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HR Staffing Consultants, LLC v. Butts

United States District Court, D. New Jersey

June 4, 2015

HR STAFFING CONSULTANTS, LLC, and Upstream Healthcare Management of New Juersey, LLC, Plaintiffs,
Richard BUTTS, Defendant.


KEVIN McNULTY, District Judge.

I have preliminarily enjoined the defendant, Richard Butts, from being employed by CarePoint within a five county area for a period of one year, and from sharing confidential information of the plaintiffs. The order was based on a non-compete covenant in Butts's employment contract with Plaintiff, [1] who was until recently his employer. My reasons are stated at length in my opinion of May 29, 2015, corrected version filed June 1, 2015. (Corrected version under seal, ECF No. 34; redacted version for public filing, ECF No. 39). Defendant immediately filed a notice of appeal on May 29, 2015 (ECF No. 33). Because I had given the parties the weekend to settle the form of order, the preliminary injunction itself was not filed in final form until June 2, 2015. (ECF No. 40)

Defendant has now filed an emergent motion for a stay of the portion of my order that enforced his restrictive employment covenant with Plaintiff. (ECF No. 37) I gave Plaintiff one day to file an opposition, and they have done so. (ECF No. 44) Defendant has today filed a Reply. (ECF No. 45)

Mr. Butts in effect seeks reinstatement to his position at CarePoint pending appeal. My consideration and disposition of his motion is, as a practical matter, a prerequisite to his seeking similar relief in the Court of Appeals. See Fed. R. App. P. 8(a)(1). I therefore consider it on an expedited basis.

A court that grants an injunction always retains the power to modify or vacate it, even while an appeal is pending. See generally Fed.R.Civ.P. 60(c); Landis v. N. Am. Co., 299 U.S. 248, 254-55 (1936). What Mr. Butts seeks here, however, is more akin to a traditional stay pending appeal. The Federal Rules of Appellate Procedure explicitly contemplate such a motion. See Fed. R. App. P. 8(a)(1)(C) (motion for "an order suspending, modifying, restoring, or granting an injunction while an appeal is pending"). For such relief, "[a] party must ordinarily move first in the district court." Fed. R. App. P. 8(a)(1); see also Fed. R. App. P. 8(a)(2) (motion may be filed in the Court of Appeals only if district court filing is "impracticable" or district court has already denied the stay).

The defendant, Richard Butts, has promptly filed his motion for a stay in this Court, as is procedurally proper. "[T]he standard for obtaining a stay pending appeal is essentially the same as that for obtaining a preliminary injunction." Conestoga Wood Specialities Corp. v. Secretary of U.S. Dept. of Health and Human Services, 2013 WL 1277419 at *1 (3d Cir. Feb. 8, 2013). Like most preliminary injunctions, a stay pending appeal is governed by four equitable factors:

"(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits;

(2) whether the applicant will be irreparably injured absent a stay;

(3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and

(4) where the public interest lies."

Nken v. Holder, 556 U.S. 418, 434 (2009) (line breaks added for clarity) (quoting Hilton v. Braunskill, 481 U.S. 770, 776 (1987). Accord Kos Pharm., Inc. v. Andrx Corp., 369 F.3d 700, 708 (3d Cir. 2004).

A stay pending appeal is extraordinary relief that is not routinely granted. The bar is particularly high where, as here, the movant is seeking immediate relief from a preliminary injunction granted after an evidentiary hearing. In such a case, the movant is effectively asking the court to negate the preliminary injunction that it just granted. See Conestoga, 2013 WL 1277419, at *1 ("Therefore, in assessing the present motion for a stay pending appeal, we must consider the same four factors that the District Court considered after an evidentiary hearing, ultimately concluding that preliminary relief was not warranted.").

In this case, a stay pending appeal would be particularly inadvisable. Far from a mere preservation of some neutral status quo, it would be tantamount to victory for the defendant. As a practical matter, it would obliterate the one-year ban on employment and enshrine the defendant's defection to CarePoint, without the required 30 days' notice and in violation of the non-compete provision in his employment contract.

Because the stay that defendant seeks is simply the other side of the preliminary injunction coin, I need not write at length. The reasons for denying a stay are those set forth in my opinion granting the preliminary injunction. (ECF No. 34). In that opinion, after briefing and an evidentiary hearing, I resolved the four injunction ...

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