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Optum, Inc. v. Smith

United States District Court, D. Massachusetts

February 11, 2019

OPTUM, INC. and OPTUM SERVICES, INC., Plaintiffs,
v.
DAVID WILLIAM SMITH, Defendant.

          MEMORANDUM AND ORDER

          WOLF, D.J.

         After hearings on January 30 and 31, 2019, for the reasons explained in a February 5, 2019 Memorandum and Order (Docket No. 48), the court found that it had the authority before compelling arbitration to decide plaintiffs' Optum, Inc. and Optum Services, Inc.'s ("Optum") motion for a temporary restraining order ("TRO"). If granted, the TRO would prohibit Optum's former employee, defendant David Smith, from working for up to 28 days, see Fed.R.Civ.P. 65(b)(2), at a recently established company known as "ABC," to protect Optum's trade secrets until an arbitrator could be selected and assume responsibility for deciding the parties' dispute.

         On January 30, 2019, after hearing argument on the issue, the court stated that it had the authority to decide the motion for a TRO before compelling arbitration. Therefore, it then heard argument on the merits of Optum's request for a TRO.

         Following the parties' arguments, the court stated that it was considering hearing testimony because it was uncertain how it would decide the motion based on the conflicting affidavits. See Jan. 30, 2019 Tr. (Docket No. 50) at 90-92 (citing Blackwelder Furniture Co. of Statesville v. Seilig Mfg. Co., 550 F.2d 189, 192 n.6 (4th Cir. 1977) and Semmes Motors, Inc. v. Ford Motor Co., 429 F.2d 1197, 1204 (2d Cir. 1970)). The court also expressed some of the reasons for its uncertainty and noted that if it decided the motion for a TRO without hearing testimony one party would be "disappointed" by the decision. Id. at 92. Counsel for Smith then urged the court to allow Smith to testify. Id. at 95.[1] The court proceeded to hear testimony on January 30 and 31, 2019 from Smith and three other witnesses. It considered the evidence complete and intended to hear argument from counsel concerning the merits of Optum's motion for a TRO.

         However, despite the fact that no order had been entered, on January 30, 2019, Smith filed a notice of appeal of the court's statement that it had the authority to decide the motion for a TRO before compelling arbitration. Later that day, Smith filed a motion to stay pending appeal, arguing that the notice of appeal divested this court of jurisdiction. The parties agreed, however, that it would be appropriate for the court to hear additional testimony on January 31, 2019, as the Chief Operating Officer of ABC, John Stoddard, was on his way to Boston to testify then.

         On February 1, 2019, Optum filed its opposition to the motion to stay. It argued that a stay was not required and that it would be irreparably harmed during the pendency of Smith's appeal if the court exercised its discretion to grant a stay.

         As indicated earlier, on February 5, 2019, the court issued a Memorandum further explaining why it had the authority to decide the motion for a TRO before compelling arbitration. See Docket No. 48. Accordingly, it denied Smith's motion to compel arbitration immediately. Id.

         On February 5, 2019, the court issued a second Memorandum and Order concerning Smith's motion to stay pending appeal. See Docket No. 49 (the "Stay Decision"). It recognized that there was, as of that date, an order, Docket No. 48, that Smith then had a right to appeal pursuant to 9 U.S.C. § 16(a). Id. at 3. The court went on to explain why it was uncertain whether it had the authority to deny Smith's motion for a stay. Id. at 3-8. In view of that uncertainty, the court concluded that it "was most appropriate to grant Smith's request for a stay without addressing the merits of the request, and to provide Optum the opportunity to ask the First Circuit to decide de novo whether the stay should be continued or lifted." Id. at 8.

         On February 7, 2019, Optum filed in this court a Motion for an Injunction Pending Appeal and/or an Indicative Ruling on the Pending Motion for a Temporary Restraining Order. On February 8, 2019, Smith filed his opposition to that motion. At 6:21 p.m. on February 8, 2019, Optum filed a motion for leave to file a reply to Smith's opposition, attaching its Reply to the motion.[2]

         Optum in part requests an "indicative ruling" pursuant to Federal Rule of Civil Procedure 62.1(a) and its counterpart, Federal Rule of Appellate Procedure 12.1(a). Rule 62.1(a)(3)

         states that:

If a timely motion is made for relief that the court lacks authority to grant because of an appeal that has been docketed and is pending, the court may . . . state either that it would grant the motion if the court of appeals remands for that purpose or that the motion raises a substantial issue.

         The 2009 Advisory Committee Notes to Rule 62.1 state that it applies to "any motion that the district court cannot grant because of a pending appeal." As the term "may" communicates, the court has the discretion, but not the obligation, to provide an indicative ruling when the Rule applies.[3]

         As explained earlier, this court allowed Smith's motion for a stay because it is unclear whether the First Circuit would find that his appeal divested it of jurisdiction to decide Optum's motion for a TRO, and it is most appropriate to permit the First Circuit to decide de novo whether a stay is necessary or appropriate. See Docket No. 49 at 8. As this court essentially assumed, without finding, that it lacked jurisdiction in granting a stay pending appeal, it is appropriate to assume the same concerning Optum's Rule 62.1 motion and to find, therefore, that the Rule now applies. In the hope that it will be helpful to the First ...


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