR APPELLANT Blake J. Burgan Manuel Herceg Steven C. Shockley TAFT STETTINIUS & HOLLISTER LLP Indianapolis, Indiana

          ATTORNEYS FOR APPELLEES Michael H. Michmerhuizen H. Joseph Cohen BARRETT MCNAGNY LLP Fort Wayne, Indiana

          BAILEY, JUDGE.

         Case Summary

         [¶1] Great Lakes Anesthesia, P.C. ("Great Lakes") brings an interlocutory appeal to challenge the denial of its motion for a preliminary injunction to restrain its former employees, Kyle O'Bryan and Megan O'Bryan ("the O'Bryans"), from performing nurse-anesthesia services for Associated Anesthesiologists of Fort Wayne ("AAFW") at Marion General Hospital ("the Hospital"), pending resolution of a declaratory judgment action, counterclaim, and third-party claim relative to a covenant not to compete within the O'Bryans' employment contracts with Great Lakes. Great Lakes presents the single consolidated issue of whether the trial court's judgment is contrary to law. We affirm.

         Facts and Procedural History

         [¶2] The facts most favorable to the judgment are as follows. In the summer of 2016, the O'Bryans, who are married and work as certified registered nurse anesthetists ("CRNAs"), responded to a job posting listed by Great Lakes on an internet website.[1] The O'Bryans engaged in recruitment discussions with Courtney Morrison ("Morrison"), the special assistant to the Chief Executive Officer ("CEO") of Great Lakes. At that time, the O'Bryans lived in Georgia and wished to re-locate closer to family members in the Midwest. They also desired to decrease their travel time from home to work and minimize their time spent apart, assigned to different locations. The O'Bryans explained these considerations to Morrison. Morrison initially offered the O'Bryans positions in Crown Point, Indiana. Concluding that it would be difficult to meet the requisite thirty-minute response time[2] from their desired home location, the O'Bryans declined the positions. Morrison responded by asking them not to seek other employment and to allow her to find suitable positions for them.

         [¶3] Morrison began efforts to recruit the O'Bryans for positions in Grant County. Great Lakes was then contracted with Marion Anesthesiologists ("MA") to provide anesthesiology services; MA had a contract with the Hospital. Although Great Lakes was a sub-contractor, it was attempting to secure a direct contract with the Hospital in anticipation of the dissolution of MA. Great Lakes assured the O'Bryans that it had a good relationship with the Hospital. According to the O'Bryans, they were repeatedly told that Great Lakes had a contractual relationship with the Hospital.

         [¶4] On August 4, 2016, the O'Bryans signed employment agreements drafted by Great Lakes ("the Agreements"), providing in relevant part:

Restrictive Covenants. Upon termination, other than if Employee terminates this Agreement for cause, Employee agrees not to provide anesthesia services, directly or indirectly, for a period of twenty four (24) months at the specific facilities where Corporation has assigned Employee to provide anesthesia services, along with any facilities in a twenty five (25) mile radius, within the twenty four (24) month period immediately prior to the termination date (the "Restricted Area"). The Employee recognizes that the Corporation will suffer great loss and damage if the Employee should compete with the Corporation or disclose confidential information in violation of Section 5.3. The Employee understands and agrees that the Corporation has a substantial investment in the good will of the Corporation's healthcare practice and the right to protect such practice by the restrictive covenants contained in this Agreement. In making these covenants, the Employee represents and warrants to the Corporation that the Employee's experience and capabilities are such that the Employee can obtain employment outside of the Restricted Area in the specialty of anesthesiology and that the enforcement of these covenants will not prevent the Employee from earning a livelihood outside the Restricted Area. As a result, the parties agree as follows:
(a)The Employee's breach of any of the restrictive covenants contained in Sections 4.5 or 5.3 will entitle the Corporation to injunctive relief, as well as compensation for damages incurred because the Corporation's remedy at law will be inadequate.
(b)If the Corporation institutes an action against the Employee for breach of this covenant against competition, or if the Employee institutes an action to challenge the Corporation's ability to enforce any of the covenants contained in Sections 4.5 or 5.3., the losing party will pay the prevailing party's reasonable attorney fees, costs, and expenses of litigation, such as expert witness fees.
(c)If a court should enter injunctive relief in favor of the Corporation and against the Employee, the Corporation shall not be required to post a bond or other security.
(d)If a court should declare all or part of any restrictive covenant contained in Section 4.5 or 5.3 unenforceable because of any unreasonable restriction, the Corporation and the Employee agree that the court shall have the express authority to reform this Agreement to provide for reasonable restrictions.
(e)If the Employee is found to be guilty of violating the restrictive covenant contained in this Section 4.5, the duration of the covenant will automatically be extended to include the period of violation.
(f) The prohibited acts contained in Sections 4.5 and 5.3 shall be construed as independent of any other provision of this Agreement and shall survive the termination of this Agreement. The existence of any claim or cause of action of the Employee against the Corporation, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Corporation of any or all of such prohibited acts.

(App. Vol. II, pgs. 42-43.) The O'Bryans relocated from Georgia and began working for Great Lakes in November of 2016. They were assigned, primarily, to perform services at the Hospital; they were sometimes assigned to provide services at two other hospitals.

         [¶5] In January of 2017, Seth Claxton ("Claxton") became the new CEO of Great Lakes. Having had little involvement with the prior negotiations between Great Lakes and the Hospital, he believed that a contract between them was inevitable and the parties just needed to finalize details. However, Claxton learned that the Hospital had been in discussions with AAFW and might be extending a contract to AAFW. In mid-February, Claxton took part in a telephone conference with the CEO of the Hospital, Stephanie Hilton-Siebert ("Hilton-Siebert"). At that time, Hilton-Siebert expressed some concerns about Great Lakes' pricing and performance and revealed that discussions with AAFW had taken place. Claxton responded with an ultimatum, giving the Hospital two weeks to decide if the Hospital would contract with Great Lakes; if not, Great Lakes was to stop providing services at the Hospital pursuant to its contract with MA. Hilton-Siebert decided not to enter into a contract with Great Lakes, because of the ultimatum.

         [¶6] On April 1, 2017, Claxton gave notice to MA that Great Lakes was terminating its contract with MA and would cease providing services under that contract in thirty days. With this tactic, risking a gap in the provision of anesthesiology services at the Hospital, Great Lakes hoped to pressure the Hospital or improve the bargaining position of Great Lakes. After learning they would no longer be based at the Hospital, the O'Bryans asked to be released from the Agreements; Great Lakes refused.

         [¶7] Great Lakes issued its CRNA assignment schedule for April of 2017. The O'Bryans were scheduled for fewer shifts, to be worked at hospitals that were more than thirty minutes from their home, necessitating overnight stays. AAFW contacted Great Lakes, offering to buy out the O'Bryans' employment agreements; Great Lakes refused. On March ...

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