Hunton Employment & Labor Perspectives

In Holton v. Physician Oncology Services, LP, et al., Case No. S13A0012 (May 6, 2013), the Georgia Supreme Court limited the use and application of the inevitable disclosure doctrine by declining to recognize it as an independent cause of action. 

The inevitable disclosure doctrine allows an employer to restrict former employees from working for a competitor by demonstrating that the former employees will necessarily rely upon knowledge of the employer’s trade secrets in performing their new job duties. 

In August 2009, Plaintiff Holton joined Defendant Physician Oncology Services, LP, which provided radiation therapy services to cancer patients, as vice president and chief operating officer, eventually becoming the company’s president.  During his employment with Physician Oncology Services, Holton was responsible for overseeing the operations of seven facilities in the Atlanta-metro area. 

In January 2011, Physician Oncology Services merged with Vantage Oncology, LLC, which operated 45 radiation oncology treatment centers in twelve states, including five in Atlanta.  For five months after the merger, Holton had oversight responsibility for the Atlanta treatment centers before changing responsibilities to handle facilities exclusively in other states.  In October 2011, Vantage terminated Holton.

One month later, Holton became chief executive officer of Radiation Oncology Services of America, Inc. (“ROSA”), a competitor of Vantage with four centers in Atlanta, none of which were to be under Holton’s oversight.  Vantage sought an injunction, claiming in part that Holton would inevitably disclose and use Vantage’s trade secrets.  The trial court granted Vantage’s request, determining that there was a substantial likelihood that Vantage would prevail on the merits of its claim that Holton would inevitably disclose its confidential information and trade secrets if employed by ROSA.

Holton appealed the trial court’s ruling challenging, among other things, that Vantage was likely to prevail on its claim for the inevitable disclosure of trade secrets because Georgia had not adopted the inevitable disclosure doctrine, and because there was no evidence that Holton had any Vantage document, nor recalled any of its trade secrets. 

Georgia Supreme Court Denies Application Of Inevitable Disclosure Doctrine As Stand-Alone ClaimThe Georgia Supreme Court sided with Holton on this issue, emphasizing that the doctrine “remains the subject of considerable disagreement” among courts, and that case law in other states is inconsistent about whether the doctrine should be recognized at all and, if so, recognized as a stand-alone claim.  Rejecting Vantage’s argument that the Court had previously applied the doctrine in Essex Group, Inc. v. Southwire, Co., the Holton Court held that “the inevitable disclosure doctrine is not an independent claim under which a trial court may enjoin an employee from working for an employer or disclosing trade secrets.”  Notably, the Court expressly declined to address whether the doctrine may be applied to support a claim for the threatened misappropriation of trade secrets.