Case 3:20-cv-02035-HZ Document 66 Filed 04/05/21 Page 1 of 22
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE DISTRICT OF OREGON
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`PORTLAND DIVISION
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`MILLENNIUM HEALTH, LLC;
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` Civ. No. 3:20-cv-02035-HZ
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`v.
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`Plaintiff,
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`DAVID BARBA; JUSTIN MONAHAN;
`NEPENTH LABORATORY SERVICES,
`LLC; DOES 1-5,
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`Defendants.
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`_______________________________________
`HERNANDEZ, Chief Judge
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`OPINION & ORDER
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`This matter comes before the Court on a Motion for Preliminary Injunction filed by
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`Plaintiff Millennium Health, LLC. ECF No. 53. An evidentiary hearing was held on March 4,
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`2021 and March 17, 2021, at which the Court heard testimony and argument by the parties. ECF
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`Nos. 54, 65. For the reasons set forth below, Plaintiff’s Motion is GRANTED.
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`LEGAL STANDARD
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`A preliminary injunction is an “extraordinary remedy that may only be awarded upon a
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`clear showing that the plaintiff is entitled to such relief.” Winter v. Nat. Res. Def. Council, Inc.,
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`555 U.S. 7, 22 (2008). A plaintiff seeking a preliminary injunction must show (1) that he or she
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`is likely to succeed on the merits; (2) he or she is likely to suffer irreparable harm in the absence
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`of preliminary relief; (3) the balance of the equities tips in his or her favor; and (4) an injunction
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`is in the public interest. Id. at 20.
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`Page 1 –OPINION & ORDER
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`In the Ninth Circuit, courts may apply an alternative “serious questions” test, which allows
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`for a preliminary injunction where a plaintiff shows that “serious questions going to the merits”
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`were raised and the balance of hardships tips sharply in plaintiff’s favor, assuming the other two
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`elements of the Winter test are met. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131-
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`32 (9th Cir. 2011). This formulation applies a sliding scale approach where a stronger showing of
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`one element may offset a weaker showing in another element. Id. at 1131. Nevertheless, the party
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`requesting a preliminary injunction must carry its burden of persuasion by a “clear showing” of
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`the four elements set forth above. Lopez v. Brewer, 680 F.3d 1068, 1072 (9th Cir. 2012).
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`BACKGROUND
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`I.
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`Factual Background
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`A. Millennium Health Services, LLC
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`Plaintiff Millennium Health, LLC (“Millennium”) is a clinical drug testing and
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`pharmacogenetic testing company based in California. Compl. ¶¶ 13, 17. ECF No. 1. Millennium
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`operates a “full-service, complex clinical laboratory,” used by “substance-use disorder and pain
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`management providers to obtain objective information about patients’ recent use of prescription
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`medications and/or illicit drugs.” Id. at ¶ 17. Millennium has a national presence and “processes
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`hundreds of thousands of patient specimens each year.” Id. at ¶ 19.
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`“Millennium promotes and sells its products and services directly to physician practices
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`and treatment centers through a nationwide network of highly-trained sales professionals.” Compl.
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`¶ 27. “Customer relationships in the clinical drug and pharmocogenetic testing business are long-
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`lasting and are the result of enormous investments of time and capital.” Supp. Knee Decl. ¶ 4.
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`ECF No. 27-3. As a result, Millennium’s success and competitive position depends “on the
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`strength of the relationships it develops with its customers,” and so its salespeople serve as “the
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`Page 2 –OPINION & ORDER
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`Case 3:20-cv-02035-HZ Document 66 Filed 04/05/21 Page 3 of 22
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`face of Millennium and cultivate the company’s valuable business relationships.” Compl. ¶ 27.
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`Millennium salespeople are given access to trade secrets and confidential business information
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`“including, but not limited to, customer lists, customer contacts, information concerning
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`profitability of individual client accounts, business methods, techniques, means of operation,
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`strategies, research and development, and business relationships that Millennium dedicated its time
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`and resources toward developing and maintaining, including relationships with existing and
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`potential customers, referral sources and vendors.” Knee Decl. ¶ 9. ECF No. 2-6.
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`Millennium’s operations in Oregon are divided between two territories called “Portland
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`North,” and “Portland South,” which together cover the entirety of Oregon and part of Washington
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`around the city of Vancouver. Knee Decl. ¶ 3. Each territory is overseen by a single Territory
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`Manager, who serves as the “Oregon face of Millennium.” Id. at ¶ 13. Territory Managers are
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`given “extensive training” about the drug testing industry, and “Millennium’s technologies, know-
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`how, products, services, payor strategies and information, research and development efforts,
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`competitive intelligence, target lists and data on prospective customers, and sales.” Compl. ¶ 33.
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`Territory Managers also have knowledge of and access to Millennium’s trade secrets and other
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`confidential business information including customer lists, finances, methodologies, processes and
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`pricing. Id. at ¶ 32.
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`B. Nepenthe Laboratory Services, LLC
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`Defendant Nepenthe Laboratory Services, LLC (“Nepenthe”) is an Oregon company that
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`provides drug testing laboratory services. Baumgartner Decl. ¶¶ 2, 8. ECF No. 23. As such,
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`Nepenthe is a direct competitor of Millennium. Id.; Compl. ¶ 80. Nepenthe operates in Alaska,
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`Page 3 –OPINION & ORDER
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`Washington, Oregon, California, Nevada, and Idaho. Pl. Mot. Ex. 5, at 5 (Baumgartner Dep.).1
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`ECF No. 53-6. Brian Baumgartner is the President of Nepenthe. Baumgartner Decl. ¶ 1.
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`C. Millennium’s Non-Competition and Non-Solicitation Agreements
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`Clinical drug testing is a “highly regulated” and “fiercely competitive” industry. Compl.
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`¶ 17. “There are often dozens of companies competing for the same customer accounts.” Id. at ¶
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`30. To protect confidential information and business relationships, Territory Managers enter into
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`Confidentiality, Non-Disclosure, Non-Competition and Intellectual Property Agreements with
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`Millennium. These Agreements contain provisions that persist after the termination of the
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`employee-employer relationship, as relevant to the present case, limit the former employee’s
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`ability to solicit Millennium customers (the “Non-Solicitation Clause”) and limit the former
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`employee’s ability to compete with the Millennium, (the “Non-Competition Clause”). The Non-
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`Solicitation Clause provides:
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`Except as provided for below, for a period of one (1) year following Employee’s
`termination of employment with Employer, regardless of which party terminates
`the employment relationship or the reasons for such termination, Employee will not
`knowingly, directly or indirectly, solicit, divert, or take away, or attempt to solicit,
`divert or take away, a customer of the Company that Employee had contact with or
`did business with (in person or through the direction or supervision of others) in the
`last two years of the Employee’s employment with the Company, nor shall
`Employee participate in soliciting or inducing such a customer to buy a competitive
`product or service. This restriction is understood to be inherently reasonable in its
`geography because it is limited to the places where said customer(s) do business.
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`Compl. Ex. A, at 6; Ex. C, at 6.2
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`The Non-Competition Clause provides:
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`Except as provided for below, for a period of one (1) year following Employee’s
`termination of employment with Employer, regardless of which party terminates
`the employment relationship or the reasons for such termination, Employee shall
`not, directly or indirectly, provide services that are the same or similar in function
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`1 Page numbers for deposition transcripts are given according to the page of the submitted exhibit, rather than the
`page of the unredacted transcript.
`2 The Non-Solicitation Clause found in Exhibit B of the Complaint is substantially identical. Compl. Ex. B, at 6.
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`Page 4 –OPINION & ORDER
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`or purpose to the services Employee provides to the Employer during the last two
`years of employment (whether as an owner, shareholder, officer, director, manager,
`supervisor, employee or agent) to any business that is competitive with any aspect
`of Employer’s business as to which Employee had material business-related
`involvement or about which Employee received Confidential Information during
`the last two years of employment in any state, province, or other jurisdiction in
`which Employee performed services or otherwise assisted the Employer in doing
`business or preparing to do business during the last two years of employment (the
`“Restricted Area”). A business shall be considered “competitive” if its products or
`services would compete with or displace the products and/or services that the
`Company was engaged in providing or developing at the time Employee’s
`employment with the Company ended. Employee specifically acknowledges and
`agrees that the foregoing restriction on competition with Employer will not prevent
`Employee from obtaining gainful employment following the termination of his
`employment with Employer and is a reasonable restriction to protect the
`Company’s legitimate business interests.
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`Compl. Ex. A, at 7; Ex. B, at 7-8; Ex. C, at 7.
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`D. David Barba and Justin Monahan
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`David Barba was offered a position as a Sales Representative with Millennium on October
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`23, 2014. Barba Decl. ¶ 3. ECF No. 21. On October 24, 2014, Barba accepted the offer and
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`signed an Agreement Regarding Confidentiality, Non-Disclosure and Intellectual Property
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`Assignment, which contained the Non-Competition Clause and Non-Solicitation Clause described
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`in the previous section (the “2014 Barba Agreement”). Compl. Ex. A. Barba worked in the
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`Portland South territory. Knee Decl. ¶ 5.
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`In November 2017, Barba was promoted to Senior Director of Managed Markets for
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`Millennium, an executive position with national duties. Barba Decl. ¶ 5. In August 2018, Barba
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`asked to return to a field sales position. Id. at ¶ 6. Millennium accommodated this request and
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`Barba was made the Territory Manager for the Portland South territory. Id. at ¶ 7. On August 27,
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`2018, prior to his return to a field sales position and at Millennium’s request, Barba signed a second
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`Confidentiality, Non-Disclosure, Non-Competition and Intellectual Property Assignment (the
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`“2018 Barba Agreement”). Id.; Compl. Ex. B. Barba began work as Territory Manager for
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`Portland South on September 1, 2018. Barba Decl. ¶ 7.
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`Justin Monahan was offered a position as a Training Customer Support Specialist with
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`Millennium on July 8, 2014. Monahan Decl. ¶ 2. ECF No. 22. On July 9, 2014, Monahan signed
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`a Confidentiality, Non-Disclosure, Non-Competition, and Intellectual Property Assignment (the
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`“Monahan Agreement”) and began working for Millennium on July 11, 2014. Monahan Decl. ¶¶
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`2-3; Compl. Ex. C. Monahan was subsequently promoted to Territory Manager and assigned to
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`the Portland North territory. Knee Decl. ¶ 8; Monahan Decl. ¶ 4.
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`Barba and Monahan were the only Territory Managers assigned to Oregon and “two of the
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`most successful Territory Managers at Millennium.” Compl. ¶ 59; Knee Decl. ¶ 13. Although
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`they were responsible for distinct territories, Barba and Monahan worked closely together,
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`exchanging “information and ideas for maintaining current accounts and gaining new accounts,”
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`and “often collaborated on certain accounts that had overlapping locations in each other’s
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`territories.” Knee Decl. ¶ 14. As Millennium Territory Managers, Barba and Monahan were paid
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`monthly commissions in addition to their salaries. Compl. ¶¶ 43, 52.
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`In June 2020, Monahan requested a promotion from his supervisor and was turned down.
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`Supp. Knee Decl. ¶ 22. In July 2020, Monahan contacted Baumgartner to inquire about job
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`opportunities at Nepenthe. Pl. Mot. Ex. 3, at 50 (Monahan Dep.). ECF No. 53-4. During this
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`meeting, Monahan told Baumgartner about his contract with Millennium and provided
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`Baumgartner with a copy of the Monahan Agreement. Baumgartner Dep., at 16. Monahan told
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`Baumgartner that Barba was also interested in a position with Nepenthe. Id. at 18. Nepenthe was
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`interested in hiring Barba and Monahan to capture market share from Millennium. Pl. Mot. Ex. 4,
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`at 13 (Goodman Dep.). ECF No. 53-5.
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`Page 6 –OPINION & ORDER
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`Barba and Monahan met with Baumgartner and Clark Goodman, who was a member of
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`the Nepenthe board, on August 18, 2020 to discuss Barba and Monahan’s planned departure from
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`Millennium. Monahan Dep., at 50-51. During this meeting, Barba and Monahan told Baumgartner
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`and Goodman about the sort of business Nepenthe might bring in if it were to hire Barba and
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`Monahan. Pl. Mot. Ex. 15, at 3-4 (Monahan II Dep.). ECF No. 53-16.
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`Barba, Monahan, Baumgartner, and Goodman met for a second time on August 24, 2020.
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`Baumgartner Dep., at 19. During this second meeting, they discussed Barba and Monahan’s
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`restrictive covenants with Millennium and opted to seek legal advice concerning those agreements.
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`Id. at 21-22.
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`On September 21, 2020, Barba and Monahan submitted nearly simultaneous notices of
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`resignation, both of which would become effective on October 2, 2020. Bleicher Decl. Ex. 516,
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`521. ECF Nos. 63-16, 63-21. On September 22, 2020, Barba called his supervisor, Jake Knee,
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`and directly informed him that he planned to resign from Millennium. Knee Decl. ¶ 18. When
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`Knee asked Barba if he could rely on Monahan to fill Barba’s shoes, Barba replied “that he did not
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`think that would be a good idea.” Id. Minutes later, Knee received a call from Monahan, who
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`informed Knee that he was also resigning from Millennium. Id. at ¶ 19. Both Barba and Monahan
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`told Knee that they did not have employment prospects at another company. Id. The Court heard
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`testimony on the issue of whether Barba and Monahan had employment prospects at the time of
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`their resignations and, after weighing the credibility of the witnesses, the Court concludes that
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`Barba and Monahan had concrete arrangements to work for Nepenthe prior to September 21, 2020,
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`whether or not those arrangements were formal offers of employment.
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`On September 22, 2020, Barba and Monahan each received a letter from Brian Fowler,
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`General Counsel for Millennium. Bleicher Decl. Ex. 504, 505. ECF Nos. 63-4, 63-5. The letters
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`advised Barba and Monahan of the “continuing, post-employment obligations you owe
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`Millennium.” Id. In particular, the letters reminded Barba and Monahan of the restrictive
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`covenants of their Agreements and specifically of the Non-Competition Clauses and the Non-
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`Solicitation Clauses. Id. Barba and Monahan were warned that “Millennium expects you to fully
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`honor your contractual obligations,” and was “prepared to defend its rights should you choose to
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`breach those obligations in any way, and will do so to the fullest extent necessary to protect itself.”
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`Id. The letters closed with a warning:
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`Millennium expects you to inform your new employer about these continuing
`obligations. If Millennium suspects any breach of your obligations by you or
`inducement of breach by your new employer, Millennium will take any and all
`action necessary against you and your new employer to enjoin the breach, and seek
`all available remedies for any harm caused by the breach.
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`Bleicher Decl. Ex. 504, at 4; Ex. 505, at 4.
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`Barba and Monahan forwarded the letters from Fowler to Baumgarnter on September 23,
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`2020. Pl. Mot. Ex. 2, at 38 (Barba Dep.) ECF No. 53-3; Monahan Dep., at 52.
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`On September 29, 2020, Barba and Monahan flew to Seattle on Nepenthe’s private jet to
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`meet with Baumgartner, Goodman, and Nepenthe’s attorneys. Baumgartner Dep., at 22; Goodman
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`Dep., at 12.
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`Barba and Monahan left Millennium’s employ on Friday, October 2, 2020. Compl. ¶ 80.
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`On Monday, October 5, 2020, Barba and Monahan sent emails to Millennium announcing that the
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`Non-Competition Clauses of their Agreements with Millennium were voidable and void. Bleicher
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`Decl. Ex. 517; Ex. 554. Fowler responded that Millennium disagreed with Barba and Monahan’s
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`positions and “intends to enforce its rights fully.” Id.
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`On October 7, 2020, Nepenthe extended formal offers of employment to Barba and
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`Monahan. Baumgartner Dep., at 23. At Nepenthe, Barba and Monahan are each paid a salary of
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`$360,000 per year for the first year. Id. at 25. In their second year of employment with Nepenthe,
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`Barba and Monahan will received 35% of the gross receipts from each new account that they
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`generate or manage. Id.
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`Following Barba and Monahan’s departure Millennium, several Millennium clients have
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`discontinued their relationships with Millennium and transferred their business to Nepenthe. The
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`Court heard extensive testimony on this issue and, after weighing the evidence and assessing the
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`credibility of the witnesses, the Court concludes that there is substantial evidence that Barba and
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`Monahan have solicited Millennium customers, both directly and indirectly, to transfer their
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`business to Nepenthe.
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`II.
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`Procedural Background
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`Millennium brought this action on November 23, 2020. ECF No. 1. On the same day,
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`Millennium filed a motion for a temporary restraining order, seeking to enforce its post-
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`employment covenants with Barba and Monahan. ECF No. 2. On December 4, 2020, the Court
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`denied the motion for a temporary restraining order. ECF No. 28. The Court set a schedule for
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`accelerated discovery for a preliminary injunction hearing.
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`On March 2, 2021, Millennium filed its Motion for Preliminary Injunction and Defendants
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`filed their brief in opposition to the Motion. ECF Nos. 43, 53.3 The Court held an evidentiary
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`hearing on March 4 and March 17, 2021, at which it took testimony from witnesses, received
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`exhibits into evidence, and heard argument from the parties. ECF Nos. 54, 64.
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`DISCUSSION
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`Millennium brings claims for (1) breach of contract against Barba and Monahan, alleging
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`violation of their contractual obligations concerning confidentiality, non-disclosure, non-
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`3 Defendants submitted an Amended Brief in Opposition the Motion for Preliminary Injunction on March 15, 2021.
`ECF No. 58.
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`Page 9 –OPINION & ORDER
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`competition, and non-solicitation; (2) tortious interference with contract against Barba, Monahan
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`and Nepenthe; (3) tortious interference with economic relations against Barba, Monahan, and
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`Nepenthe; (4) breach of the duty of loyalty against Barba and Monahan; (5) and civil conspiracy
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`against all Defendants.
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`Millennium’s Motion for Preliminary Injunction concerns its claims for breach of contract
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`against Barba and Monahan. For the reasons discussed below, the Court concludes that
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`Millennium has established a likelihood of success on the merits and a likelihood of irreparable
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`harm. The balance of equities tips slightly in favor of Millennium and the public interest does not
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`strongly favor either side.
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`I.
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`Likelihood of Success on the Merits
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`To prevail on a motion for preliminary injunction, a plaintiff must show either a likelihood
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`of eventual success on the merits or, under the Ninth Circuit’s alternative “sliding scale”
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`formulation of the test, serious questions going to the merits of their claims. Winter, 555 U.S. at
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`20; Alliance for the Wild Rockies, 632 F.3d at 1131-32. However, a court’s decision on a motion
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`for preliminary injunction is not a ruling on the merits of the claim. Sierra On-Line, Inc. v. Phoenix
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`Software, Inc., 739 F.2d 1415, 1422 (9th Cir. 1984).
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`In this case, Millennium brings claims for breach of contract against Barba and Monahan
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`alleging violation of the restrictive covenants concerning refraining from use of confidential
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`information, and violation of the Non-Competition Clauses and the Non-Solicitation Clauses of
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`the Monahan Agreement and the Barba Agreements.
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`“To establish a breach of contract claim under Oregon law, a plaintiff must show: (1) the
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`existence of a contract; (2) its relevant terms; (3) the plaintiff’s full performance and lack of breach;
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`and (4) the defendant’s breach resulting in damage to the plaintiff.” Gunderson LLC v. BCG
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`Props. Group, Inc., Case No. 3:19-cv-01569-AC, 2020 WL 1529356, at *5 (D. Or. Mar. 30, 2020)
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`(internal quotation marks and citation omitted). In this case, the parties do not dispute the existence
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`of a contract in the form of the Agreements. Instead, the dispute centers on the meaning of the
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`terms of the Agreements and, most critically, whether Barba and Monahan breached the
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`Agreements, thereby damaging Millennium.
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`As a preliminary matter, the Court concludes that Millennium has not met its burden in
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`showing that Barba or Monahan misappropriated or misused any confidential information of
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`Millennium, independent of the alleged violations of the Non-Competition and Non-Solicitation
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`Clauses. This is not to say that no such evidence exists or that it will not be found in a more
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`complete course of discovery. But the practical interests of the parties, as reflected by their
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`arguments and their presentation of the evidence, are more concerned with the Non-Competition
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`and Non-Solicitation Clauses of the Agreements and so this Order primarily concerns itself with
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`those issues.
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`A. The Non-Competition Clauses
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`A non-competition agreement is meant to mitigate the risk that a former employee could
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`use propriety information he acquired as an employee to divert all or part of the employer’s
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`business and “goes beyond direct solicitation of customers and explicit disclosure of confidential
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`information.” Ocean Beauty Seafoods v. Pac. Seafood Group Acquisition Co., Inc., 648 F. App’x
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`709, 711 (9th Cir. 2016). “To be enforceable under Oregon law, a covenant not to compete must
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`meet both the requirements of Oregon Revised Statute § (O.R.S.) 653.295 and Oregon’s common
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`law governing restraints on trade.” Brinton Bus. Ventures, Inc. v. Searle, 248 F. Supp.3d 1029,
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`1032 (D. Or. 2017).
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`1. The Non-Competition Clauses are voidable under ORS 653.295, but are not void.
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`Defendants contend that Millennium cannot meet its burden to show a likelihood of success
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`on the merits because the Non-Competition Clauses of the Monahan Agreement and the Barba
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`Agreements are void.
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`Under ORS 653.295, a noncompetition agreement entered into between an employer and
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`employee “is voidable and may not be enforced by a court of this state unless,” inter alia, “[t]he
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`employer informs the employee in a written employment offer received by the employee at least
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`two weeks before the first day of the employee’s employment that a noncompetition agreement is
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`required as a condition of employment,” or “[t]he noncompetition agreement is entered into upon
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`a subsequent bona fide advancement of the employee by the employer.” ORS 653.295(1)(a)(A),
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`(B).
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`In this case, Monahan received a written offer of employment from Millennium on July 8,
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`2014. Monahan Decl. Ex. 1. That offer letter informed Monahan, for the first time, that his
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`employment was contingent upon his signing the Monahan Agreement, including the Non-
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`Competition Clause. Monahan Decl. ¶ 2. Monahan signed the Agreement on July 9, 2014 and
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`began work on July 11, 2014. Id. at ¶ 3. Because Monahan was not provided with the terms of
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`the Agreement two weeks before he began work, the Monahan Agreement is voidable under ORS
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`653.295(1)(a)(A).
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`Barba received a written offer of employment from Millennium on October 23, 2014.
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`Barba Decl. Ex. 1. As with Monahan, this was the first time Barba learned that the employment
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`was contingent upon his signing the 2014 Barba Agreement. Barba Decl. ¶ 3. Barba signed the
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`Agreement on October 24, 2014 and began work the same day. Id. at ¶¶ 3-4. As with Monahan,
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`Barba was not provided with written notice of the Non-Competition Clause two weeks before
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`starting work as required by ORS 653.295(1)(a)(A) and the Court concludes that the 2014 Barba
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`Agreement is voidable.
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`Barba was subsequently promoted to a national executive position with Millennium in
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`2017 but requested a return to field sales work in August 2018. Barba Decl. ¶¶ 5-6. As a condition
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`of his return to field sales work, Barba was presented with the 2018 Barba Agreement, with the
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`same restrictive covenants as the 2014 version, which Barba signed on August 27, 2018. Id. ¶ 7.
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`After considering the record, the Court concludes that Barba’s transfer from the national position
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`to Territory Manager was not a “bona fide advancement” under ORS 653.295(1)(a)(B) but instead
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`constituted a voluntary demotion. See, e.g., Bleicher Decl. Ex. 512 (showing the position of Senior
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`Director of Managed Markets in the Millennium corporate hierarchy). Accordingly, the 2018
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`Barba Agreement is, like its predecessor Agreement, voidable.
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`A finding that the Agreements were voidable does not end the analysis. Oregon law treats
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`“noncompetition agreements—even those that do not strictly comply with the new statutory
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`requirements—as presumptively valid, rather than void ab initio.” Bernard v. S.B., Inc., 270 Or.
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`App. 710, 719 (2015) (emphasis in original). “Put differently, the change to ‘voidable’ means that
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`an employee who wants to be relieved of what the employee believes to be an unenforceable
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`noncompetition obligation must take affirmative steps to ‘avoid’ that obligation; otherwise, it
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`remains valid.” Id. at 718.
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`In Brinton, this Court observed that ORS 653.295 “does not provide a deadline by which
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`an employee must express his intent to void a non-competition agreement,” and Oregon appellate
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`opinions “do not expressly state what point is too late for an employee to void an agreement.”
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`Brinton, 248 F. Supp.3d at 1035. However, in Bernard, the Oregon Court of Appeals held that
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`because a voidable contract “had not been voided at the time that defendants sought to invoke the
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`Case 3:20-cv-02035-HZ Document 66 Filed 04/05/21 Page 14 of 22
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`contract, the agreement was valid and in effect.” Bernard, 270 Or. App. at 719. “This strongly
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`suggests that the Oregon Court of Appeals interpreted O.R.S. 653.295 to require a plaintiff to void
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`a non-competition agreement prior to the defendant’s effort to enforce the agreement.” Brinton,
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`248 F. Supp.3d at 1035. In Brinton, this Court found that “because [the defendant] expressed his
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`intent to void the non-competition agreement only after [the plaintiff] sought to enforce it and once
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`[the defendant] had already been competing against [the plaintiff] for five months, [the defendant]
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`did not validly void the agreement.” Id.
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`In this case, Barba and Monahan submitted their notices of resignation on September 21,
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`2020. On September 22, 2020, they each received a letter from Millennium’s attorney reminding
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`them of their post-employment obligations and restrictions under the Agreements and warning
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`them that Millennium would take legal action to enforce the Agreements. Barba and Monahan left
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`Millennium’s employ on Friday, October 2, 2020. On October 5, 2020, Barba and Monahan each
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`sent an email to Millennium purporting to void the Non-Competition Clauses of their respective
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`Agreements.
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`The Court concludes that the September 22, 2020 letters from Millennium’s general
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`counsel were an effort to enforce the Agreements by Millennium and that, by its prompt action,
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`Millennium forestalled Barba and Monahan’s subsequent efforts to void the Agreements on
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`October 5, 2020. This is consistent with this Court’s prior decision in Brinton, where the
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`dispositive fact was that the defendant did not attempt to void the contract until after the plaintiff
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`sought to enforce the disputed provision. Brinton, 248 F. Supp.3d at 1035. The fact that the
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`Brinton defendant had been in violation of the non-competition agreement for months at the time
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`of the enforcement action only bolstered the Court’s holding. Nor does the enforcement action
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`necessarily need to be the filing of a lawsuit, as Defendants suggested during the hearing. See
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`Bernard, 270 Or. App. at 719 (the defendant “sought to invoke” the non-competition agreement
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`by contacting the plaintiff and their new employer “to remind them of plaintiff’s contractual
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`obligations.”); Brinton, 248 F. Supp.3d at 1035 (the enforcement action by defendant was a threat
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`of legal action, rather than the commencement of a lawsuit.).
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`In sum, the Court concludes that the Non-Competition Clauses of the Agreements are
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`voidable under ORS 653.295, but were not timely voided. Barba and Monahan will therefore be
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`bound by their respective Agreements, provided they satisfy the common law requirements of
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`reasonableness.
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`2. The Non-Competition Clauses are reasonable.
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`A non-competition agreement must meet three requirements to be enforceable under
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`Oregon law: “(1) it must be partial or restricted in its operation either to time or place; (2) it must
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`be on some good consideration; and (3) it must be reasonable, that is, it should afford only a fair
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`protection to the interests of the party in whose favor it is made, and must not be so large in its
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`operation as to interfere with the interests of the public.” Nike, Inc. v. McCarthy, 379 F.3d 576,
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`584 (9th Cir. 2004) (quoting Eldridge v. Johnson, 195 Or. 379 (1952)). “To satisfy the
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`reasonableness requirement, the employer must show as a predicate that it has a legitimate interest
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`entitled to protection.” Id. (internal quotation marks and citation omitted, alterations normalized).
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`With respect to the existence of a protectable interest, an employee’s “general knowledge,
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`skill, or facility acquired through training or experience while working for an employer,” are
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`insufficient to support a restrictive covenant, even if “the on-the-job training has been extensive
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`and costly.” Nike, Inc., 379 F.3d at 585 (internal quotation marks and citations omitted).
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`“Nonetheless, an employer has a protectible interest in information pertaining especially to the
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`employer’s business,” including customer lists and other “specialized information relating to
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`customers.” Id. In this case, Millennium has produced evidence and testimony demonstrating that
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`Barba and Monahan possessed considerable and specialized information concerning Millennium’s
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`business and, in particular, Millennium’s relationships with its customers. The Court therefore
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`concludes that Millennium has established a legitimate interest sufficient to support a non-
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`competition agreement.
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`Turning to the other requirements laid out in Nike, Inc., the Non-Competition Clauses are
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`limited in both geographical scope and in time, lasting only one year after the termination of the
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`employment relationship. They were offered on good consideration, in the form of Barba and
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`Monahan’s salaries and commissions. With respect to the final factor, the Court concludes that
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`the scope of the Non-Competition Clause is not, on it