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Case Number: 1:23-CV-1497
Judge: Sarah Evans Barker
Court: United States District Court for the Southern District of Indiana (Marion County)
Plaintiff's Attorney: Darren Craig, Kandi Kilkelly Hidde, and Patricia Roman Hass
Description: Indianapolis, Indiana commercial litigation lawyers represented the Plaintiff who sued the Defendant on a misappropriation of trade secrets theory.
n August 22, 2023, Plaintiff Elevance Health, Inc. ("Elevance") filed this diversity action against its former employee, Defendant Vinod Mohan ("Ms. Mohan"), alleging that Ms. Mohan misappropriated trade secrets. Dkt. 1. Elevance also filed a Motion for a Temporary Restraining Order ("TRO"), requesting that we enjoin Ms. Mohan from starting her new position with its competitor, Molina Healthcare, Inc. ("Molina"). Dkt. 7. On August 30, 2023, Ms. Mohan filed a Motion to Dismiss for lack of personal jurisdiction and improper venue, pursuant to Federal Rules of Civil Procedure 12(b)(2) and (b)(3), respectively. Dkt. 22. Alternatively, Ms. Mohan asks us to transfer this action to the Central District of California, pursuant to 28 U.S.C. 1404(a).
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Elevance, one of the nation's leading healthcare benefit companies, is an Indiana corporation with its principal place of business in Indiana. As an independent licensee of Blue Cross Blue Shield Association ("BCBS"), it serves approximately forty million medical members through its affiliated health plans across the United States. Elevance maintains its success through a strategic structuring and implementation of its distribution, provider networks, portfolio of member benefit plans, and substantial investments in operational improvement-all of which are driven by information that Elevance (and its competitors) regard as highly confidential. Consequently, Elevance protects its confidential information from public dissemination by storing it in secure computer systems and password-protected databases. Further, only specific user profiles can access certain folders of confidential information, and these select few Elevance personnel are required to execute confidentiality agreements.
From September 2020 to July 2023, Ms. Mohan worked for Elevance as President, Medicare West Region, responsible for Medicare-related business in Arizona, California, Colorado, New Mexico, Nevada, Texas, Washington, and Florida. In that position, Ms. Mohan oversaw that division of Elevance's strategy, financial performance, and operational execution of its Medicare business. As a senior executive, she had comprehensive access to a "significant amount" of highly confidential and proprietary information. Throughout her employment, Ms. Mohan primarily worked out of her home office in California, where she regularly printed documents containing aspects of Elevance's confidential information to which her position granted her access. During her tenure, she traveled to Elevance's Indianapolis headquarters on three occasions to attend in-person meetings to discuss matters related to Elevance's bid planning and Medicare planning, which Elevance characterizes as involving "confidential and trade secret information key to maintaining its competitive advantage." Dkt. 24 at 5.
II. Ms. Mohan's Employment Agreement
When Ms. Mohan joined Elevance in September 2020, she "reviewed and negotiated," dkt. 23 at 4, the terms of an Employment Agreement ("Employment Agreement"), wherein she expressly acknowledged that, by virtue of her employment with Elevance, she would have access to confidential information. The Employment Agreement provided further that this confidential information "constitutes trade secrets and confidential and proprietary business information" that was considered Elevance's "exclusive property." Dkt. 1-6 at 4. Under the Employment Agreement, Ms. Mohan also agreed not to:
(A) use Confidential Information for the benefit of any person or entity other than the Company or its affiliates; (B) remove, copy, duplicate or otherwise reproduce any document or tangible item embodying or pertaining to any of the Confidential Information, except as required to perform the Participant's duties for the Company or its affiliates; or (C) while employed and thereafter, publish, release, disclose or deliver or otherwise make available to any third party any Confidential Information by any communication, including oral, documentary, electronic or magnetic information transmittal device or media.
Id. at 4-5.
The Employment Agreement also contained a forum selection clause, and a consent to personal jurisdiction, which provides in relevant part:
To the extent that any party wishes to seek such relief from a court, the parties agree to the following with respect to the location of such actions. Such actions brought by the Executive shall be brought in a state or federal court located in Indianapolis, Indiana. Such actions brought by the Company shall be brought in a state or federal court located in Indianapolis, Indiana; the Executive's state of residency; or any other forum in which the Executive is subject to personal jurisdiction. The Executive specifically consent to personal jurisdiction in the State of Indiana for such purposes.
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A plaintiff seeking a TRO must establish "(1) that [it] is likely to succeed on the merits; and (2) traditional legal remedies would be inadequate, such that [it] would suffer ... irreparable harm without the injunction." Life Spine, Inc. v. Aegis Spine, Inc., 8 F.4th 531, 539 (7th Cir. 2021) (internal citations omitted). If the moving party fails to establish either prerequisite, the Court's "inquiry is over and the injunction must be denied." Abbott Lab'ys v. Mead Johnson & Co., 971 F.2d 6, 11 (7th Cir. 1992). Alternatively, if the plaintiff establishes the first two elements, the Court must also find "that the balance of equities tips in [its] favor, and that an injunction is in the public interest." Protect Our Parks, Inc. v. Buttigieg, 10 F.4th 758, 763 (7th Cir. 2021).
In assessing whether Elevance has met its burden to secure a TRO, we view "the available evidence in the record from a neutral and objective viewpoint without accepting [Elevance's] allegations as true nor drawing all reasonable inferences in its favor." Aon PLC v. Alliant Ins. Servs., Inc., No. 23-CV-03044, 2023 WL 3914886, at *2 (N.D. Ill. June 9, 2023) (internal quotations and alterations omitted). Because Elevance has failed to demonstrate either a likelihood of success on the merits or irreparable injury, we deny its request for a TRO.
To establish a likelihood of success on the merits, "an applicant for preliminary relief bears a significant burden." Illinois Republican Party v. Pritzker, 973 F.3d 760, 763 (7th Cir. 2020). While the applicant need not proffer proof by a preponderance of the evidence, neither "a mere possibility" nor "a better than negligible chance" is enough.
Aon PLC, 2023 WL 3914886, at *2 (citing Pritzker, 973 F.3d at 762) (internal quotations and alterations omitted).
Elevance argues that Ms. Mohan misappropriated its trade secrets in violation of the Defend Trade Secrets Act ("DTSA"), 18 U.S.C. § 1839, and the Indiana Uniform Trade Secrets Act ("IUTSA"), Ind. Code. § 24-2-3-1 et seq. The elements of misappropriation claims under both the DTSA and the IUTSA are similar, and Elevance does not make separate arguments for either. Accordingly, we consider the likelihood of success on the merits of the two claims combined. LigTel Commc'ns, Inc. v. Baicells Techs., Inc., 455 F.Supp.3d 792, 806 (N.D. Ind. 2020). The success of a misappropriations claim requires a showing that (1) a trade secret existed; (2) it was misappropriated through improper acquisition, disclosure, or use; and (3) the misappropriation damaged the trade secret's owner. Aon Risk Servs. Companies, Inc. v. Alliant Ins. Servs., Inc., 415 F.Supp.3d 843, 848 (N.D. Ill. 2019).
On the record before us, Elevance has not shown beyond a mere possibility that Ms. Mohan improperly acquired, disclosed, or used Elevance's trade secrets. At best, Elevance has shown that, within minutes after resigning and "being instructed to step away from her keyboard," Ms. Mohan attempted to print one document containing confidential information and trade secrets, which document was not among those she returned to Elevance following her resignation. Dkt. 8 at 17. However, Ms. Mohan has attested that she does not possess any digital or printed copy of the missing document, and Elevance has failed to adduce any contrary evidence from which the Court could conclude that, even
if Ms. Mohan's attempt to print were successful, any such document remains in her possession or that she disclosed the document to her new employer, Molina.
Elevance also references the fact that, because Ms. Mohan worked remotely and printed "hundreds" of documents from her home office during the course of her employment, "it appears that" she must have additional documents containing confidential information and trade secrets in her possession, but that averment is no more than speculation. There is no allegation that Ms. Mohan was acting without authorization or a legitimate business purpose or otherwise nefariously when she printed documents in the normal course of business while employed by Elevance-in fact, Elevance concedes that such printing was within the scope of her role as a senior executive-nor is there any evidence that these documents remain in her possession today or have been or will be disclosed to Molina.
Based on these facts, even assuming that Ms. Mohan did improperly print a document containing confidential information following her resignation, there is insufficient evidence to establish that she continues to illicitly possess Elevance's confidential and trade secret information or that she has shared or intends to share such information with Molina. To establish an entitlement to injunctive relief, it is not enough to show that a past wrong may have been committed; rather "a future threat of irreparable harm must exist to warrant injunctive relief." DM Trans, LLC v. Scott, 38 F.4th 608, 621 (7th Cir. 2022). Ms. Mohan is, of course, still bound by the confidentiality clauses in her employment agreement with Elevance, but given the absence of a non-compete clause in that agreement, Ms. Mohan is certainly permitted to use the general knowledge and skills she acquired through experience to compete in the marketplace against her former employer. See LigTel Commc'ns, Inc., 455 F.Supp.3d at 808 (mere allegations that former employee possesses proprietary information is insufficient to plausibly suggest actual disclosure or use of trade secrets).
Without sufficient evidence of actual misappropriation, Elevance's theory of entitlement to relief is therefore "one of 'inevitable disclosure.'" Admiin Inc. v. Kohan, No. 23-CV-04430, 2023 WL 4625897, at *10 (N.D. Ill. July 19, 2023). Under the inevitable disclosure theory, courts evaluate three factors: "(1) the level of competition between the former and new employer; (2) the similarity between the employee's former and new positions; and (3) the actions the new employer has taken to prevent the use or disclosure of the former employer's trade secrets.” Packaging Corporation of America, Inc. v. Croner, 419 F.Supp.3d 1059, 1070 (N.D. Ill. 2020). But because broad application of this theory would effectively bar employees from ever leaving their jobs to take similar positions with competitive entities, courts are generally reticent to issue injunctions on these grounds. Kohan, 2023 WL 4625897, at *10.
Without the benefit of a full evidentiary record before us, we cannot conclude that each of these factors supports a TRO. On the one hand, Molina is indisputably one of Elevance's direct competitors, and Ms. Mohan has accepted a position similar to her former position with Elevance. However (and most significantly), Molina has taken steps to prevent the disclosure and use of Elevance's trade secrets. Given that both Molina and Ms. Mohan have been forthcoming about returning Elevance's property, we view the inevitable disclosure of Elevance's confidential information as improbable. For instance, Molina contacted Elevance on the same day as Ms. Mohan's resignation to confirm that Ms. Mohan had accepted a similar position with Molina. When Ms. Mohan later informed her new employer that she had an assortment of Elevance-related documents, Molina instructed her to sequester those materials, and Molina reached out to Elevance for further instructions. Despite Elevance's allegations to the contrary, Ms. Mohan and Molina have made efforts at every step to keep this transition above board. Ms. Mohan's and Molina's conduct "is in sharp contrast to cases where ex-employees have downloaded or accessed trade secrets or confidential information from their ex-employer, and the ex-employer has proof." Kohan, 2023 WL 4625897, at *12. Therefore, Elevance's speculation that Ms. Mohan may, at some unidentified point in the future, use trade secrets is insufficient to establish the imminent, irreparable harm, absent an injunction, required to justify the extraordinary relief of an emergency TRO.
Relatedly, the Employment Agreement contained a choice-of-law provision, which provides:
This Agreement forms part of an employee benefit plan subject to the Employee Retirement Income Security Act of 1974 ("ERISA"), and shall be governed by and construed in accordance with ERISA and, to the extent applicable and not preempted by ERISA, the law of the State of Indiana applicable to contracts made and to be performed entirely within that State, without regard to its conflicts of law principles.
Id. ("Section 18").
Outcome: "The Court, mindful of the need to resolve these pending issues expeditiously, now DENIES Defendant's Motion to Dismiss and DENIES Plaintiff's Motion for Temporary Restraining Order." Elevance Health, Inc. v. Mohan (S.D. Ind. 2023)