Chancery Court Extends Injunction Against CVS, Former Walmart Exec

Wal-Mart Stores Inc. scored a second victory in its case against a former executive by convincing the Delaware Court of Chancery to extend the injunction preventing him from joining CVS Caremark Corporation.  The world’s largest retailer had sued to prevent Hank Mullany, a former executive vice president, from joining CVS based on the restrictions in his noncompete agreement and the possibility that confidential information involving sales and growth initiatives would be disclosed to its rival.

In a hearing held on December 15, 2010, Vice Chancellor J. Travis Laster sided with Walmart and agreed to convert the temporary restraining order into a preliminary injunction, noting that Mullany took a calculated risk by accepting employment with CVS and that he could have gone to work for a non-competitor.   Vice Chancellor Laster also recognized that Mullany’s knowledge of Walmart’s small store strategy would prove valuable to CVS if it was disclosed.

The new injunction prohibits Mullany from employment or association with any general or specialty retail, grocery or merchandising business with sales in excess of five billion dollars, and enjoins CVS from employing or using Mullany in any capacity.  The order also prohibits Mullany from disclosing any of Walmart’s confidential or proprietary information.

The injunction is effective until the Court issues a final decision on the merits.  A trial is scheduled to take place in March 2011.  The Court also order Walmart to post $1 million bond.

A copy of the Court’s order granting the preliminary injunction can be found

Contact Information