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Cytimmune Sciences Inc. v. Paciotti

United States District Court, D. Maryland, Southern Division

September 8, 2016

CYTIMMUNE SCIENCES, INC., Plaintiff,
v.
GIULIO PACIOTTI, Defendant.

          MEMORANDUM OPINION

          Paul W. Grimm United States District Judge.

         Following a four-day bench trial at which I found that Plaintiff CytImmune Sciences, Inc. (“CytImmune”) did not materially breach the Assignment of Inventions, Non-Disclosure, Non-Solicitation and Non-Competition Agreement (“Agreement”) that Defendant Giulio Paciotti entered into while working for the company, CytImmune renewed its Motion for a Preliminary Injunction. CytImmune sought to enjoin Dr. Paciotti from working for Senior Scientific, LLC (“Senior Scientific”) during the pendency of this litigation. Because CytImmune failed to show that it is likely to succeed on the merits of its claim to enforce the Agreement and because of the hardship an injunction would impose upon Dr. Paciotti, I denied CytImmune's Motion. This Memorandum Opinion memorializes my rulings from trial.

         I. BACKGROUND

         The Court previously outlined the essential facts of the case:

On 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 [sic]. 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.

Mem. Op. & Order 1-2, ECF No. 55.

         Dr. Paciotti removed the case to this Court, ECF No. 1, where CytImmune renewed its Motion for a Preliminary Injunction made previously in state court. ECF No. 30. I denied without prejudice CytImmune's Motion subject to resubmission following targeted discovery and a bench trial on the narrow issue of whether CytImmune materially breached the Agreement by failing to pay Dr. Paciotti his full salary, thereby vitiating the Agreement. Mem. Op. & Order 13.

         During the bench trial, which took place between August 23 and 26, 2016, I found[1] that no material breach occurred because the parties altered the Agreement through a course of conduct by agreeing either to defer unpaid portions of their salary until CytImmune regained surer financial footing or to forgo the unpaid salary. Dr. Paciotti argued that § 502(f) of the Maryland Wage Payment Law, Md. Code Ann., Lab. & Empl. §§ 3-501 to 3-509, and CytImmune's corporate bylaws voided any such agreement. Def.'s Mem. 28-30, ECF No. 69; Def.'s Reply 6-7, ECF No. 77. These arguments were unavailing. Because Dr. Paciotti has not yet brought a claim under the Maryland Wage Payment and Collection Law or for breach of contract, I am not called upon to determine the precise parameters of the modified contract. Whether CytImmune's senior managers, including Dr. Paciotti, agreed to defer or forgo unpaid salary, the record clearly shows that Dr. Paciotti at least assented to payment of accrued salary at some indeterminate future date. See, e.g., Email from Attorney Maury S. Epner, on behalf of Dr. Paciotti, to Roger A. Hayden, Attorney for Presidential Bank (Sept. 16, 2013), Jt. Ex. 7 (“Dr. Paciotti is currently not receiving any salary or other workplace compensation. He has been accruing salary since March 1, 2013 and does not know when, or if, he will ever be paid this accrued sum.” (emphasis added)).[2] Therefore, no material breach occurred.

         In light of this conclusion, CytImmune orally renewed its Motion for a Preliminary Injunction. I denied the motion, finding that CytImmune had not demonstrated a likelihood of success on the merits of its contract claim because the Agreement evinces a purpose of stifling competition-which is not a legally protected interest and is contrary to public policy-and because enforcing the Agreement would impose an undue hardship on Dr. Paciotti. This Memorandum Opinion memorializes the findings of fact and conclusions of law I reached during the bench trial.

         II. STANDARD OF REVIEW

         The 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 rewarded upon a clear showing that the plaintiff is entitled to such relief.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 22 (2008). To obtain a preliminary injunction, the plaintiff must “establish that [1] he is likely to succeed on the merits, [2] he is likely to suffer irreparable harm in the absence of preliminary relief, [3] the balance of equities tips in his favor, and [4] an injunction is in the public interest.” Id. at 20; see also Dewhurst v. Century Aluminum Co., 649 F.3d 287, 290 (4th Cir. 2011).

         Prior to 2009, the Fourth Circuit followed a “balance of hardship” approach to preliminary injunctions, considering all four Winter elements, but “allow[ing] each requirement to be conditionally redefined” in a “flexible interplay” depending on how the other requirements were met. Real Truth About Obama, Inc. v. Fed. Election Comm'n, 575 F.3d 342, 347 (4th Cir. 2009) (citing Blackwelder Furniture Co. of Statesville v. Seilig Mfg. Co., 550 F.2d 189, 196 (4th Cir. 1977)). Real Truth invalidated this approach, however, and it “may no longer be applied” in the Fourth Circuit. Id. The plaintiff must therefore satisfy each requirement as articulated. Id.

         III. DISCUSSION

         A. Likelihood of ...


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