CVS Sues Capital RX Over Non-Compete on Behalf of Recent Hire

On Thursday a complaint was filed in the Massachusetts District Court by CVS Pharmacy and Pharmacist Suresh Yarlagadda against Capital RX, Inc. The case is regarding application of a non-compete agreement to the plaintiff’s pharmacist’s employment with CVS, a competitor to Capital RX.

According to the filing, Dr. Yarlagadda began working with Capital RX in May, in a work from home position in Massachusetts. While Capital RX is based in New York, Dr. Yarlagadda never worked in NY, nor did his position require him to do so.

As a part of this employment, Dr. Yarlagadda signed a non-compete agreement which held that “for a period of six (6) months after the termination of my employment with the Company, I will not assist in, engage in or otherwise take a position or benefit from any business competitive with the Company, whether directly or indirectly, and whether as an owner, sole proprietor, founder, shareholder, member, partner, joint venture, officer, director, consultant, advisor, independent contractor, agent, employee, or otherwise, in the locations where the Company markets its services and products, and where I performed services and or communcaited [sic] with, directly, or indirefctly [sic] the Company’s clients, or suppliers.”

Dr. Yarlagadda ended employment with Capital RX on July 28 and received an offer to begin work with CVS on August 9; according to CVS, Capital RX has threatened to enforce the non-compete.

CVS argues that the non-compete is invalid for failure to abide by the statutory requirements for non-compete agreements in Massachusetts, including the required notice periods, the requirement for specific types of compensation for non-compete clauses, and the choice of law segment of the non-compete.

CVS asks for declaratory judgment regarding the validity of the non-compete as well as damages for tortious interference with contractual relations and unfair and deceptive trade practices. CVS is represented by Foley Hoag.