Civil Practice – Preliminary Injunction Motion – Corporate – Labor & Employment – Medical Practice Break-Up

Fogartie v. Edrington (Lawyers Weekly No. 020-106-17, 24 pp.) (Gregory McGuire, J.) 2017 NCBC 104

Holding: Although three of five surgeons, who currently own a practice together, are planning to go to work for Duke University Health System, Inc., and although one of those three – defendant Edrington – has made some statements that might not have been in the practice’s best interests, since the practice has not yet suffered any ill effects from either the three surgeons’ plans to leave or Edrington’s comments, the two remaining surgeons have not shown a likelihood of success on their breach of fiduciary duty or removal-of-director claims.

The court denies plaintiffs’ motion for a preliminary injunction.

Edrington interviewed a surgeon, Dr. Salfity, as a courtesy to Duke, which did not intend to hire Dr. Salfity. Although Edrington knew that the nominal defendant practice, Carolina Vascular Surgery and Diagnostics, P.A. (CVSD), was interested in Dr. Salfity and that CVSD needed a new surgeon, Edrington encouraged Dr. Salfity to accept employment elsewhere if it were offered.

Nevertheless, plaintiffs have not alleged that CVSD has made an offer of employment to Dr. Salfity, much less that he has rejected such an offer. Without any allegation that Edrington’s communications proximately caused harm to CVSD, there is not a likelihood of success on the claim for breach of fiduciary duty based on emails to and concerning Dr. Salfity.

Edrington also touted CVSD employee Catherine Morgan as a key employee to Duke, knowing she would be hard for CVSD to replace. However, Morgan still remains a CVSD employee. Moreover, defendants have agreed not to solicit Morgan or any other CVSD employee on Duke’s behalf and agreed not to offer employment to Morgan until 180 days after their last day at CVSD. Plaintiffs have not established a likelihood of success on their breach of fiduciary duty claims arising from defendants’ recruiting of Morgan.

For the same reasons that plaintiffs have not established a likelihood of success on their breach of fiduciary duty claims, plaintiffs have not shown that they are likely to succeed on their claims that defendants acted dishonestly or grossly abused their authority as directors. Accordingly, the court will not exercise its authority to remove directors under G.S. § 55-8-09 at this stage of the litigation based on that conduct.

Motion denied.