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Abdou v. Davita, Inc.

United States District Court, D. Nevada

November 17, 2017

SHERIF W. ABDOU, M.D. and AMIR S. BACCHUS, M.D., Plaintiffs,
v.
DAVITA INC., HEALTHCARE PARTNERS HOLDINGS, LLC, and HEALTHCARE PARTNERS, LLC, Defendants. AND RELATED CLAIMS.

          PRELIMINARY INJUCTION

         The Motion for Preliminary Injunction (“Motion for TRO”) filed by defendants DaVita Inc. f/k/a DaVita HealthCare Partners Inc. (“DaVita”); Healthcare Partners Holdings, LLC (“HCP Holdings”); and DaVita Medical Nevada, LLC, f/k/a Healthcare Partners, LLC (“HCP”) (collectively, the “DaVita Parties”) came on for hearing on November 17, 2017.

         FINDINGS OF FACT

         Having considered the parties' briefs, the records and documents on file, and the arguments of counsel, I make the following preliminary findings of fact:

         1. In early 2012, DaVita and HCP entered into negotiations regarding a potential merger of the companies (the “Merger”).

         2. On March 16, 2012, Abdou/Bacchus sued HCP Holdings and JSA Healthcare Nevada, LLC (“JSA Nevada”), a subsidiary of the DaVita Parties.

         3. On May 20, 2012, JSA Nevada and Abdou/Bacchus entered into settlement agreements (the “2012 Settlement Agreements”).

         4. Pursuant to the 2012 Settlement Agreements, Abdou/Bacchus: (i) received substantial compensation; (ii) entered into amendments to their Employment Agreements; (iii) agreed to covenants not to compete ancillary to their employment; and (iv) agreed to covenants not to compete ancillary to the transfer of their ownership interests in HCP Holdings in connection with the Merger (the “Sale Noncompetes”).

         5. Abdou/Bacchus received $15 million in compensation pursuant to the 2012 Settlement Agreements. Specifically, each Plaintiff received a “Merger Transaction Settlement Payment”-Dr. Abdou received $6 million and Dr. Bacchus received $4 million. Further, Dr. Abdou received $3 million and Dr. Bacchus received $2 million as specific consideration for the Sale Noncompetes.

         6. On May 20, 2012, Abdou/Bacchus and DaVita entered into the Sale Noncompetes.

         7. Abdou/Bacchus were represented by legal counsel in negotiating the 2012 Settlement Agreements and the Sale Noncompetes.

         8. In entering into the Sale Noncompetes, Abdou/Bacchus expressly acknowledged that:

a. They were selling their ownership interest in HCP Holdings as part of the Merger transaction;
b. The Sale Noncompetes were a condition precedent to the Merger, “a material inducement to [DaVita] to consummate the transactions contemplated in the Merger Agreement, ” and that DaVita “would be unwilling to consummate such transactions if [Abdou/Bacchus] did not enter into [the Sale Noncompetes][;]”
c. The Sale Noncompetes were necessary to protect the benefits and value that DaVita would acquire through the Merger. Specifically, Abdou/Bacchus expressly acknowledged that, “due to [their] affiliation with [HCP Holdings], ” they had “acquired intimate knowledge of, and experience related to, the business of the [HCP Holdings] and [DaVita], which, if exploited by [Abdou/Bacchus] in contravention of this Agreement, would seriously, adversely and irreparably affect the ability of [DaVita] and its Affiliates . . . to derive the benefit or value for which it bargained in the Merger Agreement.”
d. That any breach of the Sale Noncompetes “would cause irreparable injury to” DaVita and its subsidiaries and that they “shall be entitled to enforce” the Sale Noncompetes “by demanding specific performance and immediate injunctive relief as remedies for such breach or any threatened breach.”

         9. The Sale Noncompetes expressly prohibit Abdou/Bacchus from “directly or indirectly” engaging in or preparing to engage in (or having any interest in, or providing any assistance to, any entity or group that is engaging in or preparing to engage in) a “Restricted Business” in Nevada, California, Florida, or New Mexico (the “Restricted Region”) for five (5) years from the closing date of the Merger (the “Restricted ...


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