STATE OF MICHIGAN
SAGINAW COUNTY CIRCUIT COURT
BUSINESS COURT
__________
MOBILE PHLEBOTOMY OF
CENTRAL MICHIGAN, LLC,
a Michigan limited liability company,
Case No. 23-001724-CB
Plaintiff,
Judge: M. Randall Jurrens (P27637)
v.
OPINION RE: DEFENDANTS’
COVENANT HEALTHCARE, INC, MOTION FOR SUMMARY
a Michigan nonprofit corporation, DISPOSITION
KALEIGH SOBANSKI, and
JASON HOPPE,
Defendants.
______________________________________________________________________________
Smith Bovill PC Dickinson Wright, PLLC
By: Errick A. Miles (P78758) By: Kimberly J. Ruppel (P55138)
Attorneys for Plaintiff Myles J. Baker (P82178)
200 St. Andrews Road Attorneys for Defendants
Saginaw, Michigan 48638 2600 W. Big Beaver Road, Suite 300
Telephone: 989-792-9641 Troy, Michigan 48084
______________________________________________________________________________
Plaintiff (MPCM) has filed an eleven count complaint. Hoping for an early exit, defendants
(Covenant, Sobanski, and Hoppe) have moved for summary dismissal of all claims. For the reasons
stated in this opinion, the court concludes the motion should be granted in part but largely denied.
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Background
MPCM’s amended complaint alleges it operates a phlebotomist staffing business
(Amended Complaint, ¶ 13) that supplies contract workers to healthcare providers (Amended
Complaint, ¶ 14). On September 13, 2022, Covenant entered into a written agreement to use
MPCM as its “preferred” phlebotomy services provider for the next three years (Amended
Complaint, ¶¶ 7 and 16; Defendants’ Motion, Ex C). As part of their engagement as phlebotomists
with MPCM, Sobanski and Hoppe each signed a noncompetition agreement on October 21, 2022
that precluded them from providing the same or similar services within the State of Michigan for
the next five years (Amended Complaint, ¶¶ 6 and 15; Defendants’ Motion, Exs A and B). In short
order, however, Sobanski and Hoppe left MPCM’s employ and went to work directly for Covenant
(Amended Complaint, ¶¶ 20, 53, and 86).
On August 10, 2023, MPCM filed the present action which, as amended, asserts various
theories of recovery: tortious interference with contract against Covenant (Count 1), tortious
interference with business relationship and/or expectancy against Covenant (Count 2), breach of
contract against Covenant (Count 3), breach of contract against Sobanski (Count 4), tortious
interference with business relationship and/or expectancy against Sobanski (Count 5), tortious
interference with contract against Sobanski (Count 6), antitrust violations against Covenant (Count
7), conspiracy against all defendants (Count 8), breach of contract against Hoppe (Count 9),
tortious interference with business relationship and/or expectancy against Hoppe (Count 10), and
tortious Interference with contract against Hoppe (Count 11).
However, Covenant, Sobanski, and Hoppe have asked the court to summarily dismiss all
claims.
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Summary Disposition Standards
Defendants’ motion is brought pursuant to MCR 2.116(C)(8) and (10).
MCR 2.116(C)(8) authorizes summary dismissal of complaints that “fail[ ] to state a claim
on which relief can be granted”. Such motions test the legal sufficiency of a claim. Nuculovic v
Hill, 287 Mich App 58, 61; 783 NW2d 124 (2010). Such motions are determined on the pleadings
alone, MCR 2.116(G)(5), including any written instrument upon which the claim is based that is
attached or referred to as required by MCR 2.113(F). Laurel Woods Apts v Roumayah, 274 Mich
App 631, 635; 734 NW2d 217 (2007). All well-pleaded factual allegations in support of the claim
are accepted as true, as well as any reasonable inferences or conclusions that can be drawn from
the facts, and are construed in the light most favorable to the nonmoving party. Johnson v
Pastoriza, 491 Mich 417, 435; 818 NW2d 279 (2012). “However, conclusory statements that are
unsupported by allegations of fact on which they may be based will not suffice to state a cause of
action”, Gurganus v CVS Caremark Corp, 496 Mich 45, 63; 852 NW2d 103 (2014). The motion
should be granted when the plaintiff’s claims are so clearly unenforceable as a matter of law that
no factual development could possibly justify recovery. Clohset v No Name Corp, 302 Mich App
550, 558; 840 NW2d 375 (2013).
Summary disposition under MCR 2.116(C)(10) is appropriate if “there is no genuine issue
as to any material fact, and the moving party is entitled to judgment or partial judgment as a matter
of law”. A motion under this subrule tests the factual sufficiency of a claim. Johnson v
VanderKooi, 502 Mich 751, 761; 918 NW2d 785 (2018). In reviewing such motions, courts
consider the pleadings, admissions, and other evidence submitted by the parties in the light most
favorable to the nonmoving party. MCR 2.116(G)(5); Quinto v Cross & Peters, 451 Mich 358,
362; 547 NW2d 314 (1996). The moving party has the initial burden of supporting its position
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with documentary evidence. Id. Once the moving party meets its burden, the burden shifts to the
nonmoving party to establish that a genuine issue of disputed fact exists. Id. “If the opposing party
fails to present documentary evidence establishing the existence of a material factual dispute, the
motion is properly granted.” Id. at 363; MCR 2.116(G)(4). “There is a genuine issue of material
fact when reasonable minds could differ on an issue after viewing the record in the light most
favorable to the nonmoving party.” Allison v AEW Capital Management, LLP, 481 Mich 419, 425;
751 NW2d 8 (2008).
Analysis
Breach of Contract Against Covenant
Count 3 of MPCM’s amended complaint alleges Covenant breached the parties’ contract
in two different ways: by “poaching” MPCM’s employees (Amended Complaint, ¶¶ 20, 39 and
40) and by not using MPCM’s phlebotomists as required (Amended Complaint, ¶¶ 41 and 42).
However, as Covenant accurately points out (Defendants’ Brief, p 7), review of the contract
does not disclose a non-solicitation provision. And MPCM‘s response does not argue otherwise.
Accordingly, Covenant is entitled to dismissal of this aspect of MPCM’s complaint.
However, MPCM argues that Covenant has additionally breached the contract by
significantly reducing its use of MPCM’s phlebotomists (Plaintiff’s Response, p 4; Plaintiff’s
Response, Ex B). This could be problematic. Although Covenant did not agree to use MPCM
exclusively, it did agree that MPCM would be its “preferred” phlebotomy services provider;
specifically that Covenant was to “normally look to MPCM [ ] to provide [Covenant] with its
necessary phlebotomy services that may arise during this Contract by way of ‘need list’ or ‘hot
sheet,’ and all phlebotomy services for non-casual scheduled work [that Covenant] shall require”
(Amended Complaint, ¶ 18; Defendants’ Motion, Ex C, ¶ 4). Reducing MPCM’s hours and
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revenue by nearly 90% (Plaintiff’s Response, Ex B) while hiring others to perform phlebotomy
services in-house raises a legitimate question whether Covenant is keeping its agreement to treat
MPCM as its “preferred” provider.
1
Accordingly, the court concludes that this aspect of MPCM’s
claim should survive Covenant’s present challenge.
Breach of Contract Against Sobanski and Hoppe
Counts 4 and 9 of the amended complaint claim Sobanski and Hoppe violated their
respective noncompetition agreements.
Although Michigan law generally prohibits contracts in restraint of trade, MCL 445.772,
the Legislature has provided an exception for noncompetition agreements between employers and
employees, MCL 445.774a(1):
An employer may obtain from an employee an agreement or covenant which
protects an employer’s reasonable competitive business interests and expressly
prohibits an employee from engaging in employment or a line of business after
termination of employment if the agreement or covenant is reasonable as to its
duration, geographical area, and the type of employment or line of business. * * *
1
Although not raised in MPCM’s response to the present motion, the court notes that the amended
complaint alleges Covenant’s conduct breaches an implied covenant of good faith and fair dealing
(Amended Complaint, ¶¶ 41 and 42).
Michigan does not recognize a separate or independent cause of action for breach of an implied
obligation of good faith and fair dealing, Gorman v American Honda Motor Co, Inc, 302 Mich
App 113; 839 NW2d 223 (2013). However, Michigan law does recognize an implied covenant of
good faith and fair dealing generally exists in all contracts, except employment contracts, which is
an implied promise that neither party will do anything “which will have the effect of destroying or
injuring the right of the other party to receive the fruits of the contract.” Hammond v United of
Oakland, Inc, 193 Mich App 146, 151-152; 483 NW2d 652 (1992). This implied covenant applies
to the performance and enforcement of contracts even where a contractual term leaves the manner
of its performance to one party's discretion. Ferrell v Vic Tanny Int'l, Inc, 137 Mich App 238, 243;
357 NW2d 669 (1984). Where a party to a contract makes the manner of performance a matter of
its own discretion, it must exercise that discretion honestly and in good faith. Id. at 243.
Given its response’s silence, it’s not clear if MPCM continues to maintain this theory.
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As summarized in St Clair Medical PC v Borgiel, 270 Mich App 260, 266; 715 NW2d
914 (2006) (citations omitted):
[A] restrictive covenant must protect an employer’s reasonable competitive
business interests, but its protection in terms of duration, geographical scope, and
the type of employment or line of business must be reasonable. Additionally, a
restrictive covenant must be reasonable as between the parties, and it must not be
specially injurious to the public.
Because the prohibition on all competition is in restraint of trade, an
employer’s business interest justifying a restrictive covenant must be greater than
merely preventing competition. To be reasonable in relation to an employer’s
competitive business interest, a restrictive covenant must protect against the
employee’s gaining some unfair advantage in competition with the employer, but
not prohibit the employee from using general knowledge or skill.
The burden of demonstrating the validity of the agreement is on the party seeking
enforcement. Coates v Bastian Bros, Inc, 276 Mich App 498, 508; 741 NW2d 539 (2007).
Here, Sobanski and Hoppe argue that MPCM’s claim that they breached their
noncompetition agreements is legally deficient because the amended complaint fails to allege they
took any confidential business information or trade secret when they left (Defendants’ Brief, p 11).
Preventing the anticompetitive use of confidential information is a legitimate business interest,
Rooyakker & Sitz, PLLC v Plante & Moran, 276 Mich App 146, 158; 742 NW2d 409 (2007). But
while MPCM argues its phlebotomists “are gaining [ ] confidential information of which they
would otherwise be ignorant” (Plaintiff’s Brief, p 8), its amended complaint makes no such
allegation.
Sobanski and Hoppe additionally argue that use of their general education and training as
Covenant’s employees does not constitute a violation of their noncompetition agreements
(Defendants’ Brief, p 11). Michigan law agrees. St Clair Medical, PC, 270 Mich App at 266 (“To
be reasonable in relation to an employer’s competitive business interest, a restrictive covenant
must protect against the employee’s gaining some unfair advantage in competition with the
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employer, but not prohibit the employee from using general knowledge or skill”). And MPCM
does not argue otherwise.
2
MPCM, however, does argue that loss of business is contrary to an employer’s legitimate
business interest, albeit without citing any legal authority (Plaintiff’s Brief, p 8). But even absent
supporting caselaw, MPCM’s proposition seems self-evident (at least as a general proposition).
Here, although the court does not find an express allegation of customer loss in the amended
complaint, MPCM’s [partial] loss of business is at least implicit in allegations involving Covenant
(Amended Complaint, ¶¶ 42, 53, and 86); and MPCM has supplemented its allegations of loss by
supporting affidavit.
3
The question is, ultimately, whether MPCM can carry its burden to factually
demonstrate its loss is attributable to an impermissible act or omission by Sobanski and/or Hoppe;
2
The court is not unaware that, perhaps suggesting something more is at play here than Sobanksi
and Hoppe’s own general knowledge and skill, MPCM alleges that it “spends a considerable
amount of time and resources in recruiting, training and maintaining its contract workers it uses to
supply healthcare providers with trained and qualified phlebotomists” (Amended Complaint, ¶ 14).
However,
[i]t has been uniformly held that general knowledge, skill, or facility acquired
through training or experience while working for an employer appertain exclusively
to the employee. The fact that they were acquired or developed during the
employment does not, by itself, give the employer a sufficient interest to support a
restraining covenant, even though the on-the-job training has been extensive and
costly. [Follmer Rudzewicz & Co v Kosco, 420 Mich 394, 402, n 4; 362 NW2d 676
(1984), quoting Blake, Employment Agreements Not to Compete, 73 Harv L Rev
625, 652 (1960).]
On the other hand, the court acknowledges the possibility that an employer’s investment in
specialized training may rise to a protectable competitive business interest. St Clair Medical PC v
Borgiel, 270 Mich App 260, 266; 715 NW2d 914 (2006); but MPCM does not allege its training
of Sobanski and/or Hoppe was specialized (Amended Complaint, ¶ 14).
3
MPCM’s owner avers that its business with Covenant is down nearly 90% (Plaintiff’s Response,
Ex B).
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and, while MPCM’s path to success may be presently unclear, with discovery still open the court
is not comfortable in foreclosing the possibility at this time.
Finally, assuming MPCM can demonstrate a protectable business interest, Hoppe and
Sobanski argue that their noncompetition agreements are facially unenforceable because they
prohibit them from working elsewhere in any capacity (i.e. “regardless of whether [the] competitor
is offering the same or similar Protected Practices” (Defendants’ Brief, Exs A and B; Defendants’
Brief, pp 11-12) and, additionally, are unreasonable in duration (5 years) and geographic scope
(entire State of Michigan) (Defendants’ Brief, p 12).
But as MPCM points out (Plaintiff’s Brief, p 5), even if impermissibly broad, a
noncompetition agreement is not necessarily void in its entirety. Compton v Joseph Lepak, DDS,
PC, 154 Mich App 360, 367-368; 397 NW2d 311 (1986). Rather than an “all or nothing”
proposition, MCL 445.774a(1) authorizes courts to effectively reform offending noncompetition
agreements:
* * * To the extent any such agreement or covenant is found to be unreasonable
in any respect, a court may limit the agreement to render it reasonable in light of
the circumstances in which it was made and specifically enforce the agreement as
limited.
[
4
]
4
The court notes MPCM’s assertion that a severability clause in Sobanski and Hoppe’s
noncompetition agreements similarly authorizes “blue penciling” (Plaintiff’s Brief, p 7). However,
a fair reading of the provision indicates a different purpose:
Severability. If any provisions of this Agreement or its applications are held to be invalid,
illegal or unenforceable in any respect, the validity, legality, or enforceability of an other
provisions and applications herein shall not in any way be affected or impaired
[(Defendants’ Brief, Exs A and B, ¶ VII(a)) (emphasis added)]
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Tortious Interference with Contract
and/or Business Relationship and/or Expectancy
MPCM claims Covenant, Sobanski, and Hoppe have each tortiously interfered with a
contract or business relationship/expectancy (Amended Complaint, Counts 1, 2, 5, 6, 10, and 11)
5
.
Tortious interference with a contract and tortious interference with a business relationship
or expectancy are distinct causes of action. Health Call v Atrium Home & Health Care Servs, Inc,
268 Mich App 83, 89; 706 NW2d 843 (2005). However, their similarities outweigh their
differences. Pappas, McNeill, and Quick, Michigan Business Torts, § 2.2. Indeed, the jury
instruction for each is nearly identical. See M Civ JI 125.01 and 126.01.
Generally speaking, the elements of a cause of action for tortious interference with a
contract or a business relationship/expectancy are: (1) a contract or a business relationship or
expectancy with a third party, (2) knowledge by the defendant of the contract or the business
relationship/expectancy, (3) intentional and improper interference by the defendant, inducing or
causing a breach, disruption, or termination of the contract or the business relationship/expectancy,
and (4) resultant damage to the plaintiff.
6
Pappas, McNeill, and Quick, Michigan Business Torts,
§ 2.2.
5
It appears that MPCM has written contracts with each of Covenant, Sobanski, and Hoppe
(Defendants’ Brief, Exs A, B, and C). If the parties’ relationships are governed by contract, it is
unclear where there is room for a noncontractual business relationship/expectancy. However,
admittedly, a party may state claims in the alternative. MCR 2.111(A)(2)(a).
6
Historically, caselaw has commonly listed the elements of tortious interference with a contract
as (1) the existence of a contract, (2) a breach of the contract, (3) an unjustified instigation of the
breach by the defendant”, and (4) resulting damages, Health Call v Atrium Home & Health Care
Servs, Inc, 268 Mich App 83, 88-89; 706 NW2d 843 (2005), and the elements of tortious
interference with a business relationship or expectancy as (1) the existence of a valid business
relationship or expectancy, (2) knowledge of the relationship or expectancy on the part of the
defendant, (3) an intentional interference by the defendant inducing or causing a breach or
cont’d
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In determining whether interference is improper, courts consider several factors: (1) the
interferer’s conduct, (2) the interferer’s motive, (3) the injured party’s interests, (4) the interferer’s
interests, (5) the societal interests in protecting the freedom of action of the interferer and the
contractual interest of the other, (6) the relationship of the interferer’s conduct to the interference,
and (7) the parties’ relationship to each other. Pappas, McNeill, and Quick, Michigan Business
Torts, §§ 2.10-2.20.
Here, Sobanski and Hope assert the amended complaint is deficient because it fails to allege
any act of malice (Defendant’s Brief, p 14). Admittedly, malice
7
(or, stated otherwise, motive)
may well support an action for tortious interference. But, as observed above, malice/motive is but
one factor that courts typically consider in determining whether interference is improper. Review
of MPCM’s amended complaint discloses allegations that Sobanski and Hoppe “improperly
interfered with MPCM’s business relationship and/or expectancy with Covenant by unilaterally
terminating her [his] contract with MPCM and becoming an employee of Covenant performing
the same services she [he] was performing under her [his] agreement with MPCM” (Amended
Complaint, ¶¶ 53 and 86). Accordingly, the absence of an allegation of malice is not fatal to
MPCM’s claim.
Covenant similarly, but separately, argues that there is no allegation of malice in either
interference claim against it (Amended Complaint, Counts 1 and 2) (Defendants’ Brief, p 15).
termination of the relationship or expectancy, and (4) resulting damage to the plaintiff. Id. at 90.
But these rote recitations fall short of fully expressing courts’ intention of broadly imposing
liability for interference with either a contract or a business relationship upon one who knowingly,
intentionally, and improperly interferes. Pappas, McNeill, and Quick, Michigan Business Torts, §
2.2. Accordingly, the court here has taken the liberty of utilizing a more modern list of elements
of the two related causes of action.
7
“Malice in the legal sense is the intentional doing of a wrongful act without justification or
excuse”. Feldman v Green, 138 Mich App 360, 371 n 1; 360 NW2d 881 (1985).
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MPCM counters (Plaintiff’s Response, p 9) that its amended complaint alleges “Covenant has been
intentionally and deliberately encouraging, aiding and causing MPCM contractors to breach their
agreements with MPCM and then hiring those individuals as phlebotomy employees of Covenant”
(Amended Complaint, ¶ 19
8
); and, arguably, is doing so surreptitiously (Amended Complaint, Exs
A and B). Accordingly, the court concludes a claim of tortious interference has been sufficiently
stated against Covenant also.
Civil Conspiracy
Count 8 purports to state a claim for civil conspiracy against all defendants.
“A civil conspiracy is a combination of two or more persons, by some concerted action, to
accomplish a criminal or unlawful purpose, or to accomplish a lawful purpose by criminal or
unlawful means.” Advocacy Org for Patients & Providers v Auto Cub Ins Ass’n, 257 Mich App
365, 384; 670 NW2d 569 (2003). A claim of civil conspiracy must be based on an underlying,
separate, actionable tort. Id. Proof of a civil conspiracy may be established through circumstantial
evidence and may be premised on inference. Temborius v Slatkin, 157 Mich App 587, 600; 403
NW2d 821 (1986). Direct proof of an agreement need not be shown, nor is it necessary to show a
formal agreement. “It is sufficient if the circumstances, acts and conduct of the parties establish an
agreement in fact.” Id.
Covenant, Sobanski, and Hoppe argue that, absent a valid tortious interference claim, there
is no underlying tort to which the conspiracy change may attached (Defendants’ Bref, p 16). They
make a valid point. Early Detection Center, PC v New York Life Ins Co, 157 Mich App 618, 632;
403 NW2d 830 (1986).
8
Plaintiff’s response erroneously identifies the source of the quoted language as paragraph “18”,
and also omits the paragraph’s prefatory phrase, “Contrary to state and federal law”.
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However, as described above, the court has determined that the tortious interference claims
survive, which, in turn, provide support for MPCM’s conspiracy claim.
Antitrust Violations
Count 7 of the amended complaint asserts Covenant’s “poaching” of MPCM’s employees
violated the Sherman Act, 15 USC 1 et seq.
Covenant argues (Defendants’ Brief, pp 16-17) that MPCM’s amended complaint fails to
state a claim under Section 1 of the Sherman Act, 15 USC 1:
Every contract, combination in the form of trust or otherwise, or conspiracy, in
restraint of trade or commerce among the several States, or with foreign nations, is
declared to be illegal. Every person who shall make any contract or engage in any
combination or conspiracy hereby declared to be illegal [ ].
To establish a violation of section 1 of the Sherman Act a plaintiff must demonstrate that
there is (1) an agreement, which may be in the form of a contract, combination, or conspiracy, (2)
affecting interstate commerce, (3) that imposes an unreasonable restraint on trade. Hobart-
Mayfield, Inc v Nat’l Operating Comm On Standards for Athletic Equip, 48 F4th 656, 663 (CA 6,
2022).
But MPCM argues (Plaintiff’s Response, pp 10-11) that its amended complaint purposes
to pursue a claim under Section 2 of the Act, 15 USC 2:
Every person who shall monopolize, or attempt to monopolize, or combine or
conspire with any other person or persons, to monopolize any part of the trade or
commerce among the several States, or with foreign nations, shall be deemed guilty
of a felony.
It appears that the primary difference is that Section 2 deals with unilateral action, while
Section 1 deals with agreements.
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Either way, as Covenant points out (Defendant’s’ Brief, p 17), MPCM’s amended
complaint is devoid of an allegation that interstate (much less international) commerce is involved
here.
9
Conclusion
Plaintiff has sued defendants under several contract-related theories. Hoping to quickly
extricate themselves, defendants are asking the court to summarily dismiss all claims. Having
considered the parties’ respective arguments, the court concludes some of plaintiff’s claims are
deficient and should be dismissed while others pass muster and survive.
The court will sign an Order that comports with this opinion upon presentment in
accordance with MCR 2.602(B).
10
Date: February 29, 2024 (P27637)
M. Randall Jurrens, Business Court Judge
9
Under the circumstances, the court need not address Covenant’s other objections to Count 7 (i.e.
the mere hiring of Sobanski/Hoppe is not an unreasonable restraint on trade and the amended
complaint lacks any allegation of concerted action among competitors) (Defendants’ Brief, p 17).
10
The court recognizes MCR 2.116(I)(5) affords the possibility of amendment when the grounds
for summary disposition are based on, as here, MCR 2.116(C)(8) and (10). However, the right to
amend is neither automatic nor absolute. Kloian v Schwartz, 272 Mich App 232, 242; 725 NW2d
671 (2006).
