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Non-Solicitation Agreement - Professional - Preliminary Injunction Bond

DeVos and Simmons v. The Cunningham Group, LLC, et al., [Ms. 1180088, 1180434, Dec. 20, 2019] __ So. 3d __ (Ala. 2019). The Court (Stewart, J.; Bolin, Shaw, Wise, Bryan, Sellers, Mendheim, and Mitchell, JJ., concur; Parker, C.J., concurs in the result) reverses a preliminary injunction entered by the Jefferson Circuit Court in an action against Drs. DeVos and Simmons enforcing non-solicitation agreements signed by the physicians with their former employer medical practice.

In granting the preliminary injunction, the circuit court declined to rule on the physicians’ defense that their status as professionals rendered the non-solicitation agreements void. The Court reversed the preliminary injunction because the circuit court could not conclude that the plaintiff had at least a reasonable chance of success on the merits “without determining whether the restrictive provisions are void ....” Ms. *16.

In addressing the physicians’ challenge to the bond set by the circuit court, the Court explained:

The purpose of an injunction bond is to protect an enjoined party from harm resulting from the issuance of a wrongful injunction. Ex parte Waterjet Sys., Inc., 758 So. 2d 505, 512 (Ala. 1999)(“[A] party is wrongfully enjoined ‘when it turns out the party enjoined had the right all along to do what it was enjoined from doing.’” (quoting Nintendo of America, Inc. v. Lewis Galoob Toys, Inc., 16 F.3d 1032, 1036 (9th Cir. 1994))). The amount of the damages recoverable on the bond, however, is limited to the amount of the injunction bond. 758 So. 2d at 513.

Ms. *18.

The Court concluded that the $25,000 bond “is simply inadequate to compensate two physicians for damages and attorneys’ fees in the event it is determined that they were wrongfully enjoined from soliciting and continuing to serve Brookwood [Hospital] through their new pathology business.” Ms. *24.

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