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Physiotherapy Associates Inc. v. Deloach

United States District Court, N.D. Alabama, Eastern Division

September 17, 2018

PHYSIOTHERAPY ASSOCIATES, INC., Plaintiff,
v.
JAMES DOUG DELOACH, Defendant.

          MEMORANDUM OPINION

          ANNEMARIE CARNEY AXON, UNITED STATES DISTRICT JUDGE

         In this breach of contract action, Plaintiff Physiotherapy Associates, Inc. asserts that, while working for Physiotherapy and after he quit to work for a competitor, Defendant James Doug DeLoach breached the terms of non-compete and non-solicitation agreements that he had entered with Physiotherapy. (See Doc. 1). Physiotherapy contends that Mr. DeLoach's breach has caused it to lose business and employees. Physiotherapy seeks monetary damages and a permanent injunction prohibiting Mr. DeLoach from breaching his non-compete and non-solicitation agreements.

         This case is before the court on Mr. DeLoach's motion for summary judgment. (Doc. 75). The parties have fully briefed the motion. (Docs. 75, 82, 87). The court WILL GRANT IN PART and DENY IN PART Mr. DeLoach's motion. Because Physiotherapy has not presented evidence indicating that Mr. DeLoach breached the non-compete and non-solicitation agreements, the court WILL GRANT SUMMARY JUDGMENT in favor of Mr. DeLoach and against Physiotherapy on Physiotherapy's claim seeking monetary damages. As a result, the court finds as moot Physiotherapy's request for injunctive relief, and WILL DISMISS WITHOUT PREJUDICE that request. Accordingly, the court WILL DENY AS MOOT Mr. DeLoach's motion for summary judgment on the claim for injunctive relief.

         I. STANDARD OF REVIEW

         “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The court views the evidence in the light most favorable to the non-moving party. Baas v. Fewless, 886 F.3d 1088, 1091 (11th Cir. 2018). “The moving party bears the initial burden of demonstrating the absence of a genuine dispute of material fact.” FindWhat Inv'r Grp. v. FindWhat.com, 658 F.3d 1282, 1307 (11th Cir. 2011) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)).

         II. FACTUAL BACKGROUND

         Physiotherapy owns and operates physical therapy and occupational therapy clinics and provides sports medicine services to schools. (Doc. 79-2 at 10; Doc. 83-1 at 3). More than 90% of its business comes from physician referrals, and its largest referral source in north Alabama is Andrews Sports Medicine and Orthopaedic Center (the “Andrews Group” or “Andrews”). (Doc. 79-2 at 12-13; Doc. 83-1 at 3).

         Mr. DeLoach is a licensed occupational therapist who has practiced occupational therapy and managed physical rehabilitation facilities in northern Alabama since 1994. (Doc. 75-6 at 3; Doc. 79-1 at 4, 18-24). Physiotherapy offered Mr. DeLoach a position as an Area Vice President in January 2013, and it confirmed its offer with a letter dated January 14, 2013 (the “Offer Letter”). (Doc. 1-1; Doc. 75-6 at 4).

         The Offer Letter begins by stating that Mr. DeLoach is an at will employee, which “means that you are not employed for a set period of time, and you or the Company may terminate your employment at any time and for any reason.” (Doc. 1-1 at 2). And although the Offer Letter states that “[t]his offer letter . . . is not intended to create an employment contract, ” it also provides that signing the Offer Letter and accepting employment with Physiotherapy signals his agreement “to be legally bound and obligated to comply with” the non-compete and non-solicitation agreements. (Id. at 1, 4).

         Mr. DeLoach's non-compete agreement required that, for a period of twelve months after termination from Physiotherapy, Mr. DeLoach would “not, directly or indirectly, own, manage, operate, control, be employed by, perform services for, consult with, solicit business for, participate in, or be connected with the ownership, management, operation, or control of, any business which performs outpatient rehabilitation or orthotics or prosthetic services in the Market Area.” (Id. at 4). The agreement defined the “Market Area” as “the area that is within a ten (10) mile radius of any of the Company's facilities [ ] at which you provided services during your employment . . . or for which you had . . . management or supervisory responsibility.” (Doc. 1-1 at 4).

         Mr. DeLoach also agreed not to solicit customers, vendors, and/or associates of Physiotherapy for twelve months after his employment with Physiotherapy terminated. (Doc. 1-1 at 4-5). This meant that Mr. DeLoach could not

solicit, induce, or attempt to induce any past or current Customer or vendor of the Company to (a) cease doing business in whole or in part with or through the Company, or (b) do business with any other person, firm, partnership, corporation, or other entity which performs services material similar to or competitive with those provided by the Company.

(Id. at 4). The Offer Letter defines “Company” as “Physiotherapy Associates” and “Customer” as “any person, division or unit of a business enterprise with whom within a two (2) year period preceding the date of termination of your employment with the Company, the Company . . . held a business or contractual arrangement to perform services for Company. (Id. at 1, 4-5; Doc. 82 at 20). Mr. DeLoach is also prohibited from “solicit[ing], interfer[ing] with, or endeavor[ing] to cause any [Physiotherapy] Associate to leave his or her employment.” (Doc. 1-1 at 5).

         As an area vice president for Physiotherapy, Mr. DeLoach's job responsibilities included providing hands-on occupational therapy to patients, managing clinics for Physiotherapy in north Alabama, and developing business opportunities in north Alabama. (Doc. 75-6 at ¶ 5; Doc. 79-1 at 5, 7-8; Doc. 79-2 at 22). In particular, Mr. DeLoach was responsible for developing Physiotherapy's relationship with the Andrews Group, and he interacted with physicians or the CEO of Andrews at least twice a month. (Doc. 79-1 at 38; Doc. 83-1 at ¶ 18).

         In early 2016, another company acquired Physiotherapy, although Physiotherapy continued to operate under the same name. (Doc. 76-1 at 6-7; Doc. 79-2 at 11). The merger agreement provides that “[a]s of [January 22, 2016], neither [Physiotherapy] nor any [Physiotherapy] Subsidiary is a party to or bound by . . . any agreement with any employee [ ] that . . . provides for an annual compensation opportunity . . . to exceed $100, 000 . . . .” (Id. at 27). It is undisputed that Mr. DeLoach's annual compensation exceeded $100, 000.

         After the merger, Physiotherapy's largest referral source, the Andrews Group, developed concerns about the post-merger management of Physiotherapy. (Doc. 79-5 at 10). As it happens, around that time another company-ATI-that owns and operates physical therapy clinics was looking to expand into north Alabama. (Doc. 79-4 at 7-9; Doc. 83-1 at 6). In August 2016, ATI's Chief Operations Officer, Brent Mack, contacted the Andrews Group's CEO, Lisa Warren, to arrange a meeting to discuss ATI's business and plans for expansion. (Doc. 79-1 at 27, 46; Doc. 79-4 at 28-29). During the meeting, Ms. Warren expressed frustration with Physiotherapy's new management. (Doc. 79-4 at 55). Mr. Mack believed that an opportunity existed for ATI to expand its business by getting referrals from the Andrews Group. (Id. at 29, 53-55).

         Mr. DeLoach had no involvement in the initial contact between Mr. Mack and Ms. Warren, (doc. 79-4 at 9, 29, 53), but around the time when they were meeting, Mr. Mack also contacted Mr. DeLoach about interviewing for a position with ATI. (Doc. 79-1 at 27-28). On August 18, 2016, Mr. DeLoach sent ATI a copy of his Offer Letter containing the non-compete and non-solicitation agreements with Physiotherapy. (Doc. 79-1 at 29-30; Doc. 84-1 at 2-8). Later that same month, while Mr. DeLoach was still working for Physiotherapy, he sent to ATI an action plan entitled “DeNovo and Acquisition Strategy.” (Doc. 84-7). In the action plan, Mr. DeLoach identified potential locations for ATI ...


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