Walmart Obtains Delaware Injunction Barring Former Exec From Working For CVS

Wal-Mart Stores obtained a temporary restraining order on December 3, 2010 from the Court  of Chancery in Delaware enjoining a former executive vice president from commencing employment with CVS Caremark Corporation. The former executive, Harry S. Mullany, had been president of Walmart North and was scheduled to start work at CVS on December 6, 2010.youngconaway

According to the verified complaint, Mullany had oversight of Walmart’s operations for over 1,300 stores in nineteen states and has extensive knowledge of Walmart’s confidential and proprietary information and trade secrets. Walmart alleges that Mullany executed a covenant not to compete in 2009 which prohibited him from working for a competing business for a two (2) year period or participating in any activity that risks the use or disclosure of Walmart’s confidential information.

On October 24, 2010, Mullany apparently informed Walmart that he was resigning his position effective November 5, 2010. Walmart subsequently learned that Mullany had accepted a position with CVS beginning December 6, 2010 as president of its retail division. The parties purportedly had discussions to resolve the dispute prior to the filing of the lawsuit but these proved unsuccessful.

Walmart asserts three claims in its complaint. It first claims Mullany breached his noncompete agreement by accepting employment with CVS, a direct competitor. It also alleges that since Mullany has extensive and intimate knowledge of Walmart’s business and strategies this confidential information will necessarily be used and inevitably disclosed during his employment with CVS. Walmart alleges that the Court of Chancery has jurisdiction to enforce the noncompete agreement because it contained a Delaware forum selection clause.

Walmart also alleges that the confidential information acquired by Mullany constitutes trade secrets as defined by Delaware’s Uniform Trade Secrets Act. It claims both CVS and Mullany will use and disclose Walmart’s trade secrets, and CVS will further violate the Trade Secrets Act by inducing Mullany to breach his duty to keep Walmart’s confidential information secret. Finally, Walmart alleges that CVS tortiously interfered with Walmart’s contractual relationship with Mullany by inducing him to breach his noncompetition agreement.

Vice Chancellor J. Travis Laster of the Delaware Court of Chancery issued the temporary restraining order. A preliminary injunction hearing has been scheduled for December 15, 2010.

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