United Healthcare Servs. v. Guemple

Full title: United Healthcare Services, Inc., and UnitedHealth Group Incorporated…

Court: United States District Court, District of Minnesota

Date published: Oct 3, 2024

24-cv-2606 (ECT/DTS) (D. Minn. Oct. 3, 2024)

Opinion

24-cv-2606 (ECT/DTS)

10-03-2024

United Healthcare Services, Inc., and UnitedHealth Group Incorporated, Plaintiffs, v. James Guemple, Defendant.

Elizabeth A. Patton, Ellie J. Barragry, and Paul William Fling, Fox Rothschild LLP, Minneapolis, MN, for Plaintiffs United Healthcare Services, Inc., and UnitedHealth Group Incorporated. David M. Wilk and Samuel Schultz, Larson King, LLP, St. Paul, MN, and Melissa R. Muro LaMere, Snell & Wilmer LLP, Los Angeles, CA, for Defendant James Guemple.

Eric C. Tostrud United States District Judge.

Elizabeth A. Patton, Ellie J. Barragry, and Paul William Fling, Fox Rothschild LLP, Minneapolis, MN, for Plaintiffs United Healthcare Services, Inc., and UnitedHealth Group Incorporated.

David M. Wilk and Samuel Schultz, Larson King, LLP, St. Paul, MN, and Melissa R. Muro LaMere, Snell & Wilmer LLP, Los Angeles, CA, for Defendant James Guemple.

OPINION AND ORDER

Eric C. Tostrud United States District Judge.

Plaintiffs-two business organizations who refer to themselves collectively as “United”-seek confirmation of an arbitration award. The award preliminarily enjoined Defendant James Guemple, a former United employee, from working for a United competitor in specific ways the arbitrator found would violate a noncompete covenant and other restrictive covenants in effect between United and Mr. Guemple.

Mr. Guemple opposes confirmation. He argues the award is not final and definite and that, if it were, the arbitrator made legal and factual errors thereby exceeding his powers. These arguments are not persuasive. The weight of legal authority shows the award is final. The award is reasonably definite. And the legal and factual errors Mr. Guemple identifies do not justify vacatur or stand in the way of confirmation. United's motion will be granted.

I

For this motion's purposes, the following background facts are not disputed. United provides “health care coverage and benefits, as well as information and technology-enabled health services.” ECF No. 18-3 ¶ 1. United employed Mr. Guemple from November 2018 to January 5, 2024. Id. ¶ 5. Mr. Guemple was the Key Accounts Regional Vice President of Employer & Individual in United's West Region. Id. The West Region includes Utah. Id.

Mr. Guemple signed several contracts as part of his United employment. He signed an Employment Arbitration Policy when his employment started. ECF No. 18-1. As the contract's title suggests, it included an arbitration clause. Id. § A. The contract enabled either party to “bring an action in a court of competent jurisdiction to compel arbitration under th[e] Policy, to enforce an arbitration award, or to vacate an arbitration award.” Id. § D(15). Mr. Guemple also signed eight agreements at various times during his United employment that included restrictive covenants: four “Nonqualified Stock Option Award[s]” and four “Restricted Stock Unit Award[s],” one of each for every year from 2020 to 2023. ECF No. 18-3 ¶ 19. Covenants in these agreements restrain Mr. Guemple in three basic ways: they include a confidentiality provision forbidding him from disclosing certain sensitive information acquired during his United employment; they include a nonsolicitation provision forbidding him from soliciting business from, or doing business with, United competitors; and they include a noncompete provision forbidding Mr. Guemple from engaging in activities that would compete with United. Id. ¶¶ 20-22.

In January 2024, Mr. Guemple left United and began working for Regence BlueCross BlueShield of Utah-a United competitor-as the Market President. Compl. [ECF No. 1] ¶ 8. United, concerned Mr. Guemple was violating his restrictive covenants, initiated arbitration. Id. ¶ 10. United sought a preliminary injunction, and the arbitrator entered findings of fact, conclusions of law, and an award enjoining Mr. Guemple. See ECF No. 18-3. The factual findings and legal conclusions cover roughly twenty-two pages, and the preliminary injunction has four parts. The first three parts enjoin Mr. Guemple from violating the confidentiality, nonsolicitation, and noncompetition covenants, respectively, and detail the injunction's terms. Id. at 22-24. The fourth part specifies, “[f]or the avoidance of doubt,” certain actions the award did not prohibit. Id. at 24.

II

Section 9 of the Federal Arbitration Act (or “FAA”) provides,

If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title.

9 U.S.C. § 9. Notice of a motion to vacate, modify, or correct must be served within three months after the award is filed or delivered. Id. § 12.

Though Mr. Guemple has filed no separate motion to vacate, modify, or correct the award, his opposition to United's motion to confirm the award will be construed as a motion to vacate. Persuasive precedents support this approach. See The Hartbridge, 57 F.2d 672, 673 (2d Cir. 1932) (“Upon a motion to confirm the party opposing confirmation may apparently object upon any ground which constitutes a sufficient cause under the statute to vacate, modify, or correct, although no such formal motion has been made.”); McLaurin v. Terminix Int'l Co., 13 F.4th 1232, 1240-41 (11th Cir. 2021); United House of Prayer for All People of Church on the Rock of Apostolic Faith v. L.M.A. Int'l, Ltd., 107 F.Supp.2d 227, 229 (S.D.N.Y. 2000); Catz Am. Co. v. Pearl Grange Fruit Exch., Inc., 292 F.Supp. 549, 551 (S.D.N.Y. 1968); Chandler v. Journey Educ. Mktg., Inc., No. 2:10-cv-00839, 2012 WL 1714885, at *2 (S.D.W.V. May 15, 2012).

A federal court has limited power to review an arbitral award. See Stark v. Sandberg, Phoenix & von Gontard, P.C., 381 F.3d 793, 798 (8th Cir. 2004) (“[F]ederal courts are not authorized to reconsider the merits of an arbitral award ‘even though the parties may allege that the award rests on errors of fact or on misinterpretation of the contract.'” (quoting Bureau of Engraving, Inc. v. Graphic Commc'n Int'l Union, Loc. 1B, 284 F.3d 821, 824 (8th Cir. 2002))). The FAA allows vacatur for four narrow exceptions: (1) fraud, (2) partiality, (3) prejudicial misconduct, or (4) “where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.” 9 U.S.C. § 10(a); see also Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 578 (2008) (holding that the four grounds for vacatur are exclusive).

Mr. Guemple opposes United's motion on just the fourth ground, and it seems fair to say that his challenges fall in three categories within this ground. First, Mr. Guemple argues the award is not “final” in the FAA sense because it granted only preliminary relief. Second, Mr. Guemple says the award is not “definite” because the arbitrator assigned United responsibility for identifying individuals and organizations subject to the award's noncompetition and nonsolicitation aspects and because the award is vague in some respects. Third, Mr. Guemple says the arbitrator “exceeded” or “imperfectly executed” his powers by misapplying the law, misinterpreting the restrictive covenants, and making erroneous fact findings. Consider each of these in turn.

(1) The general rule is that an award is “final” for the FAA's purposes if the arbitration is “complete.” Local 36, Sheet Metal Workers Int'l Ass'n, AFL-CIO v. Pevely Sheet Metal Co., 951 F.2d 947, 949-50 (8th Cir. 1992); see Wootten v. Fisher Invs., Inc., 688 F.3d 487, 491 (8th Cir. 2012) (same). The rule is “designed to avoid piecemeal litigation and repeated judicial review,” much like the final-judgment rule embodied in 28 U.S.C. § 1291. CAA Sports LLC v. Dogra, No. 4:18-cv-01887-SNLJ, 12019 WL 1001041, at *2 (E.D. Mo. Feb. 28, 2019); see COKeM Int'l, Ltd. v. Riverdeep, Inc., Nos. 06-cv-3331 (PJS/RLE) and 06-cv-3359 (PJS/RLE), 2008 WL 4417323, at *2-3 (D. Minn. Sept. 24, 2008) (recognizing that, as a general rule, an arbitration “award must finally determine all of the claims and defenses submitted for arbitration” before a federal court may confirm it, and that it likely would violate the FAA's finality requirement for a federal court “to review dozens of rulings-one by one-over the course of a single arbitration”).

Notwithstanding this general “complete arbitration” rule, federal courts routinely entertain requests to confirm arbitration awards that are preliminary injunctions. See, e.g., Arrowhead Global Sols., Inc. v. Datapath, Inc., 166 Fed.Appx. 39, 44 (4th Cir. 2006) (“In short, as the other circuits to have addressed this issue recognize, arbitration panels must have the power to issue temporary equitable relief in the nature of a preliminary injunction, and district courts must have the power to confirm and enforce that equitable relief as ‘final' in order for the equitable relief to have teeth.”); Publicis Commc'n v. True N. Commc'ns, Inc., 206 F.3d 725, 729 (7th Cir. 2000) (“A ruling on a discrete, time-sensitive issue may be final and ripe for confirmation even though other claims remain to be addressed by arbitrators.”); Pac. Reinsurance Mgmt. Corp. v. Ohio Reinsurance Corp., 935 F.2d 1019, 1023 (9th Cir. 1991) (“[W]e hold that temporary equitable orders calculated to preserve assets or performance needed to make a potential final award meaningful . . . are final orders that can be reviewed for confirmation and enforcement by district courts under the FAA.”); Ace/Cleardefense, Inc. v. Clear Defense, Inc., 47 Fed.Appx. 582, 582 (D.C. Cir. 2002) (affirming the district court's confirmation of an interim reward because it was “a preliminary injunction, and confirmation of the injunction is necessary to make final relief meaningful”); Hamdorf v. United Healthcare Servs., Inc., No. 2:23-mc-00215-HLT, 2024 WL 3738056, at *2 (D. Kan. Jan. 31, 2024) (confirming interim arbitration award that was a preliminary injunction); Berland v. Conclave, LLC, No. 20-cv-00922-H-WVG, 2021 WL 461727, at *5-8 (S.D. Cal. Feb. 9, 2021) (same); Vital Pharms. v. PepsiCo, Inc., 528 F.Supp.3d 1304, 1308-09 (S.D. Fla. 2020) (same); Ferry Holding Corp. v. Williams, No. 4:11 MC 527 RWS, 2011 WL 5039917, at *2 (E.D. Mo. Oct. 24, 2011) (same); Blue Cross Blue Shield of Mich. v. MediImpact Healthcare Sys., Inc., No. 09-14260, 2010 WL 2595340, at *2 (E.D. Mich. June 24, 2010) (same).¹

1 The Eighth Circuit has affirmed the confirmation of interim arbitration awards in other, non-preliminary-injunction contexts. See, e.g., Crawford Grp., Inc. v. Holekamp, No. 4:06-CV-1274 CAS, 2007 WL 844819, at *3 (E.D. Mo. Mar. 19, 2007) (enforcing an interim award for liability and damages, even though the parties had yet to arbitrate attorneys' fees and related expenses), aff'd, 543 F.3d 971 (8th Cir. 2008); Legion Ins. Co. v. VCW, Inc., 198 F.3d 718, 720 (8th Cir. 1999) (upholding confirmation of interim award where the arbitration panel had not yet decided additional, minor issues); Manion v. Nagin, 392 F.3d 294, 299-301 (8th Cir. 2004) (holding that the district court properly reviewed an interim award that “finally determined the substantive issues” on liability, even though the arbitrator postponed resolving the question of damages).

Here, the better answer is to follow the great weight of authority and find that the arbitrator's preliminary injunction is “final” in the sense the FAA requires for confirmation. If the policies underlying the final-judgment rule of 28 U.S.C. § 1291 are a fair comparison to the FAA's finality requirement, it stands to reason that federal courts would deem arbitration awards that are preliminary injunctions “final.” In the usual federal court case, an order granting or denying a preliminary injunction is immediately appealable notwithstanding its interlocutory character. 28 U.S.C. § 1292(a)(1); see El Paso Nat. Gas Co. v. Neztsosie, 526 U.S. 473, 482 (1999) (“Preliminary injunctions are, after all, appealable as of right[.]”). And preliminary injunctions have consequences that are final in important ways. They govern the parties' conduct through the case's duration (and unless dissolved at final judgment, then beyond the case's conclusion). If a district court had no authority to confirm an interim injunction, a party to arbitration could continue its enjoined activity during the matter's pendency with no immediate legal consequences. In noncompete cases in particular, enforcement may be crucial to protecting the interests of the injured party. These matters are often time-sensitive, as noncompete provisions ordinarily expire after a set term. Pac. Reinsurance Mgmt. Corp., 935 F.2d at 1023. To borrow from the Fourth Circuit, finding the arbitration award to be “final” and subject to confirmation here seems necessary to give it “teeth.” Arrowhead Global Sols., Inc., 166 Fed.Appx. at 44.

At the hearing on this motion, Mr. Guemple argued that this case is just like COKeM International, in which the court found an interim arbitration award non-final and not subject to confirmation. This is not persuasive because COKeM is distinguishable. There, the arbitrator issued an award regarding a standing issue and one defense, both applicable to one of ten claims and counterclaims asserted in the case. 2008 WL 4417323, at *1. The award's resolution of these two issues did not resolve the one claim to which they pertained. Id. at *3. And the arbitrator noted that many issues and claims remained to be resolved. Id. We don't have anything like that here. COKeM did not involve the award of a preliminary injunction. It is true that the award in COKeM and the award here may fairly be called “interim,” but the award here seems to have resolved every claim raised in the arbitration. If there is an issue the award did not decide, Mr. Guemple hasn't identified it. To be clear, COKeM's reasoning is quite persuasive, but the case addressed an award that is materially different from the award here.

(2) An arbitration award is “definite” if it “is sufficiently clear and specific to be enforced should it be confirmed by the district court and thus made judicially enforceable.” IDS Life Ins. Co. v. Royal All. Assocs., Inc., 266 F.3d 645, 650 (7th Cir. 2001); see Smart v. Int'l Bhd. of Elec. Workers, Loc. 702, 315 F.3d 721, 725 (7th Cir. 2002) (“The purpose of [§ 10(a)(4)] is merely to render unenforceable an arbitration award that is either incomplete in the sense that the arbitrators did not complete their assignment (though they thought they had) or so badly drafted that the party against whom the award runs doesn't know how to comply with it.”); see also Chase v. Cohen, 519 F.Supp.2d 267, 275-76 (D. Conn. 2007) (rejecting vagueness challenge to arbitration award that was an injunction).

Mr. Guemple's challenge to the award's definiteness is not persuasive.² It is true that the award itself did not identify organizations subject to the injunction's nonsolicitation and noncompetition requirements; it tasked United and Mr. Guemple with that responsibility. ECF No. 1-3 at 24. The award required United to provide Mr. Guemple with a “definitive list of Utah providers and customers subject to” the award. Id. United evidently complied with this aspect of the award and provided Mr. Guemple with this list. See ECF No. 25-1 at 41. If Mr. Guemple knew of “any other prospective provider or customers” not on United's list but who are subject to the restrictive covenants, then the award made clear that Mr. Guemple “must also refrain from soliciting these prospective providers or customers.” ECF No. 1-3 at 24. In another case, an arbitration award that leaves issues open to be resolved by the parties might raise concerns regarding the award's definiteness (or perhaps finality). Here, whatever uncertainty may have existed on the award's entry date regarding the prospective content of United's list, United subsequently provided the list and Mr. Guemple identifies no indefiniteness regarding the list's content. In this respect, the indefiniteness Mr. Guemple complains about seems hypothetical.³

2 If an award is indeterminate, the law is clear that a district court should not vacate but remand for clarification. See, e.g., Domino Grp., Inc. v. Charlie Parker Mem'l Found., 985 F.2d 417, 420 (8th Cir. 1993) (“An ambiguous award should be remanded to the arbitrators so that the court will know exactly what it is being asked to enforce.” (quoting Ams. Ins. Co. v. Seagull Compania Naviera, S.A., 774 F.2d 64, 67 (2d Cir. 1985))); U.S. Energy Corp. v. Nukem, Inc., 400 F.3d 822, 830-31 (10th Cir. 2005); Green v. Ameritech Corp., 200 F.3d 967, 977 (6th Cir. 2000); Am. Postal Workers Union, AFL-CIO v. U.S. Postal Serv., 254 F.Supp.2d 12, 16-17 (D.D.C. 2003). Mr. Guemple does not seek a remand for clarification.

3 Mr. Guemple complains that his inability to object to the United-created list's content deprived him of “process.” ECF No. 24 at 14-15. This process-related concern does not show indefiniteness.

Mr. Guemple also argues that the award is not definite because it is contradictory. Mr. Guemple claims the award's third and fourth paragraphs contradict each other. Paragraph 3 forbids Mr. Guemple from “[m]eeting or discussing with any external business, legislative, or regulatory leaders, or otherwise engaging in or performing work, regarding strategies, approaches, initiatives, solutions, or plans for the Utah market that Mr. Guemple learned at United.” ECF No. 18-3 at 25 (emphasis added). Paragraph 4 lists parallel permitted activities, including “[m]eeting with external business, legislative, regulatory, and other government officials regarding non-confidential and non-strategic issues.” Id. These provisions are not contradictory. The former addresses activities subject to the restrictive covenants; the latter does not.

(3) A party who seeks to show that an arbitrator “exceeded” or “imperfectly executed” his powers “bears a heavy burden.” 9 U.S.C. § 10(a)(4); Oxford Health Plans LLC v. Sutter, 569 U.S. 564, 569 (2013). “Courts have absolutely no authority to reconsider the merits of an arbitration award, even when the parties allege the award rests on factual errors or on a misinterpretation of the underlying contract.” McGrann v. First Albany Corp., 424 F.3d 743, 748 (8th Cir. 2005). “It is not enough for petitioners to show that the [arbitrator] committed an error-or even a serious error.” Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 671 (2010). To succeed, challengers must show that the arbitrator acted “outside the scope of his contractually delegated authority,” E. Associated Coal Corp. v. United Mine Workers of Am., Dist. 17, 531 U.S. 57, 62 (2000), by not “even arguably construing or applying the contract.” Beumer Corp. v. ProEnergy Servs., LLC, 899 F.3d 564, 565 (8th Cir. 2018). “It is only when an arbitrator strays from interpretation and application of the agreement and effectively dispenses his own brand of industrial justice that his decision may be unenforceable.” Stolt-Nielsen, 559 U.S. at 671 (cleaned up). “[T]he sole question . . . is whether the arbitrator (even arguably) interpreted the parties' contract, not whether he got its meaning right or wrong.” Oxford Health Plans LLC, 569 U.S. at 569; see Beumer Corp., 899 F.3d at 565 (8th Cir. 2018) (recognizing that the required showing applies to errors of law and of fact).

Here, the arbitrator's findings of fact, conclusions of law, and award reflect careful, conscientious consideration of the various restrictive covenants, the relevant facts, and the thoughtful formation of injunction terms. If there is some aspect of the arbitrator's decision that strayed from the contracts, Mr. Guemple does not identify it. His arguments are geared to show only that the arbitrator made legal and factual errors. As the cases make clear, these are not valid grounds on which to challenge an arbitration award. The analysis could end there.

If Mr. Guemple's arguments might conceivably justify not confirming (or vacating) the award, the arguments are not persuasive. Mr. Guemple argues that the injunction's scope exceeded the nonsolicitation agreement by preventing him from interviewing United “members.” See ECF No. 24 at 9. This argument misreads the award. As support for this argument, Mr. Guemple cites “Award at ¶ 4(e).” Id. Paragraph 4 of the award did not prohibit Mr. Guemple from doing anything; in the interest of avoiding doubt, the paragraph identifies activities Mr. Guemple “is not prohibited from” undertaking during his Regence employment. ECF No. 18-3 ¶ 4.

Mr. Guemple claims that the award ignored key features of the restrictive covenants, namely the lookback period and “confidential information” requirement of the noncompetition provision. ECF No. 24 at 11-12. The noncompetition provision precluded Mr. Guemple from engaging in competitive activity “with any Company activity, product, or services that [Guemple] engaged in, participated in, or had Confidential Information about during [Guemple's] last months of employment with the Company.” ECF No. 18-3 ¶ 22 (alterations in original) (footnote omitted). The award, Mr. Guemple claims, failed to interpret the contract because it lacked specificity. It is true that the award enjoined Mr. Guemple from “meeting or discussing with any external business, legislative, or regulatory leaders . . . regarding strategies, approaches, initiatives, solutions, or plans for the Utah market that Mr. Guemple learned at United,” without specifying that the forbidden discussions involved confidential information and without identifying the period when Mr. Guemple learned the information. Id. at 25. The arbitrator did find, however, that Mr. Guemple was engaged in United's Utah activity in even the shorter lookback period. Id. ¶ 14 (noting that Mr. Guemple “maintained significant responsibilities for, and confidential information about, the Utah market”); id. ¶ 15 (“[Mr. Guemple] maintained his responsibility over Utah and continued attending regional meetings that included confidential discussions about Utah, strategizing with local Utah leadership about the Utah market, and leading regularly scheduled Key Accounts meetings, which involved confidential discussions of all Mr. Guemple's markets, including Utah.”); id. ¶ 16 (“Mr. Guemple attended the two-day business planning presentations for 2024 which involved highly confidential discussions about the Utah market that he could use to Regence's advantage. The information is not stale and is competitively sensitive and could give Regence an advantage in competing against United in Utah.”). The award enjoins conduct related to a time in which Mr. Guemple had confidential information, meaning the arbitrator plainly interpreted the contract.

Mr. Guemple claims “[t]he Award expands the noncompete by prohibiting activities that Guemple never engaged in at United.” ECF No. 24 at 12. Specifically, Mr. Guemple argues that, because he worked for United only in “Key Accounts,” the noncompetition provision of the contract “could never be enforced beyond Key Accounts.” Id. Therefore, the argument goes, the Arbitrator exceeded his powers by enjoining Mr. Guemple from working at Regence in “sales, products, initiatives, business plans or customers.” Id. at 13; see ECF No. 18-3 at 25. That is not what the noncompetition provision says. It says that Mr. Guemple could not “engage in or participate in any activity that competes, directly or indirectly, with any Company activity, product, or services that [Guemple] engaged in, participated in, or had Confidential Information about during [Guemple's] last months of employment with the Company.” ECF No. 18-3 ¶ 22 (alterations in original) (footnote omitted). What matters is that the enjoined conduct competes with an activity that United engaged in, not that the enjoined conduct falls within the boundaries of Mr. Guemple's prior job description.

Along similar lines, Mr. Guemple argues that the arbitrator expanded the nonsolicitation provision's scope “by prohibiting contacts with brokers, who are neither customers nor providers of United.” ECF No. 24 at 13. Mr. Guemple is correct that the nonsolicitation provision does not mention “brokers.” ECF No. 8-1 § 8(c)(i)(A)-(B); ECF No. 8-2 § 8(c)(i)(A)-(B). But the nonsolicitation provision of the Award also does not mention brokers. ECF No. 18-3 at 24. Mr. Guemple is referring to paragraph 3(c) of the award, which is part of the noncompetition injunction, not the nonsolicitation provision. And the noncompetition contract prohibits Mr. Guemple from assisting “anyone” in anticompetitive activity-brokers presumably included. No. 8-1 § 8(d)(ii); ECF No. 8-2 § 8(d)(ii).

ORDER

Based on the foregoing, and on all the files, records, and proceedings herein, IT IS ORDERED THAT:

1. Plaintiff's Motion to Confirm Arbitration Award [ECF No. 15] is GRANTED; and

2. The Interim Arbitration Award of May 13, 2024 [attached as Exhibit A] is CONFIRMED.

LET JUDGMENT BE ENTERED ACCORDINGLY.

EXHIBIT A

FINDINGS OF FACT AND CONCLUSIONS OF LAW

In this arbitration, United HealthCare Services, Inc. (“UHC”) and UnitedHealth Group Incorporated (“UHG”) (collectively “United”) assert various claims against James Guemple (“Guemple” or “Respondent”) to enforce various restrictive covenants contained in eight Stock Agreements executed during Mr. Guemple's employment with UHC. This matter came before the undersigned Arbitrator Tod F. Schleier (the “Arbitrator”) on Claimants' Motion for Interim Measures under AAA Employment Rule 32 against Respondent. The claims are set for a Final Evidentiary Hearing beginning September 16, 2024.

On April 8, 2024, the Arbitrator held a virtual evidentiary hearing during which the parties presented argument and substantial documentary evidence, including references to multiple declarations from various witnesses. Following the hearing, the parties submitted proposed findings of fact and conclusions of law in accordance with the Arbitrator's Order.

After the evidentiary hearing, however, on Tuesday, April 23, 2024, pursuant to sections 5 and 6(g) of the Federal Trade Commission Act (“FTC Act”), the Federal Trade Commission (“Commission”) issued the Non-Compete Clause Rule (“the Final Rule”). See, https://www.ftc.gov/ news-events/news/press-releases/2024/04/ftc-announces-rule-banning-noncompetes. The Arbitrator requested the parties discuss their respective positions as to how or whether the Final Rule affects the non-competition, non-solicitation, and confidentiality provisions which are at issue in Claimants' Motion for Interim Measures under AAA Employment Rule 32. The parties submitted their responsive briefing addressing each other's proposed findings of fact and conclusions of law and the FTC's Noncompete Rule on May 3, 2024.

After consideration of the evidence and the parties' submissions, the Arbitrator issues Findings of Fact and Conclusions of Law, and an Interim Award Granting Temporary Injunctive relief, as set forth below.

FINDINGS OF FACT

A. Parties and Procedural History

1. Claimant UHG is a diversified health care company that offers both health care coverage and benefits, as well as information and technology-enabled health services, through a family of closely related affiliate companies. (See Feb. 21, 2024 Declaration of David Milich (“Milich Decl.”) ¶ 2.)

2. Claimant UHC (collectively with UHG, “United”) offers health care benefits for individuals, employers, and Medicare and Medicaid beneficiaries. (Milich Decl. ¶ 2.)

3. The health care coverage and benefits space is highly competitive and Regence BlueCross BlueShield of Utah (“Regence”) is a direct competitor of United. (Id.; see also, Apr. 2, 2024 Supplemental Declaration of David Milich (“Supp. Milich Decl.”) ¶ 8.) In Utah, United and Regence sometimes bid for the exact same contract and also compete for renewal contracts. (Apr. 2, 2024 Supplemental Declaration of Pamela Gold (“Supp. Gold Decl.”) ¶ 5.)

4. United invests significant time, effort, and expense in developing and protecting its confidential information, goodwill, and reputation, including by entering into restrictive covenants with employees who have access to confidential information, relationships, and other proprietary information. (Id.) (Milich Decl. ¶ 3.)

5. From November 2018 until January 5, 2024, James Guemple (“Guemple”) worked for UHC as Key Accounts Regional Vice President of Employer & Individual (“E&I”) in United's West Region, including the State of Utah. (See Mar. 25, 2024 Declaration of James Guemple (“Guemple Decl.”) ¶¶ 3, 16-17; Milich Decl. ¶¶ 4-5; Feb. 21, 2024; Declaration of Pamela Gold (“Gold Decl.”) ¶ 2; Feb. 21, 2024 Declaration of David Czajka (“Czajka Decl.”) Ex. 1, Job Description.) Mr. Guemple was second in command in United's West Region.

6. By the end of his employment, Mr. Guemple reported directly to United's Regional CEO for the West Region and was a highly compensated senior-level employee (making around $400,000). (Milich Decl. ¶ 4; Czajka Decl. Ex. 3.)

7. Shortly after resigning from UHC, Mr. Guemple began working for Regence as its Market President in Utah. (Guemple Decl. ¶¶ 3, 16-17.)

8. On January 30, 2024, United initiated this arbitration. (See Statement of Claims.) On February 23, 2024, United submitted its Injunction Motion under AAA Employment Rule 32, seeking to enjoin Mr. Guemple from: (1) soliciting United employees, customers, and providers in violation of his non-solicitation obligations to United; (2) engaging in job duties in his role with Regence that violate his non-competition agreement; and (3) using or disclosing United's confidential information. (See Injunction Motion at 1.)

B. Mr. Guemple's Employment at United

9. At United, Mr. Guemple provided oversight of sales and account management, strategy, and product initiatives for the Key Accounts Segments in Utah, which included employers with 100-3,000 members, as well as certain Utah-based employers with over 3,000 members, totaling approximately 205 Key Accounts. (Milich Decl. ¶ 5; see also, Guemple Decl. ¶ 6; Gold Decl. ¶ 2.)

10. Mr. Guemple was responsible for the annual business plan to meet the Key Accounts health plans' revenue, membership, and earnings objectives in Utah and for providing guidance and leadership to regional and market leaders in Utah regarding sales strategy and execution on national initiatives in West Region local markets. (Milich Decl. ¶ 5.) His role involved working directly with United's VP of Sales and Account Manager in Utah and strategizing regarding specific details of and plans for the Utah market. (Milich Decl. ¶ 5.) Mr. Guemple was responsible for providing support for product, sales, and customer retention, working on growth strategies, and knowing pricing strategy within Utah. (Id.)

11. According to Mr. Guemple, he was “responsible for driving West Region customer and earnings growth” and through “[partnering with the West Region Health Plans he help[ed] build and support West Region sales strategy and lead broker development and product initiatives.” (Feb. 20, 2024 Declaration of David Yerich (“Yerich Decl.”) Ex. 1.)

12. Mr. Guemple's work on and exposure to United's confidential and strategic business information was broad, covered multiple aspects of United's business, including health plan strategies and initiatives (both nationally and locally, including in Utah), product strategy and deployment, market growth, value propositioning, pricing and profitability, network and network discount strategies, customer and prospect strategies, distribution partner and broker bonus system strategies, and incentive compensation planning. (See Milich Decl. ¶ 6; see also, Gold Decl. ¶ 3.) Mr. Guemple led and attended meetings regarding United's confidential information, proprietary business strategies, and relationships with employees, providers, and customers. (Id.)

13. Mr. Guemple undertook various work responsibilities that involved significant contact with Utah, as acknowledged in his employment reviews. (Czajka Decl. Exs. 4-6; see also, Yerich Decl. Ex. 31.) For example, Mr. Guemple:

• Attended business planning presentations for 2024, involving highly confidential discussions about the Utah market. (Supp. Gold Decl. ¶ 9; Gold Decl. Ex. 16.)

• Worked with individuals in, attended numerous recurring meetings regarding, and led the Key Accounts meetings for the West Region that included issues related to the Utah market. (Milich Decl. ¶ 8, Ex. 1; Yerich Decl. Exs. 2-5; Gold Decl. ¶ 4, Exs. 1-4.)

• Conducted frequent meetings with sales and account management personnel in the West Region, including Utah, and participated in monthly customer renewal/block calls for the Utah market. (Milich Decl. ¶ 9; Gold Decl. ¶ 5, Ex. 5-6.)

• Participated in growth, business plan, base rate, and other pricing meetings for Utah involving forward looking information and strategies. (Gold Decl. ¶¶ 6-7, 14-15, Exs. 7-9, 15-16; Milich Decl. ¶¶ 9, 12, Ex. 2; see also Yerich Decl. Ex. 16-20.)

• Obtained and worked with numerous documents containing confidential information related to Utah, such as pipeline reports, prospect lists, sales update reports, trend performance reports, growth reports, confidential provider contracts with Utah customers, and Utah Market Assessments.

(Gold Decl. ¶ 9, 13, 16; see also, Yerich Decl. Ex. 11, 12, 2132, 35; Milich Decl. ¶ 11, Ex. 1; Feb. 23, 2024 Declaration of Elizabeth A. Patton (“Patton Decl.”) ¶ 2, Ex. A.)

• Worked with United's sales strategies, products, sales teams, brokers, compensation and bonus structures for sales teams and brokers, including those in Utah, pharmacy and pharmacy benefit strategies in Utah, United's strategies to grow its market share in Utah, United's product strategies in Utah, United's level-funded product in Utah, and United's strategy for captives in Utah. (Gold Decl. ¶ 8, 10-11, 16-20, Exs. 2-3, 7-8, 10-13, 17, 21; see also, Yerich Decl. Exs. 6-10, 13, 17, 22-29; Milich Decl. ¶ 10, 13.)

• Managed the sales pipeline for Utah, worked with the underwriting team regarding sales opportunities in Utah, and worked on specific customer opportunities in Utah. (Supp. Milich Decl. ¶ 5; Yerich Decl. Ex. 22.)

• Attended two days of meetings with United personnel and distributors in Utah in August 2022, and admits he “traveled to Utah a few times before then.” (Gold Decl. ¶ 12, Ex. 14; see also Yerich Decl. Exs. 14-15; Guemple Decl. ¶ 6.)

• Facilitated distribution partner training (including in-person Broker UHC Level Funding training in Utah), had relationships with brokers everywhere, and attended national broker meetings and advisory council meetings that brokers (including a key Utah broker) attended. (Czajka Decl. Exs. 4-5; Supp. Milich Decl. ¶ 4.)

• Had regular calls, meetings, and internal message chats with Pam Gold, VP of Sales and Account Management in Utah, Mike Fawson, Director of Sales in Utah, and others related to work in Utah and strategies for the Utah market. (See, e.g., Gold Decl. ¶ 20, Ex. 22; Supp. Milich Decl. ¶ 3; Supp. Gold Decl. ¶ 3; see also, Yerich Decl. Ex. 30.)

14. Effective February 6, 2023, Mr. Guemple was directed to focus his attention on Southern California, also part of UHG's West Region. Thereafter, during the balance of his employment at UHG, Mr. Guemple traveled to California no fewer than 15 times. Mr. Guemple maintains he did not travel to Utah for UHG business after August 2022. Although Mr. Guemple took on expanded responsibilities in California in 2023, he did not have less responsibility for the West Region, including Utah, and he maintained significant responsibilities for, and confidential information about, the Utah market. (Supp. Milich Decl. ¶ 3; Supp. Gold Decl. ¶ 3.)

15. Although Mr. Guemple had expanded duties in California during 2023, he maintained his responsibility over Utah and continued attending regional meetings that included confidential discussions about Utah, strategizing with local Utah leadership about the Utah market, and leading regularly scheduled Key Accounts meetings, which involved confidential discussions of all of Mr. Guemple's markets, including Utah. (Supp. Milich Decl. ¶ 3; Supp. Gold Decl. ¶ 3.)

16. Mr. Guemple attended the two-day business planning presentations for 2024 which involved highly confidential discussions about the Utah market that he could use to Regence's advantage. The information is not stale and is competitively sensitive and could give Regence an advantage in competing against United in Utah. (Supp. Gold Decl. ¶ 9.)

17. On January 16, 2024, Pamela Gold was alerted that Mr. Guemple was actively meeting with a least one provider of United's. (Gold Decl. ¶ 22).

C. Mr. Guemple's Restrictive Covenants

18. As a condition of his employment, Mr. Guemple agreed to United's Code of Conduct and Employee Handbook, by which he acknowledged he may be given access to United's confidential, proprietary, and/or trade secret information and agreed he would not use or disclose such information. (Czajka Decl. Ex. 9.)

19. During his employment, Mr. Guemple entered into eight stock agreements (collectively, “Agreements”): (1) 2/13/20 Nonqualified Stock Option Award; (2) 2/13/20 Restricted Stock Unit Award; (3) 2/22/21 Nonqualified Stock Option Award; (4) 2/22/21 Restricted Stock Unit Award; (5) 2/14/22 Nonqualified Stock Option Award; (6) 2/14/22 Restricted Stock Unit Award; (7) 2/23/23 Nonqualified Stock Option Award; and (8) 2/23/23 Restricted Stock Unit Award. (See Czajka Decl. Exs. 11-18.) Each Agreement contained restrictive covenants limiting Mr. Guemple's post-employment activities. (“Restrictive Covenants”). (Id.)

20. First, the Agreements contain confidentiality provisions in which Mr. Guemple agreed:

[Guemple] has or will be given access to and provided with sensitive, confidential, proprietary and/or trade secret information (collectively, “Confidential Information”) in the course of [Guemple's] employment. Examples of Confidential Information include inventions, new product or marketing plans, business strategies and plans, merger and acquisition targets, financial and pricing information, computer programs, source codes, models and data bases, analytical models,

customer lists and information, and supplier and vendor lists and other information which is not generally available to the public. [Guemple] shall not disclose or use Confidential Information, either during or after [Guemple's] employment with the Company, except (i) as necessary to perform [Guemple's] duties, (ii) as the Company may consent in writing, or (iii) as permitted . . . below.

(CzajkaDecl. Exs. 11-18, Agreements § 8(b).)¹

1 Because the section and subsection numbers sometimes differ between the Agreements, the undersigned Arbitrator generally cites to the 2023 Agreements.

21. Second, the Agreements contain non-solicitation provisions, providing that for two years following his employment termination, Mr. Guemple cannot:

(i) Solicit or conduct business with any business competitive with the Company from any person or entity: (A) who was a Company provider or customer within the 12 months before [Guemple's] employment termination and with whom [Guemple] had contact regarding the Company's activity, products or services, or for whom [Guemple] provided services or supervised employees who provided those services, or about whom [Guemple] learned Confidential Information during employment related to the Company's provision of products and services to such person or entity, or (B) was a prospective provider or customer the Company solicited within the 12 months before [Guemple's] employment termination and with whom [Guemple] had contact for the purposes of soliciting the person or entity to become a provider or customer of the Company, or supervised employees who had those contacts, or about whom [Guemple] learned Confidential Information during employment related to the Company's provision of products and services to such person or entity;

(ii) Raid, hire, employ, recruit or solicit any Company employee or consultant who possesses Confidential Information of the Company to leave the Company;

(iii) Induce or influence any Company employee, consultant, or provider who possesses Confidential Information of the Company to terminate his, her or its employment or other relationship with the Company; or

(iv) Assist anyone in any of the activities listed above.

(CzajkaDecl. Exs. 11-18 § 8(c).)

22. Third, the Agreements provide that for one year following his employment termination, Mr. Guemple cannot “engage in or participate in any activity that competes, directly or indirectly, with any Company activity, product, or services that [Guemple] engaged in, participated in, or had Confidential Information about during [Guemple's] last ² months of employment with the Company.” (Czajka Decl. Exs. 11-18, Agreements § 8(d).) This provision applies nationwide, but is self-limiting because it only restricts work that competes with Mr. Guemple's work at United (which was geographically focused on the West Region). (See Id. § 8(d)-(e).)

2 The lookback period is two years in some Agreements and three years in other Agreements. (See Czajka Decl. Exs. 11-18, Agreements § 4(c)/8(c)/8(d).)

D. Mr. Guemple's Role at Regence

23. On December 28, 2023, Mr. Guemple notified his manager, Dave Milich, that he was resigning to take a Market President position at Regence BlueCross BlueShield of Utah (“Regence”); his voluntary resignation was effective, January 5, 2024. (Czajka Decl. ¶ 3.)

24. Mr. Guemple took a job as “Market President” with Regence, a position that has “broad market leadership responsibility in Utah, including oversight of strategy and growth for the health plan and community involvement.” (Patton Decl. Ex. B.)

25. In his opposition to United's Motion, Mr. Guemple identified seven general categories of responsibilities in his role at Regence, including: (1) working through Regence's “robust executive onboarding process;” (2) working on legislative matters; (3) working on various regulatory matters; (4) meeting with various business leaders; (5) advancing local community engagement; (6) meeting with existing Regence clients; and (7) participating in Regence's community board. (See Guemple Decl. ¶¶ 20-26.)

26. Mr. Guemple's responsibilities also include interviewing candidates; attending market excellence team meetings regarding priorities and initiatives; attending meetings regarding month-end membership results in various business lines; attending meetings regarding integration of dental care into health programs; participating in payment integrity meetings aimed at saving money and reducing costs; attending advanced primary care meetings regarding the future of primary care in Utah; participating in the Cambia Health Foundation; attending forecasting meetings; and leading a leadership session regarding rewiring habits. (Id. ¶ 27.)

27. Mr. Guemple expects he will take on additional responsibilities related to Regence's budget and resource allocation in 2024. (Id. ¶ 28.) United has expressed concerns regarding some, but not all, of the duties that Mr. Guemple is engaging in at Regence. (See Supp. Milich Decl. ¶ 8; Supp. Gold Decl. ¶ 5.)

28. United concedes that Mr. Guemple is permitted to engage in duties that involve regulatory affairs and state legislative duties and the relationships developed there.

29. United acknowledges that Mr. Guemple did not take confidential information or documents with him when he left United's employment.

PRELIMINARY INJUNCTION LEGAL STANDARD

In determining whether to issue a preliminary injunction, an arbitrator (like a court) must balance four factors under Minnesota law³: “(1) the likelihood of the moving party's success on the merits; (2) the threat of irreparable harm to the moving party; (3) the state of balance between the alleged irreparable harm and the harm that granting the injunction would inflict on the other party; and (4) the public interest.” Select Comfort Corp. v. Tempur Sealy Int'l Inc., 988 F.Supp.2d 1047, 1052 (D. Minn. 2013) (citing Dataphase Sys., Inc. v. CL Sys., Inc., 640 F.2d 109, 113 (8th Cir. 1981)); see Taylor Corp. v. Four Seasons Greetings, LLC, 315 F.3d 1039, 1041 (8th Cir. 2003) (“This analysis requires a balancing of the four factors.”).

3 Most of the Agreements are governed by Minnesota law, with the exception of the 2020 Agreements, which are governed by Delaware law. (See Czajka Decl. Exs. 11-18, Agreements § 11(a).)

The AAA rules permit interim relief only in appropriate circumstances, see HealthPartners, Inc. v. Health Enhancement Sys., Inc., No. Civ.04-3908 RHK/AJB, 2004 WL 2823223, at *8 (D. Minn. Dec. 8, 2004), and the moving party bears a heavy burden to establish it is entitled to such relief. A preliminary injunction or a temporary restraining order is an “extraordinary equitable remedy.” Life Time Fitness, Inc. v. DeCelles, 854 F.Supp.2d 690, 694 (D. Minn. 2012). “The burden of establishing the propriety of [preliminary injunctive relief] is on the movant.” Medtronic, Inc. v. Ernst, 182 F.Supp.3d 925, 934 (D. Minn. 2016).

CONCLUSIONS OF LAW

As set forth below, the Arbitrator finds that the Restrictive Covenants are enforceable and that each factor weighs in favor of granting United's request for preliminary relief.

I. Enforceability Under Minnesota Law

30. Under Minnesota law, a restrictive covenant is enforceable if it is “reasonable and supported by adequate consideration.” Boston Sci. Corp. v. Duberg, 754 F.Supp.2d 1033, 1039 (D. Minn. 2010). To determine if a restrictive covenant is reasonable, courts consider: “(1) whether the restraint is necessary for the protection of the business or goodwill of the employer; (2) whether the restraint is greater than necessary to adequately protect the employer's legitimate interests; (3) how long the restriction lasts; and (4) the geographic scope of the restriction.” Id. After considering the parties' arguments, the undersigned Arbitrator concludes that Mr. Guemple's Restrictive Covenants are supported by consideration because Guemple received a monetary award, right to exercise stock options, and confidential information, and they are reasonable and enforceable.

II. Scope of the Restrictive Covenants

31. The Restrictive Covenants are reasonable in scope because: (1) the non-solicitation provision only restricts Mr. Guemple from (a) soliciting United actual or prospective customers and providers who Mr. Guemple engaged with (directly or indirectly) or had confidential information about in the last twelve months of his employment with United, and (b) soliciting United employees who possess confidential information (Czajka Decl. Exs. 11-18, Agreements § 8(c)); and (2) the non-competition provision only restricts Mr. Guemple from engaging in activities that compete with those activities Mr. Guemple engaged in or had confidential information about during the last 24 or 36 months of his employment (Id. § 8(d)). Unlike in some of the cases that Mr. Guemple cites, these provisions do not prevent him from working in the healthcare or insurance industries altogether and rather are focused on the work he did at United, which is reasonable.

32. Mr. Guemple heavily relies on United Healthcare Servs., Inc. v. Louro, No. 202696 (JRT/ECW). 2021 WL 533690 (D. Minn. Feb. 12, 2021) in which a federal court in Minnesota was asked by United to enforce a non-compete identical to the one here against its former “Vice President in the National Accounts segment” who was subject to the same stock agreements as Mr. Guemple. Id. at *1. The court did not grant a preliminary injunction to United. The Arbitrator finds Louro distinguishable because Louro's work at his new employer was “in a different role and in a different business segment” and could be accomplished without resort to confidential information related to his former position. Tellingly, within the first few weeks of Mr. Guemple's employment with Regence, on January 16, 2024, Pamela Gold was alerted that Mr. Guemple was actively meeting with at least one provider of United's. (Gold Decl. ¶ 22).

33. The Restrictive Covenants in Mr. Guemple's Agreements are reasonable in geographic scope because, although the Restrictive Covenants apply on a nationwide basis, they are limited to activities that compete with those activities Mr. Guemple engaged in or had confidential information about while at United.⁴ (Id. § 8(d)-(e).) Because Mr. Guemple's role at United was limited to the West Region, this limits the scope of his restricted post-employment activities to the West Region, which is reasonable under Minnesota law. See, e.g., Vital Images, Inc. v. Martel, CIV. No. 07-4195 DWF/AJB, 2007 WL 3095378 (D. Minn. Oct. 19, 2007) (modifying scope of non-compete to states employee operated in); Roth v. Gamble-Skogmo, Inc., 532 F.Supp. 1029, 1032 (D. Minn. 1982) (allowing voluntary limitation on restrictive covenant when evaluating reasonableness); Satellite Indus., Inc. v. Keeling, 396 N.W.2d 635, 640 (Minn.Ct.App. 1986) (holding non-compete agreements can be modified to area where employee performed duties); Davies & Davies Agency, Inc. v. Davies, 298 N.W.2d 127, 131 (Minn. 1980) (affirming lessening of restrictive covenant's geographic scope).

4 A nationwide geographic reach would likely be reasonable given United's nationwide business. See Riddle v. Geckobyte.com, Inc., Civ. No. 17-623 (PAM/LIB), 2018 WL 3104107, at *2 (D. Minn. June 22, 2018). However, given Mr. Guemple's activities at United were limited to the West Region and United is seeking an injunction only related to Utah (which falls within the West Region), the undersigned Arbitrator need not determine if a nationwide scope is reasonable.

III. Duration of the Restrictive Covenants

34. Under the Agreements, absent tolling, the non-solicitation provision remains in place for two years and the non-competition provision remains in place for one year following Mr. Guemple's separation from United. (Czajka Decl. Exs. 11-18, Agreements § 8(c)-(d).) Under Minnesota law, the undersigned Arbitrator finds that these durations are reasonable. See, e.g., Overholt Crop Ins. Serv. Co., Inc. v. Bredeson, 437 N.W.2d 698, 703-04 (Minn.Ct.App. 1989) (finding two-year scope on restrictive covenant reasonable); see also CPI Card Grp., Inc. v. Dwyer, 294 F.Supp.3d 791, 815 (D. Minn. 2018) (same).

IV. United's Legitimate Business Interests

35. “There are two types of legitimate interests of an employer that a restrictive covenant may properly protect. The first interest is trade secrets or confidential information, and the second interest is the employer's goodwill.” Roth, 532 F.Supp. at 1031. The undersigned Arbitrator agrees with United that the Agreements are reasonably tailored to protect its legitimate business interests.

36. First, the Restrictive Covenants adequately define competitive activity because they are limited to activities that Mr. Guemple actually engaged in or had confidential information about while at United. (See Czajka Decl. Exs. 11-18, Agreements § 8(b)-(d).) The fact that common terms are not defined in the Agreements is irrelevant because their plain and ordinary meanings apply under basic rules of contract interpretation. See Sleep Number. Corp. 33 F. 4th at 1016; see also, Brookfield Trade Ctr. v. City of Ramsey, 584 N.W.2d 390, 394 (Minn. 1998) (“In interpreting a contract, the language is to be given its plain and ordinary meaning.”). Further, Mr. Guemple and United know which activities he engaged in or had confidential information about. Accordingly, this provision is not overbroad or unreasonably defined.

37. Second, United has presented considerable evidence showing the information to which Mr. Guemple had access to is confidential. Under Minnesota law, information is protectible as confidential if it: (1) is not “generally known or readily ascertainable,” (2) provides a “demonstrable competitive advantage,” (3) was “gained at expense to the employer,” and (4) is “such that the employer intended to keep it confidential.” Minn. Min. & Mfg. Co. v. Kirkevold, 87 F.R.D. 324, 334 (D. Minn. 1980) (quoting Cherne Indus., Inc. v. Grounds & Assocs., Inc., 278 N.W.2d 81, 90 (Minn. 1979)). The information Mr. Guemple had access to (described in detail above) meets this test. (See Supp. Milich Decl. ¶ 9; Supp. Gold Decl. ¶ 8.) The information was not generally known or readily ascertainable but maintained internally at United, at United's expense, and with the intent that such information stay confidential because it would provide a competitive advantage to others, including Regence. (See Supp. Milich Decl. ¶¶ 8-9; Supp. Gold Decl. ¶¶ 5-6, 8.)

38. United employees, including Mr. Guemple, are subject to strict confidentiality policies and agreements to ensure United's confidential information is not used for the benefit of others. (Id.) Indeed, Mr. Guemple admits he had “full access to UHG's confidential information.” (Opp'n at 9.)

39. The Arbitrator finds that whether United's internal documents were originally marked confidential is not dispositive. See, e.g., Breton S.p.A. v. Cambria Co., CIV. 05-2631 JRTFLN, 2006 WL 314497, at *3 (D. Minn. Feb. 9, 2006) (“Under Minnesota law, Breton does not need to label the Know-How Manual as confidential if Cambria knows or has reason to know that Breton intends or expects the secrecy.”).

40. Further, the undersigned Arbitrator disagrees that the information to which Mr. Guemple had access is “stale.” For example, he attended meetings where confidential information about Utah was discussed immediately prior to accepting employment with Regence. (See Milich Decl. ¶¶ 10, 13; see also, Gold Decl. ¶ 4, Ex. 4, ¶ 17, Exs. 17-20; Yerich Decl. ¶ 8, Ex. 6, ¶ 26, Ex. 24.) Furthermore, Mr. Guemple admits he attended a two-day business planning meeting for 2024, which included United's business plan for the Utah market. (See Supp. Gold Decl. ¶ 9; see also, Guemple Decl. ¶ 46.)

41. Mr. Guemple argues that he does not remember any of United's confidential or competitively sensitive information. Based upon the extensive record submitted by United, the Arbitrator does not find that contention credible. Additionally, the fact that Mr. Guemple claims he has not disclosed any of UHC's confidential information does not eliminate its clear interest in protecting that information through enforcement of the Restrictive Covenants at issue. See, United HealthCare Servs., Inc. v. Corzine, No. 2:21-CV-319, 2021 WL 961217 (S.D. Ohio Mar. 15, 2021).

42. Case law has stated ''....when leaving one company for another, an employee is not required to have a partial lobotomy to remove all information relevant to his former position.” Winner Logistics, Inc. v. Labor & Logistics, Inc., 2011 WL 10524983 (Pa.Com.Pl. 2011) (unpublished decision). However, the Arbitrator finds that Mr. Guemple's knowledge and involvement in managing United's operations in Utah and developing and participating in developing strategies to improve the quality of its services in Utah, would necessarily inform and provide an unfair advantage to Regence. See, Wachovia Ins. Serves., Inc. v. Hinds, No. CIV WDQ-07-2114, 2007 WL 6624661, at *3-4 (D. Md. Aug. 20, 2007) (finding that employee's work in aiding her new employer's bid in response to an RFP for consulting work demonstrated a probability of irreparable harm where the employee had access and knowledge of confidential pricing information that could irreparably harm her former employer in the RFP process) (granting preliminary injunction).

43. United has presented considerable evidence of its goodwill in the area it seeks to enforce the Restrictive Covenants (Utah) and in its Utah relationships (customers, providers, and brokers). Mr. Guemple's assertions that he had little to no contact with Utah and has no relationships there are belied by credible documentary evidence submitted by United showing Guemple's work in and connections to Utah on behalf of United.

44. Mr. Guemple attempts to minimize his involvement with Utah during his time at United. For example, he states that he “did not meet with customers on behalf of UHG,” that he was not involved in “contract negotiations or meetings with providers,” and that he “had no employees who reported to him in Utah.” (Guemple Submission ¶¶ 7-8.) Even though Mr. Guemple did not directly sell to customers in Utah, he closely supported Utah employees Pamela Gold and Mike Fawson, who did directly sell in Utah. (See, e.g., Gold Decl. ¶ 20, Ex. 22; Supp. Milich Decl. ¶ 3; Supp. Gold Decl. ¶ 3; see also, Yerich Decl. Exs. 30, 31.) Further, Mr. Guemple managed the sales pipeline for Utah and he specifically handled Key Accounts “growth” and “sales execution.” (Supp. Milich Decl. ¶ 5; Milich Decl. ¶ 8, Ex. 1; Yerich Decl. Ex. 4.) As such, Mr. Guemple had access to and knowledge of United's pipeline, prospects, sales updates, new business sales, new business opportunities, renewals, pricing information, and confidential provider contracts in Utah, which would allow him to benefit Regence at United's expense. (Gold Decl. ¶¶ 9, 10, 13, 16, 21; Supp. Gold Decl. ¶ 7.) Therefore, customer goodwill is very much at stake.

45. Lastly, Mr. Guemple expressly acknowledged the Restrictive Covenants are “reasonable and necessary to protect the legitimate interests of [United].” (See Czajka Decl. Exs. 11-18, Agreements § 8(i).) For these reasons, the undersigned Arbitrator agrees with other courts that have enforced similar provisions for other United employees. See United HealthCare Servs., Inc. v. Corzine, Case No. 2:21-cv-319, 2021 WL 961217, at *11-15 (S.D. Ohio Mar. 15, 2021); Hamdorf v. United Healthcare Servs., ¶¶ 6, 43, 109 (Patton Decl. Exs. N-O) (enforcing same provisions).

46. Based upon the record submitted by the parties, the Arbitrator agrees with the court's reasoning in Corzine, supra and finds it persuasive. Corzine involved Restrictive Covenants similar to those involved in this matter. In that case, the former employee worked as the Chief Operating Officer and later in a strategic marketing role for UHC's Ohio Medicaid contract procurement process, which was highly competitive. The court issued a preliminary injunction which enjoined Corzine from working for his new employer with respect to any role related to its Ohio Medicaid business. The Arbitrator agrees with the court's finding that United had a legitimate interest in enforcing the Restrictive Covenants to preclude Corzine from assisting United's competitor in soliciting Ohio's Medicaid business. See, Corzine, 2021 WL 961217.

V. Likelihood of Success on the Merits

47. Under Minnesota law, to establish it is likely to succeed on the merits, United must establish that it has a “fair chance of prevailing” on its claim. See In re Planned Parenthood Minn., N.D., S.D. v. Rounds, 530 F.3d 724, 732 (8th Cir. 2008); see also Sleep Number Corp. v. Young, 532 F.Supp.3d 793, 798 (D. Minn. 2021) (“To show [] a ‘fair chance of prevailing,' [the moving party] need not show that it is more likely than not to prevail on the merits.”) aff'd, 33 F.4th 1012 (8th Cir. 2022). A “fair chance” is “less than a preponderance of the evidence (i.e., greater than fifty percent chance of success), but more than an outside chance of success.” Let Them Play MN v. Walz, No. 20-2505 (JRT/HB), 2020 WL 7425278, at *4 (D. Minn. Dec. 18, 2020); see also, Heartland Acad. Cmty. Church v. Waddle, 335 F.3d 684, 690 (8th Cir. 2003) (“Heartland is not required to prove a mathematical (greater than fifty percent) probability of success on the merits.”).

VI. Non-Competition Provision

48. The Agreements provide that, for one year following employment termination, “[Guemple] shall not.. . engage in or participate in any activity that competes ... with any [United] activity, product, or service that [Guemple] engaged in, participated in, or had Confidential information about during [Guemple's] last months of employment with [United].” (See Czajka Decl. Exs. 11-18, Agreements § 8(d)(i).) The undersigned Arbitrator concludes that United has shown a “fair chance” of prevailing on its claim forbreach of his non-competition provision.

49. First, United has made a sufficient showing that Mr. Guemple had access to confidential information regarding United's business in the Utah market. In light of his position as a high-level and highly compensated employee, that information is significant. See, e.g., Lapidus v. Lurie LLP, No. A17-1656, 2018 WL 3014698, at *1 (Minn.Ct.App. June 18, 2018) (“Here, Lapidus's former position as administrative partner and as a member of the executive committee, combined with his decades-long tenure as a partner, demonstrate that he had access to, and direct knowledge of, the sort of confidential information Lurie has a legitimate business interest in protecting. The record supports the district court's finding that all three noncompete provisions served Lurie's legitimate interest in protecting its confidential information.”).

50. Second, United has presented credible and contemporaneous evidence that Mr. Guemple is engaging in activities that competes with the activities he engaged in, participated in, or had confidential information about at United, including the following:

• At United, Mr. Guemple worked with and had confidential information about customers and brokers. (See Supp. Milich Decl. ¶ 8; Supp. Gold Decl. ¶¶ 5-6.) At Regence, he participates in meetings with external business leaders and clients. (Guemple Decl. ¶¶ 23, 25.) These activities are competitive.

• At United, Mr. Guemple worked with and had confidential information about United's costs, pricing, and margins. (See Milich Decl. ¶¶ 9, 11; Gold Decl. ¶¶ 6-7; Supp. Milich Decl. ¶ 8; Supp. Gold Decl. ¶¶ 5-6.) At Regence, Mr. Guemple's role involves establishing relationships with business, legislative, and regulatory leaders in Utah to improve healthcare costs and delivery. (Guemple Decl. ¶¶ 21-22.) These activities are competitive.

• At United, Mr. Guemple was involved in business planning. (Supp. Gold Decl. ¶ 9; Gold Decl. Ex. 16.) At Regence, Mr. Guemple is involved in internal meetings on various topics covering business planning. (Guemple Decl. ¶ 27.) These activities are competitive.

• At United, Mr. Guemple worked on market excellence, payment integrity, cost reduction, and integration of dental care. (See Supp. Gold Decl. ¶ 6.) At Regence, he works on those same areas. (Guemple Decl. ¶ 27.) These activities are competitive.

51. Accordingly, United has shown a “fair chance” of prevailing on its claim that, by virtue of his employment with Regence, Mr. Guemple is in breach of his non-competition agreement.

VII. Non-Solicitation Provision

52. The Agreements' non-solicitation provision provides, in part, that for two years following employment termination, Mr. Guemple cannot: (1) solicit business from a recent or current customer or provider, or prospective customer or provider, of United, (2) recruit or solicit a United employee or consultant who possesses confidential information, or (3) induce or influence a United employee, consultant, or provider who possesses confidential information to terminate their relationship with United. (See Czajka Decl. Exs. 11-18, Agreements § 8(c).)

53. At the preliminary injunction stage, United need not prove an actual breach, and an injunction is warranted even if Mr. Guemple denies engaging in the conduct at issue. See St. Jude Med. S.C., Inc. v. Saxon, CIV. 13-2332 JRT/JJK, 2013 WL 6481440, at *5-6 (D. Minn. Dec. 10, 2013) (granting preliminary injunction despite defendant's denial of any violation); Universal Hosp. Servs., Inc. v. Hennessy, CIV. 01-2072(PAM/JGL), 2002 WL 724242, at *4-5 (D. Minn. Apr. 19, 2002) (same). Here, United has pointed to at least one instance when Mr. Guemple met with a United provider within weeks of being employed at Regence. (See Gold Decl. ¶ 22.) Further, Mr. Guemple admits his work at Regence involves developing relationships with external business leaders and meeting with Regence's clients. (Guemple Decl. ¶¶ 23, 25.) He also admits that, in his current position, he is interviewing candidates for open positions. (Id. ¶ 27.) As noted above, Utah and Regence compete for business in Utah, so all of this conduct risks soliciting United's customers, business partners, and employees in Utah.

54. As a result, United has shown a “fair chance” of prevailing on its claim that Mr. Guemple has breached or is in threat of breaching in the future his non-solicitation agreement.

VIII. Tolling

55. Mr. Guemple's non-solicit restrictions expire two years after his employment termination, or January 5, 2026, and his non-compete restrictions expire one year after termination, or January 5, 2025. (See Czajka Decl. Exs. 11-18, Agreements § 8(c)-(d).) However, the Agreements provide: “the time periods for the restrictions set forth in [the Restrictive Covenants] shall be tolled as permitted by applicable law,” up to a period of two years. (See id. § 7(c) (emphasis added).) Under Minnesota law, a court must apply a contractual tolling provision when a defendant is in violation of the applicable restrictive covenants. See Medtronic, Inc. v. Petitti, No. A18-0010, 2018 WL 3520858, at *7 (Minn.Ct.App. July 23, 2018) (“Here, the district court solely found that individual appellants remained in violation of Section 4.1. The tolling provision explicitly applies to continuous breaches of Section 4.1. Therefore, the district court must apply the provision.”); see also Medtronic, Inc. v. Doerr, A14-1283, 2015 WL 506768, at *6 (Minn.Ct.App. Feb. 9, 2015).

56. Because the undersigned Arbitrator finds that United has shown more than a “fair chance” that Mr. Guemple's employment with Regence breaches the non-competition provision, United is entitled to tolling. Specifically, the Arbitrator will add the number of days between January 8, 2024 (the date Mr. Guemple commenced employment with Regence) and the date of this Order to the duration of the Agreement's non-competition provision. As to the non-solicitation provision, there is credible evidence Mr. Guemple breached his non-solicitation obligation on at least one occasion. At this time, the Arbitrator will toll Mr. Guemple's non-solicitation obligation for one day, but reserves the right to implement additional tolling if discovery supports it at a final hearing.

IX. Irreparable Harm

57. Irreparable harm is established if the “harm is certain and ... of such imminence that there is a clear and present need for equitable relief.” Iowa Utils. Bd. v. F.C.C., 109 F.3d 418, 425 (8th Cir. 1996). “Irreparable injury can be ‘actual or threatened.'” St. Jude Med. Ctr., Inc. v. Carter, 913 N.W.2d 678, 684 (Minn. 2018). Irreparable harm is present when no adequate remedy at law exists, “typically because its injuries cannot be fully compensated through an award of damages.” Gen. Motors Corp. v. Harry Brown's LLC, 563 F.3d 312, 319 (8th Cir. 2009). The undersigned Arbitrator finds that United will suffer irreparable harm absent injunctive relief.

58. United acted expeditiously after it learned on or about December 28, 2023 that Mr. Guemple had accepted competing employment with Regence in Utah. United initiated this arbitration on January 30, 2024 and filed its injunction motion on February 23, 2024. Between those periods, the parties exchanged voluminous communications attempting to resolve their dispute, which were ultimately unsuccessful. (See Patton Decl. Ex. L.)

59. The Arbitrator rejects Mr. Guemple's argument that United is required to show actual harm. The law is clear that “the alleged harm need not be occurring or be certain to occur before a court may grant relief.” Richland/Wilkin Joint Powers Auth. v. U.S. Army Corps of Eng'rs, 826 F.3d 1030, 1037 (8th Cir. 2016). Indeed, Mr. Guemple's cited case confirms that “threatened” injury is sufficient. Carter, 913 N.W.2d at 684.

60. United has demonstrated a “fair chance” that Mr. Guemple has violated his Restrictive Covenants. This alone supports a finding of irreparable harm. See QBE Americas, Inc. v. McDermott, No. 14-5020, 2015 WL 138082, at *6 (D. Minn. Jan. 9, 2015) (“[I]rreparable harm is presumed when an employee violates a valid restrictive covenant.”); Medtronic, Inc. v. Camp, Civ. No. 02-285 (PAM/JGL), 2002 WL 207116, at *2 (D. Minn. Feb. 6, 2002) (“[W]hen a former employee violates a valid covenant not to compete, the Court may infer irreparable harm on the employer.”). Although some Minnesota courts have retreated from blanket presumptions, even the cases Mr. Guemple cites presume irreparable harm “where customer good will is at stake, when an employee takes business secrets with an intent to benefit from its secrets, or when a risk exists that the secrets will be disclosed in the subsequent employment and result in irreparable harm.” Carter, 913 N.W.2d at 685. United has presented evidence that each of those circumstances exists here.

61. Mr. Guemple also signed an acknowledgment of irreparable harm. (See Czajka Decl. Exs. 11-18, Agreements § 11(e).) Although not conclusive, such acknowledgements are still evidence of irreparable harm. See, e.g., Midwest Sign & Screen Printing Supply Co. v. Dalpe, 386 F.Supp.3d 1037, 1055 (D. Minn. 2019) (“Courts may consider such stipulations as evidence of irreparable harm.”). Again, even Mr. Guemple's cited case agrees that a court may “consider contractual provisions” like this. See Carter, 913 N.W.2d at 678.

62. The Arbitrator finds Mr. Guemple's work at Regence is not fully compensable by money damages because United is facing loss of goodwill. See, e.g., United Healthcare Ins. Co. v. AdvancePCS, 316 F.3d 737, 741 (8th Cir. 2002) (“Loss of intangible assets such as reputation and goodwill can constitute irreparable injury.”); Med. Shoppe Int'l, Inc. v. S.B.S. Pill Dr., Inc., 336 F.3d 801, 805 (8th Cir. 2003) (“Harm to reputation and goodwill is difficult, if not impossible, to quantify in terms of dollars.”); Zerorez Franchising Sys., Inc. v. Distinctive Cleaning, Inc., 103 F.Supp.3d 1032, 1047-48 (D. Minn. 2015) (“Reputational harm and damage to goodwill are difficult to quantify and monetary damages are generally inadequate to compensate such injuries.”).

63. The undersigned Arbitrator is persuaded by the findings in Medtronic v. Sherland, A18-0579, 2018 WL 6729773 (Minn.Ct.App. Dec. 24, 2018). In that case, the court found an inference of irreparable harm because the employee “had access to and significant knowledge about sales and marketing strategies used by Medtronic to train their sales force,” which would allow him and his new employer to use that knowledge “to compete unfairly with Medtronic” and would result in a “risk that. . . secrets will be disclosed in the subsequent employment.” Id. at *8 (emphasis added). Here, that same risk exists and certainty of disclosure is not required.

64. Accordingly, United is likely to be irreparably harmed absent an injunction.

X. Balance of Harms

65. In assessing the balance of harms, courts weigh “the threat to each of the parties' rights and economic interests that would result from either granting or denying the preliminary injunction.” See CPI Card Grp., 294 F.Supp.3d at 819. The undersigned Arbitrator finds the balance of harm favors United. United does not seek to enjoin Mr. Guemple from working for Regence entirely. Mr. Guemple is still free to work in any capacity (at Regence or otherwise) that does not breach his contractual obligations. Further, any harm Mr. Guemple may suffer by the injunction is self-inflicted as he went to work for Regence, a competitor of United's in Utah, when he knew, or should have known, about the Restrictive Covenants he had previously and repeatedly executed in multiple stock agreements. Finally, the potential for harm to United if the injunction is not granted is considerable based on the threat of Mr. Guemple using or disclosing United's confidential information to unfairly compete.

XI. Public Interest

66. Public interest is best served by “the enforcement of valid business agreements and the protection of legitimate business interests in an industry propelled by vigorous but fair competition.” Bos. Sci. Corp. v. Duberg, 754 F.Supp.2d, 1033, 1042 (D. Minn. 2010) (quotations omitted). Mr. Guemple is correct that the Minnesota legislature recently passed a law making noncompete obligations unenforceable under Minnesota law, but it only applies proactively, not retroactively. See S.F. No. 3035, Art. 6 at “Effective Date.” The undersigned Arbitrator agrees with United's position because Mr. Guemple agreed to the Restrictive Covenants under his own free will and in exchange for stock. He was a Vice President level employee who was significantly compensated, and there is no evidence that he did not understand his contractual obligations. Accordingly, the public interest weighs in United's favor.

67. The Arbitrator finds the Non-Compete Clause Rule (“Final Rule”) issued by the Commission on April 23, 2024, which bans nearly all non-compete agreement following the effective date of the Rule, does not apply to the claims in this Arbitration because there is an exception in the Final Rule for existing causes of action. Specifically, the Final Rule provides that “[t]he requirements of. . . part 910 do not apply where a cause of action related to a non-compete clause accrued prior to the effective date,” which is “120 days after date of publication of the final rule.” 16 C.F.R. §§ 910.3(b); 910.6. This includes, for example, where an employer alleges that a worker accepted employment in breach of a noncompete if the alleged breach occurred prior to the effective date. Id., Part V.B. This provision responds to concerns that the Final Rule would apply retroactively by extinguishing or impairing vested rights acquired under existing law prior to the effective date. Id. Here, Mr. Guemple breached the non-competition agreement by commencing work for Regence beginning on January 8, 2024. Accordingly, the cause of action in this matter accrued at least as early as January 8, 2024, well before the effective date of the Final Rule, and the Final Rule undisputedly does not apply in this case. In fact, the Final Rule demonstrates the FTC's acknowledgment that enforcement in the context present here is not against public policy. XII. Conclusion

68. On this record, the Arbitrator concludes the balance of relevant factors weighs strongly in favor of granting temporary injunctive relief, as set forth below.

INJUNCTION AWARD

Based upon the above, IT IS HEREBY ORDERED:

1. Respondent James Guemple is immediately enjoined from disclosing or using any of United's confidential, proprietary, and/or trade secret information, including but not limited to the following: sales and account management information; health plan strategies and initiatives; customer, prospect, provider, broker, and member specific information and strategies; sales and pipelines information and strategies; other strategies, initiatives, business plans, approaches, solutions, and plans for individual markets; financial, cost, margin, pricing, and profitability information; product strategy and deployment; revenue, membership, and earnings objectives; growth strategies, customer retention, and value propositioning; network and network discount strategies; distribution partner/broker bonus system strategies; incentive compensation planning; and any other confidential information as defined in the Agreements (“Confidential Information”).

2. Respondent James Guemple is immediately enjoined, for the duration of two years from January 5, 2024, plus one day per the Agreements' tolling provision, from the following:

a. Raiding, hiring, employing, or recruiting or soliciting for employment (whether for employment now or in the future) with Regence any of United's employees or consultants who had access to United's Confidential Information;

b. Inducing or influencing any employee, consultant, or provider of United who possesses United's Confidential Information to terminate their relationship with United;

c. Soliciting or conducting business on behalf of Regence from:

i. Any person or entity who was a United provider, customer, prospective provider, or prospective customer within 12 months before Mr. Guemple's employment with United ended on January 5, 2024, and:

a) Mr. Guemple had contact with them regarding United's activities, products, or services or provided services to them,

b) Mr. Guemple supervised employees who provided services to them (for current providers or customers) or who had soliciting contact with them (for prospective providers or customers), or c) Mr. Guemple learned Confidential Information about them relating to United's provision of products and services to them.

d. Assisting anyone else in any of the activities listed above.

e. As it pertains to Utah specifically, within five (5) days of entry of this Order, United will provide Mr. Guemple and his outside counsel a list of: (1) United's hospital system and large clinic providers in Utah that fall within paragraph 2.c.i of this Injunction Award; and (2) United's Key Accounts customers in Utah that fall within paragraph 2.c.i of this Injunction Award, which will constitute a definitive list of Utah providers and customers subject to this Order. To the extent Mr. Guemple has knowledge of any other prospective provider or customers, he must also refrain from soliciting those prospective providers or customers.

3. Respondent James Guemple is immediately enjoined, for the duration of one year from January 5, 2024, plus the number of days in which Mr. Guemple has been in breach of the Restrictive Covenants per the Agreements' tolling provisions (calculated as January 8, 2024 through the date of this Award), from violating his non-competition obligations to Claimant. Mr. Guemple is specifically enjoined from doing the following on behalf of Regence:

a. Meeting or discussing with internal Regence business leaders, or otherwise engaging in or performing work, regarding Regence's strategies, sales, pipelines, products or potential products, initiatives, business plans, customers, or brokers for the Utah market.

b. Meeting or discussing with any external business, legislative, or regulatory leaders, or otherwise engaging in or performing work, regarding strategies, approaches, initiatives, solutions, or plans for the Utah market that Mr. Guemple learned at United.

c. Soliciting or strategizing opportunities with customers, prospects, providers, brokers, or members of Regence in the Utah market.

d. Meeting or discussing with internal or external individuals, or otherwise engaging in or performing work, regarding healthcare cost reduction, money savings, overall cost reduction strategies, pricing, margins, or profitability in the Utah market.

e. Meeting or discussing with internal or external individuals, or otherwise engaging in or performing work, regarding market excellence, payment integrity, or integration of dental care in the Utah market.

4. For the avoidance of doubt, Respondent James Guemple is not prohibited from being employed with Regence in a non-competitive position or from working in a noncompetitive position for another company as long as he complies with the terms of this Injunctive Award and the Agreements. Mr. Guemple is further not prohibited from participating in following non-competitive activities:

a. Meeting with Regence business leaders regarding non-confidential and non-strategic issues related to operating a health plan in Utah.

b. Meeting with external business, legislative, regulatory, and other government officials regarding non-confidential and non-strategic issues.

c. Working on or developing relationships for regulatory affairs and legislative issues that do not involve United Confidential Information.

d. Engaging in internal and external public relations, community engagement, and marketing activities that involve non-confidential and non-strategic issues.

e. Interviewing candidates for positions with Regence that are not United employees, customers, prospects, providers, brokers, or members.

5. This Award shall remain in effect until otherwise ordered by the Arbitrator at a final hearing in this arbitration.