Telehealth Company Sues Former CCO and His New Company in Trade Secrets Suit

A telehealth services company is suing a former company official and the official’s current employer, Hinge Health Inc., alleging that the official breached his contract and misappropriated company trade secrets.

Teladoc Health Inc. and Livongo Health Inc. filed the complaint on Monday in the Northern District of Illinois against Hinge Health Inc. and James Pursley, now president of Hinge Health and formerly chief commercial officer (CCO) of Livongo.

Pursley was Livongo’s CCO beginning in March 2014 up until Teladoc acquired Livongo on Oct. 30, 2020, the complaint said. While at Livongo, he signed an agreement on March 18, 2016, that stipulated he would not engage in certain conduct while employed with the company and for one year after leaving. Such prohibited conduct included soliciting certain Teladoc customers, soliciting fellow employees to leave the company, and disclosing or using confidential company information, the complaint explained.

The merged companies offered a position to Pursley, which he declined, the complaint said. Accordingly, Pursley signed a separation agreement that acknowledged that his March 2016 agreement still remained applicable, except for a particular section that was replaced with a new noncompete provision. Under the separation agreement, Pursley received approximately $3 million in accelerated vesting of equity awards and a $150,000 cash payment to be made over time in exchange for Pursley’s reaffirmation of his noncompete obligations.

However, the complaint claimed, Pursley became president of Hinge Health, a competitor in the telehealth industry, shortly after executing the separation agreement and receiving the equity award and some of the cash payment.

“Pursley joined Hinge Health as its President knowing he was breaching his non-compete covenants,” the complaint alleged. “As Hinge Health’s President, Pursley is providing ‘Conflicting Services’ because Hinge Health conducts business and provides services in telemedicine, just as Teladoc does.”

The plaintiffs argued that Pursley has already disclosed confidential proprietary information of Teladoc in his role at Hinge Health or inevitably will by the nature of his role as president, in violation of his agreements with Teladoc and Livongo.

The formal causes of action against the defendants are breach of contract, actual or threatened misappropriation under the Defend Trade Secrets Act, tortious interference with contract, tortious interference with business relationships, unjust enrichment, and civil conspiracy. The plaintiffs’ requested relief includes an injunction to bar Pursley from continuing the alleged conduct and compensatory damages.

The plaintiffs are represented by Ogletree, Deakins, Nash, Smoak & Stewart P.C.