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Novo Nordisk Can’t Enforce Noncompete Contract Against Ex-Worker

June 2, 2020, 11:28 PM

Pharmaceutical company Novo Nordisk Inc. can’t enforce a confidentiality and noncompete agreement that it had entered into with a worker who was briefly laid off and rehired before leaving the company for BioMarin Pharmaceutical Inc., the First Circuit ruled Tuesday.

Novo sought to enforce the agreement, signed with Thomas Russomano, in an effort to prohibit him from working for a competitor in certain positions for a year after the end of his employment with Novo, and from sharing certain information. He was laid off in 2018 and then rehired, but wasn’t asked to sign a new agreement upon his return, according to the court record.

Russomano filed suit first, seeking declaratory judgment, after which Novo removed to federal court and filed counterclaims.

The U.S. District Court for the District of Massachusetts denied Novo’s motion for a temporary restraining order and preliminary injunction against Russomano and BioMarin, finding that Novo couldn’t show a likelihood of success on the merits due to the rehiring and possible expiration of terms.

On appeal, the U.S. Court of Appeals for the First Circuit affirmed the district court’s judgment, finding no abuse of discretion and rejecting Novo’s argument that it didn’t lay off Russomano. Instead, the company argued, it transferred him to a different position in the company.

That argument is “without merit,” Judge Sandra L. Lynch wrote in the opinion.

The Massachusetts court “did not err in concluding that the letter laying Russomano off was unambiguous when it stated that his employment ended” on a specific date, according to the appellate panel.

His letter offering him a new position was also unambiguous because it set his effective employment date as three days after the layoff, according to the appeals court.

The court further rejected Novo’s contention that a letter mentioning Russomano’s “transfer” wasn’t enough to undermine its claim that the previous letter represented the “end” of the employment.

Judges Juan R. Torruella and William J. Kayatta Jr. joined in the decision.

Novo is represented by Morgan, Lewis & Bockius LLP. The appellees are represented by Jones Day.

The case is Russomano v. Novo Nordisk Inc., 1st Cir., No. 20-1173, 6/2/20.

To contact the reporter on this story: David McAfee in Los Angeles at dmcAfee@bloomberglaw.com

To contact the editor responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com

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