Ex-Employees Enjoined in Clinical Drug Testing Company’s Non-Compete Case

A District of Oregon opinion issued on Monday granted Millennium Health LLC’s motion for a preliminary injunction against two former employees after they joined Nepenthe Laboratory Services LLC, a competitor. The court ruled that the employees likely breached their restrictive covenants when they solicited Millennium’s clients after their departure.

According to the opinion, the clinical drug testing industry is both tightly regulated and fiercely competitive. This case centers on two employees, David Barba and Justin Monahan, who worked for Millennium in Portland, Oregon as sales representatives since 2014. In their roles, they were reportedly privy to trade secrets and confidential information like customer lists, finances, methodologies, processes, and pricing.

After several years with Millennium, Monahan reportedly inquired about working for Nepenthe, a company that provides drug testing laboratory services and also operates in the Pacific Northwest. Subsequently, several clients switched from Millennium to Nepenthe. 

After warning the former employees about their non-compete and non-solicitation covenants, Millennium filed suit on Nov. 23, 2020, alleging various contract and tort claims against Barba, Monahan, and Nepenthe. It simultaneously filed a motion for a temporary restraining order, seeking to enforce its post-employment covenants, which was denied.

In this week’s opinion, the court reasoned that Millennium would likely succeed on the merits of its claims. The court made several findings, including that Monahan and Barba had “concrete arrangements to work for Nepenthe” prior to their departure. The court also concluded, after hearing extensive testimony and after weighing the evidence and assessing the credibility of the witnesses, that Barba and Monahan improperly solicited Millennium customers both directly and indirectly.

The court enjoined Barba and Monahan from working for Nepenthe in Oregon and portions of the State of Washington for one year, and prevented them from soliciting any Millennium clients for one year. As security, the court ordered Millennium to post a $200,000 bond, should the defendants prove that the injunction was improper and suffer damages.

The plaintiff is represented by Seyfarth Shaw LLP and Parsons Farnell & Grein LLP, and the defendants by Perkins Coie LLP.