A judge has just ruled on several motions advanced by both plaintiffs and defendants in a lawsuit filed by Miraca Life Sciences against two of its former dermatopathologist employees alleging, among other things, breach of contract.
In June 2012, Metroplex Pathology Associates and Miraca Life Sciences (Miraca) sued Dr. Lisa Cohen and Dr. Thomas Horn as well as their current employer, the Massachusetts General Physicians Organization Dermatopathology Associates (MDA). Miraca, which is the sole shareholder of Metroplex, is suing for “…breach of contract, breach of the implied covenant of good faith and fair dealing, tortious interference with contractual relations, unfair practices in violation of M.G.L. c. 93A, and civil conspiracy”.
Dr. Cohen started Cohen Dermatopathology (Cohen) in 1997 and was later joined by dermatopathologists Drs. Lisa Lerner and Thomas Horn; Drs. Cohen and Lerner were the only shareholders of Cohen Dermatopathology. In May 2007, Cohen was sold to Caris Diagnostics for $80 million cash; Drs. Cohen and Lerner each received approximately $40 million, according to the original complaint. In November 2011, Miraca purchased Caris Diagnostics.
All three dermatopathologists continued to work for Miraca/Metroplex following the sale. Dr. Horn’s employment agreement included the following:
Upon termination of this Agreement and for one (1) year thereafter, [Horn] agrees that he will not (i) attempt to persuade, induce, solicit, encourage or otherwise suggest that employees of, vendors with, or referrers to the Corporation terminate their relationship with the Corporation; or (ii) hire, directly or indirectly, persons who have been employed by the Corporation within the six (6) month period preceding termination of this Agreement.
Dr. Cohen’s employment agreement stated she would:
“hold in strictest confidence and not disclose, use, provide access to, copy or publish” any of the Company’s confidential information for a period of five (5) years after the termination of the Employment Agreement.
In addition, the agreement stated Dr. Cohen would not:
…directly or indirectly, take any action that results or may reasonably be expected to result in owning any interest in… operating, managing… or otherwise participating in the business… of a Competitor…and further provided, that [Cohen] shall not be prohibited from being employed on a salaried basis to review and interpret slides without any other duties or responsibilities of any nature or kind.
In early 2011, all three pathologists apparently became dissatisfied with the manner in which Cohen was being run and all considered joining MDA, which was set to open in late 2011. Dr. Horn became medical director of MDA in late 2011, and Dr. Cohen became an employed physician shortly thereafter. Dr. Lerner started working for MDA in spring 2012.
In its most recent motion, Miraca asked the court to grant a preliminary injunction preventing Drs. Cohen and Horn from violating their employment agreements. In addition, it asked the court to order MDA to cease employing all of Cohen’s former employees using confidential information gained from those employees and to stop soliciting Miraca’s clients to switch to MDA.
In order for a court to grant a preliminary injunction, the court must believe the party asking for it has a very good chance of success in its lawsuit. The court in this case did not believe Miraca demonstrated a likelihood of success of its claim and denied the request for a preliminary injunction.
Dr. Cohen had separately asked certain documents filed by the plaintiffs be sealed from public view. She argued there is information contained within them, including the purchase price and shareholder proceeds from the sale of Cohen, that should be kept private. The court denied her motion.
Finally, MDA had separately asked to stay the legal proceedings against it until the outcome of arbitrations between Miraca, Horn and Cohen is known. The court agreed, and MDA, at this time, does not have to respond to this complaint.
This is not the end of this case, as I stated above. Because the parties involved are also in arbitration, it is possible we will never learn the final outcome, as the results of most arbitrations are usually sealed.
The original complaint is here (Metroplex v. Horn).