United States District Court, D. Maryland, Southern Division
MEMORANDUM OPINION AND ORDER
W. Grimm United States District Judge.
February 17, 2016, Giulio Paciotti, Ph.D. ended approximately
twenty-eight years of employment at CytImmune Sciences, Inc.,
(“CytImmune”) where he most recently worked as
Chief Science Officer. There, he focused on nano-technology,
specifically a theragnostic called the “Aurimmune
Platform, ” which employed gold to diagnose and treat
cancerous solid tumors. He began employment as the Vice
President of Research and Development at Senior Scientific
LLC (“Senior Scientific”) two days later. His
work continues to target cancerous solid tumors but now
employs iron oxide in lieu of gold and focuses, at least for
now, on diagnosing, not treating, cancerous tumours. Within a
month, CytImmune filed suit against Dr. Paciotti in the
Circuit Court for Montgomery County, claiming that he
breached the confidential information and restrictive
covenants of the Assignment of Inventions, Non-disclosure,
Non-solicitation and Non-competition Agreement it had entered
into with Dr. Paciotti, as well as breached the duty of
loyalty. ECF Nos. 2, 32. CytImmune also sought injunctive relief
in the form of a temporary restraining order and preliminary
and permanent injunction. Id. Along with its
Verified Complaint, CytImmune filed a Motion for a Temporary
Restraining Order and Preliminary Injunction. ECF No. 3.
state court denied the motion for a temporary restraining
order, ECF No. 10, and Dr. Paciotti removed to this Court,
ECF No. 1, where CytImmune renewed only its Motion for a
Preliminary Injunction, ECF No. 30. On May 12, 2016, I held a
hearing on CytImmune’s motion and denied the motion
without prejudice to resubmission following discovery and
trial on the narrow issue of whether CytImmune is precluded
from enforcing the Agreement because it materially breached
it by failing to pay Dr. Paciotti his full salary. This
Memorandum Opinion and Order memorializes the findings of
fact and conclusions of law I reached during the hearing.
purpose of a preliminary injunction is to “protect the
status quo and to prevent irreparable harm during the
pendency of a lawsuit, ultimately to preserve the
court’s ability to render a meaningful judgment on the
merits.” In re Microsoft Corp. Antitrust
Litig., 333 F.3d 517, 525 (4th Cir. 2003). As a
preliminary injunction is “an extraordinary remedy . .
. [it] may only be awarded upon a clear showing that the
plaintiff is entitled to such relief.” Winter v.
Natural Res. Def. Council, Inc., 555 U.S. 7, 22 (2008).
To obtain a preliminary injunction, the plaintiff must
“establish that  he is likely to succeed on the
merits,  he is likely to suffer irreparable harm in the
absence of preliminary relief,  the balance of equities
tips in his favor, and  an injunction is in the public
interest.” Id. at 20; see Dewhurst v.
Century Aluminum Co., 649 F.3d 287, 290 (4th Cir.
2011). “A preliminary injunction cannot be
issued unless all four of these elements are met, and
‘“[p]laintiff bears the burden of establishing
that each of these factors supports granting the
injunction.”’” Williams v. JP Morgan
Chase Bank, No. RDB-16-00312, 2016 WL 509426, at *3 (D.
Md. Feb. 4, 2016) (slip op.) (quoting Direx Israel, Ltd.
v. Breakthrough Med. Corp., 952 F.2d 802, 812 (4th Cir.
1991) (citation omitted)). “[T]he burden placed upon
Plaintiffs to state a claim for a preliminary injunction is
high.” EndoSurg Med., Inc. v. EndoMaster Med.,
Inc., 71 F.Supp.3d 525, 538 (D. Md. 2014); see
Fowler v. Wells Fargo Home Mortg., Inc., No.
GJH-15-1084, 2015 WL 2342377, at *2 (D. Md. May 13, 2015)
succeed on the merits, under Maryland law, an employer
seeking to enforce a non-compete agreement must show that:
all of the following four conditions are met: “(1) the
employer must have a legally protected interest; (2) the
restrictive covenant must be no wider in scope and duration
than is reasonably necessary to protect the employer's
interest; (3) the covenant cannot impose an undue hardship on
the employee; and (4) the covenant cannot violate public
MCS Servs., Inc. v. Jones, No. WMN-10-1042, 2010 WL
3895380, at *3 (D. Md. Oct. 1, 2010) (quoting Deutsche
Post Global Mail, Ltd. v. Conrad, 116 F. App’x
435, 438 (4th Cir. 2004) (interpreting Maryland law));
see also Gen. Parts Distribution, LLC v. St. Clair,
No. JFM-11 3556, 2011 WL 6296746, at *3 (D. Md. Dec. 14,
the first requirement, the plaintiff must “clearly
demonstrate that he will likely succeed on the
merits, ” rather than present a mere “grave or
serious question for litigation.” Real Truth About
Obama, Inc. v. Fed. Election Comm’n, 575 F.3d 342,
346-47 (4th Cir. 2009) (emphasis from the original). Only
“providing sufficient factual allegations to meet the
[Fed. R. Civ. P.] 12(b)(6) standard of Twombly and
Iqbal” does not meet the rigorous standard
required under the Winter and Real Truth
decisions. Allstate Ins. Co. v. Warns, No.
CCB-11-1846, 2012 WL 681792, at *14 (D. Md. 2012). Relevant
to the present case is that post-Real Truth courts
have “declined to issue a preliminary injunction when
there are significant factual disputes” in breach of
contract cases. Chattery Int’l, Inc. v. JoLida,
Inc., No. WDQ-10-2236, 2011 WL 1230822, at *9 (D. Md.
2011) (citing Allegro Network LLC v. Reeder, No.
09-912, 2009 WL 3734288, at *3 (E.D. Va. Nov. 4, 2009)
(holding that the parties’ conflicting versions of
facts key to determining whether a breach of a franchise
agreement occurred prevented the plaintiff from making a
clear showing of the likelihood of success on the merits));
see Torres Advanced Enter. Sols. LLC v. Mid-Atl.
Prof’ls Inc., No. PWG-12-3679, 2013 WL 531215, at
*3 (D. Md. Feb. 8, 2013) (“In the present case, the
record highlights multiple unresolved factual disputes. As
the resolution of these disputes is central to the
determination of a breach of contract claim, Plaintiff is
prevented from making a clear showing of a likelihood of
success on the merits.”).
of Non-compete Agreement at Time of Alleged
condition precedent to enforcing a non-compete agreement is
that there is a valid, applicable non-compete agreement in
effect. “It is well established that an agreement is
binding and enforceable only if it is a valid contract
supported by consideration.” Hearn Insulation &
Improvement Co. v. Carlos Bonilla, No. AW-09-990, 2010
WL 3069953, at *6 (D. Md. Aug. 5, 2010) (citing Cheek v.
United Healthcare of the MidAtl., Inc., 835 A.2d 656,
661 (Md. 2003)). In the context of a restrictive covenant,
“continued employment of an at-will employee for a
significant period constitutes sufficient consideration . . .
where there is no allegation of bad faith or other
compromising circumstance.” Id. (citing
Simko, Inc. v. Graymar Co., 464 A.2d 1104, 1107-08
(Md. Ct. Spec. App. 1983)). In this case, Dr.
Paciotti’s more than ten years of continued employment
after signing the Agreement in 2005 more than suffice for
consideration. See Id. (concluding that,
“[o]bviously, continuance of employment for a period of
ten years imparts sufficient consideration”).
the question here is not whether the Non-compete Agreement
was supported by sufficient consideration when it came into
existence. Rather, it is whether, as Dr. Paciotti argues,
CytImmune materially breached its employment relationship
with him by failing to pay his full salary, prior to his
alleged breaches of the Agreement, such that the Agreement
and the Non-compete Agreement it encompassed no longer are
enforceable. Indeed, if an employer materially breaches an
employment agreement that includes a restrictive covenant,
its former employee’s “non-compete obligations
under the agreement are discharged.” Jorgensen v.
United Commc’ns Grp. Ltd. P’ship, No.
10-429-AW, 2011 WL 3821533, at *10 (D. Md. Aug. 25, 2011)
(citing Jay Dee/Mole Joint Venture v. Mayor of
Balt., 725 F.Supp.2d 513, 528 (D. Md. 2010)); see
Maternal-Fetal Med. Assocs. of Md., LLC v.
Stanley-Christian, No. 0967 Sept. Term 2009, 2013 WL
3941970, at *7 (Md. Ct. Spec. App. July 24, 2013)
(unreported) (“An employee defending against a claim
for breach of non-competition provision by her
former-employer may assert evidence that the employer had
breached the employment agreement such that the
employee’s duty to perform under the non-competition
agreement was extinguished.”).
“[a]lthough any breach of contract may give rise to a
cause of action for damages, only a material breach
discharges the non-breaching party of its duty to
perform.” Jay Dee/Mole Joint Venture, 725
F.Supp.2d at 526 (citing Restatement (Second) of Contracts
§ 236 cmt. a.; 23 Williston on Contracts § 63:3
(4th ed.)) (emphasis added). Maryland law provides that
“‘[a] breach is material “if it affects the
purpose of the contract in an important or vital
way.”’” Id. (quoting Gresham
v. Lumbermen’s Mut. Cas. Co., 404 F.3d 253, 260
(4th Cir. 2005) (quoting Sachs v. Regal Sav. Bank,
FSB, 705 A.2d 1, 4 (Md. Ct. Spec. App. 1999))).
“[W]hat constitutes a ‘material breach’ of
an employment contract is not subject to ‘a
mathematically precise definition’ but rather
‘varies with the nature of the particular
employment.’” Gresham, 404 F.3d at 260
(quoting Shapiro v. Massengill, 661 A.2d 202, 211
(Md. Ct. Spec. App. 1995)).
Paciotti suggests that CytImmune’s failure to pay his
full salary constitutes a material breach. Yet, even if a
reduction in salary may constitute a material breach, parties
to a contract may “‘modify it by mutual consent,
’” through “‘implication as well as
by express agreement.’” Hovnanian Land Inv.
Grp., LLC v. Annapolis Towne Ctr. at Parole, LLC, 25
A.3d 967, 978 (Md. 2011) (quoting Freeman v. Stanbern
Constr. Co., 106 A.2d 50, 55 (Md. 1954)). Thus, by
continuing to work for CytImmune at a reduced salary, Dr.
Paciotti may have agreed to the reduced salary, and CytImmune
argues that this is exactly what occurred. “A
modification [such as by course of conduct] creates a new