# Laboratory Corporation of America v. ASL-DEN, LLC

> District Court, E.D. North Carolina · March 4, 2024

URL: https://www.frixlaw.com/law-library/cases/10653315

## Case

- **Court:** District Court, E.D. North Carolina
- **Decided:** March 4, 2024
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
Civ. Action No. 5:22-cv-00437-BO-RN
LABORATORY CORPORATION OF
AMERICA,
Plaintiff,

STIPULATED ORDER GRANTING
ASL-DEN, LLC f/k/a APP-UNIPATH, LLC PERMANENT INJUNCTION
d/b/a UNIPATH; and ATHANASSIOS
PAPAIOANU,
Defendants.

Plaintiff, Laboratory Corporation of America (“Labcorp”) and Defendants ASL-DEN,
LLC f/k/a/ APP-UniPath, LLC d/b/a UniPath (“ASL”) and Athanassios Papaioanu (“Papaioanu”’)
(collectively, “Defendants”), have resolved their disputes in this action pursuant to the terms of a
settlement agreement dated February 5, 2024. As part of their agreed resolution of this action, the
Parties have agreed to a permanent injunction subject to the approval of the Court.
The Court, noting the agreement of the parties as evidenced by the signatures of the parties
and their counsel on the Joint Motion for Entry of Agreed Order Granting Permanent Injunction,
determines that this Stipulated Order Granting Permanent Injunction should be entered for the
reasons set forth below.
FINDINGS OF FACT
The Court hereby makes the following findings of fact, to which each of the parties has
stipulated:
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A. The Parties.
1. Plaintiff Labcorp is a corporation formed and organized under the laws of the State
of Delaware with its principal place of business in Burlington, North Carolina.
2. Defendant ASL is a limited liability company formed and organized under the laws
of the State of Colorado with its principal place of business in Nashville, Tennessee.
3. Defendant Papaioanu is a citizen and resident of Nashville, Tennessee.
4. ASL, when it was previously named “APP-Unipath, LLC,” was a subsidiary of
non-party American Pathology Partners, Inc. (“AP2”).
5. Since 2019, Papaioanu has served as an officer of ASL.
6. Prior to September 30, 2023, ASL operated a laboratory located at 6|16 E. Warren
Avenue in Denver, Colorado, 80222 (“Denver Lab”).
B. Labcorp, ASL, and other Entities Enter the Purchase Agreement.
7. On or about October 19, 2020, Labcorp, AP2, ASL, and nine other subsidiaries of
AP2 entered into an asset purchase agreement for Labcorp to acquire some of the assets of AP2,
ASL, and the other subsidiaries (“Purchase Agreement”).
8. The Purchase Agreement designated AP2, ASL, and nine other entities operating
laboratories as “Seller.”
9. Prior to the Purchase Agreement’s closing date, the parties thereto executed an
Amended Purchase Agreement on or about February 1, 2021 (“Amended Purchase Agreement”),
reflecting, among other things, a purchase price acjustment.
10. Except as noted therein, the Amended Purchase Agreement did not alter the
Purchase Agreement’s terms.
11. Pursuant to the Purchase Agreement, AP2 and ASL agreed to sell and Labcorp
agreed to purchase “selected operating assets of Seller that are used or hed for use in connection
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with Seller’s clinical and anatomic pathology laboratory services business based in the States of
Colorado and Texas, with customers in additional States (the “Biisiness”).”
12. | Under Section 2.1 of the Purchase Agreement, AP2 and UniPath agreed to
“transfer, assign, convey and deliver” to Labcorp “all of the assets and properties of Seller
constituting the Business, other than the Excluded Assets (collectively referred to herein as the
“Purchased Assets”).”
13. Section 2.2 of the Purchase Agreement lists the “Excluded Assets” that Labcorp
was not purchasing from Seller, including the assets identified in Schedule 2.2 to the Purchase
Agreement.
14. Schedule 2.2 to the Purchase Agreement includes as Excluded Assets, inter alia,
certain office and laboratory equipment for the Denver Lab as well as the Denver Lab’s
certification issued by the Center for Medicare and Medicaid Services under the Clinical
Laboratory Improvement Amendments (“CLIA certification’).
15. Section 2.2 of the Purchase Agreement permitted Seller to use the Colorado CLIA
certification for the Denver Lab (which the Purchase Agreement designated as the “Facility”) “for
up to one hundred twenty (120) days after the Closing Date (“CLIA Transition Period”) solely for
the purpose of transitioning Seller’s current customers serviced at the Facility to a new facility not
in the ‘territory’ as such term is defined in and covered by any of the Restrictive Covenant
Agreements (individually and collectively, the “RCA Territory”).”
16. Section 2.2 of the Purchase Agreement specified that Seller was not permitted to
use “any business name at or in connection with the Facility, including signage on the building”
during the CLIA Transition Period.
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17. The Seller further agreed in Section 7.15 of the Purchase Agreement that after the
Closing, Seller would (a) not commercially use the name UniPath or any variation, name,
derivatives from or form thereof of or any other names used by the Business, or any trademarks or
service marks associated therewith and (b) “take all necessary action to effect a change of name of
Seller Parties to names other than those listed in this Section 7.15 or any derivations thereof as of
the Closing Date.”
18. Seller acknowledged and agreed that Labcorp would suffer irreparable injury if
Seller breached Section 7.15 of the Purchase Agreement and that Labcorp would be entitled to an
injunction restraining Seller from breaching that provision.
19. Section 8.9(f) of the Purchase Agreement obligated Seller to deliver to Labcorp
certain Restrictive Covenant Agreements that were attached to the Purchase Agreement as Exhibit
8.9(f).
20. | Papaioanu and ASL were two of the parties obligated to execute a Restrictive
Covenant Agreement in connection with the Purchase Agreement.
21. Section 12.9 of the Purchase Agreement and Section 6 of the Amended Purchase
Agreement each state that they “shall be governed by and construed in accordance with the internal
laws of the State of Delaware, without regard to conflicts-of-law principles that would require
application of any other law.”
22. Section 12.10 of the Purchase Agreement states that each seller party agrees that
any lawsuit “in connection with or relating to” the Purchase Agreement “shall be brought in a court
of competent jurisdiction located in Raleigh, North Carolina.” It also states that the parties to the
Purchase Agreement “shall consent and submit to personal jurisdiction in any such court” in
Raleigh, North Carolina.
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C. ASL aid Papaioanu Executed Restrictive Covenant Agreeiiéiits.
23. Onor about February 15, 2021, each of Papaioanu and ASL executed a Restrictive
Covenant Agreement with Labcorp.
24. The Restrictive Covenant Agreements designate each of Papaioanu and ASL as
“Counterparty.”
25. Section 3 of the Restrictive Covenant Agreements contain identical non-solicitation
provisions that prohibit Papaioanu and ASL, during the five-year period from February 15, 2021
to February 15, 2026 (“Restricted Period”), from influencing or attempting to influence any
(1) customer of Labcorp or the Business “to divert such customer’s purchases of services
associated with the Business to any Person, firm, corporation, institution, or other entity then in
competition with [Labcorp] or its Subsidiaries or Affiliates;” or (2) “employee of [Labcorp] or its
Subsidiaries or Affiliates, either directly or indirectly, to terminate his or her employment with
[Labcorp] or any of its Subsidiaries or Affiliates.”
26. Section 2 of the Restrictive Covenant Agreements also contain non-competition
provisions that restrict Papaioanu’s and ASL’s conduct in the “Territory,” which is defined in
Section 4 of those agreements to mean Texas, Colorado, Louisiana, and Wyoming.
27. | The non-competition provisions of the Restrictive Covenant Agreements forbid
Papaioanu or ASL to “(a) engage, directly or indirectly, in a business that competes with the
Business within the Territory ... , or (b) provide information to, solicit or sell for, organize or own
any interest in, or become employed by or engaged by, or act as agent for, any Person that is
directly or indirectly engaged in a business in the Territory which is substantially similar to or
competes with the Business,” except for “hclding (solely as a passive investment) not more than
five percent (5%) of the outstanding shares of any publicly held company which may be so engaged
in a trade or business substantially similar to or competes with the Business.”
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28. Section 2 of Papaioanu’s Restrictive Covenant Agreement explicitly provides that
it does not prohibit him from “[1] working for a division, entity, or subgroup of a company that
engages in the Business so long as such division, entity, or subgroup does not directly or indirectly
engage in the Business; [2] owning, working for, providing services in, contracting with or
consulting with a hospital or a health system, including working as a pathologist in a hospital or
health system, and is not competitive with [Labcorp]’s business and is not involved in such group
... growing this business; [3] owning, providing services to, contracting with or consulting with
an entity that owns its own laboratory where such laboratory does not provide external services;
or [4] providing COVID PCR/RPP testing outside the Territory.”
29. In Section 7 of the Restrictive Covenant Agreements, Papaioanu and ASL agreed
that the non-competition, non-solicitation, and confidentiality provisions in each Restrictive
Covenant Agreement would remain in effect for the Restricted Period.
30. By executing each of their Restrictive Covenant Agreements, Papaioanu and ASL
each acknowledged that:
a. “the restrictions contained in this [Restrictive Covenant] Agreement are
reasonable and necessary to protect the legitimate interests of [Labcorp] and
that [Labcorp] would not have entered into the Purchase Agreement in the
absence of such restrictions”; and
b. “any breach by Counterparty of this [Restrictive Covenant] Agreement will
cause continuing and irreparable harm to [Labcorp] for which monetary
damaiges would not be ian adequate rerned y.”
31. Papaioanu and ASL also agreed in Section 7(a) of their respective Restrictive
Covenant Agreements that, in the event of a breach, “[Labcoro] :shall have the right to enforce the
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provisions of this [Restrictive Covenant] Agreement by seeking injunctive or other relief in any
court, without a requirement that a bond be posted, and this [Restrictive Covenant] Agreement
shall not in any way limit remedies of law or in equity otherwise available to [Labcorp].”
32. Papaioanu and ASL further agreed in Section 7(b) of their respective Restrictive
Covenant Agreements that “[iJn the event that Counterparty breaches any of the Restrictive
Covenants in this Agreement, then the Restricted Period shall be extended for a period of time
equal to the period of time during which such breach occurs, and, in the event that Purchaser is
required to seek relief from such breach in any court, board of arbitration or other tribunal, then
the Restricted Period shall be extended for the period of time required for the pendency of such
proceedings, including all appeals.”
33. The Restrictive Covenant Agreements rely on the Purchase Agreement’s definition
of “Business” as “Seller’s clinical and anatomic pathology laboratory services business based in
the States of Colorado and Texas, with customer's in additional States.”
34. Section 9(c) of the Restrictive Covenant Agreements dictate that they “shall be
construed and enforced in accordance with the substantive laws of the State of Delaware without
regard to the principles of conflicts of laws of any jurisdiction.”
35. The Restrictive Covenant Agreements do not include a provision addressing venue
for a dispute arising out of the Restrictive Covenant Agreements.
D. The Parties Ciose on the Purchase Agreement
36. On or about February 15, 2021, Labcorp, AP2, ASL, and nine other subsidiaries of
AP2 closed on the Purchase Agreement.
37. Labcorp contends that, at closing, Labcorp paid the amounts owed to the Seller
under the Purchase Agreement.
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38. At closing, the Seller executed a General Assignment and Bill of Sale through
which it granted, sold, assigned, released, conveyed, transferred, set over and confirmed unto
Labcorp the assets purchased pursuant to the Purchase Agreement.
39. Under Section 5.23(11) of the Disclosure Schedule, Papaioanu and other listed
individuals would receive a transaction bonus payment from AP2 upon the closing of the Purchase
Agreement. Papaioanu has received that transaction bonus contemplated in Section 5.23(11) of the
Disclosure Schedule.
E. The Parties’ Dispute
40. After the Closing Date, a dispute arose among the parties to this litigation.
41. | ASL operated the Denver Lab following the CLIA Transition Period in a manner
that Labcorp believed violated the Purchase Agreement and Papaioanu’s and ASL’s Restrictive
Covenant Agreements because Labcorp believed that, within the Territory, the Denver Lab was
performing services that compete with the Business and ASL and Papaioanu were soliciting and
recruiting laboratory staff.
42. ASL and Papaioanu deny that the continued operation of the Denver Lab violated
the Purchase Agreement, their Restrictive Covenant Agreements, or any other obligations to
Labcorp, contractually or otherwise.
43. Labcorp has alleged that ASL continued to display the UniPath name in certain
physical and online locations.
44. ASL denies that it displayed the UniPath name in any manner that violated the
Purchase Agreement or any other law.
45. After the parties, through counsel, exchanged correspondence regarding the
dispute, Labcorp filed this litigation in which it asserts claims against ASL for breach of the
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Purchase Agreement and against ASL and Papaioanu for breach of the Restrictive Covenant
Agreements, violations of the Lanham Act, 15 U.S.C. § 1125(a)(1)(A), and violations of the North
Carolina Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1.
46. ASL and Papaioanu deny Labcorp’s allegations in this matter.
47. As of September 30, 2023, ASL and Papaioanu have closed the Denver Lab and
moved all of the Denver Lab’s operations to Tennessee.
48. ASL and Papaioanu are not using or displaying the UniPath name.
49. Neither ASL nor Papaioanu have any intent to resume laboratory operations in
Colorado in the next five (5) years or to use or display in the future the UniPath name.
50. ‘In light of the changed circumstances, the parties have reached an agreement that
will resolve this litigation, which includes the parties’ agreement to entry of this Stipulated
Permanent Injunction as shown by the parties’ signatures on the joint motion requiesting that the
Court enter the Stipulated Permanent Injunction.
51. Toeffectuate their settlement, the parties request that the Court enter this Stipulated
Permanent Injunction, after which Labcorp will dismiss its claims, with the Court having
jurisdiction over this action for the purposes of enforcing the permanent injunction, if necessary.
CONCLUSIONS OF LAW
Based on the foregoing, the Court concludes:
52. For purposes of entry and enforcement of this permanent injunction oaly and
without prejudice to Defendants’ arguments to the contrary, this Court finds that it has matter
jurisdiction over this action and personal jurisdiction ove: Defendants.
53. A party seeking permanent injunction relief must demonstrate “(1) that it has
suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are
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inadequate to compensate for that injury; (3) that, considering the balance of the hardships between
the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would
not be disserved by a permanent injunction.” eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 391
(2006).
54. For purposes of entry and enforcement of this permanent injunction only and
without prejudice to Defendants’ arguments to the contrary, this Court finds as follows:
a. Labcorp has suffered and would suffer irreparable harm from any future breaches
of the Purchase Agreement and Restrictive Covenant Agreements by Defendants.
b. Legal remedies would be inadequate to compensate Labcorp for its injuries, which
are inherently difficult to quantify.
c. Considering the balance of the hardships between Plaintiff and Defendants,
particularly in light of the fact that Defendants have ceased operations in Colorado
and have no intent to resume such operations in the next five (5) years, the Court
concludes that an equitable remedy is warranted.
d. The public interest would not be harmed by entry of this permanent injunction.
STIPULATED PERMA NENT INJUNCTION
THEREFORE, pursuant to Rule 65 of the Federal Rules of Civil Procedure, which provides
that an order granting an injunction binds the parties, their officers, agents, servants, employees,
and attorneys, and any person in active concert or participation with the parties or their officers,
agents, servants, employees, and attorneys who receive actual notice of this order, Fed. R. Civ. P.
64(d)(2), it is ORDERED tthat:
1. ASL and the persons bound pursuant to Rule 65(d)(2) are hereby enjoined and
restrained, from using or displaying the UniPath name as required by the Purchase Agreement;
and
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2. For a period of five years running from October 1, 2023 through October 1, 2028,
ASL, Papaioanu, and all other persons bound pursuant to Rule 65(d)(2) are hereby enjoined and
shall not, in Colorado, do any of the following either directly or indirectly:
a. influence or attempt to influence any customer of Labcorp or the Business
(meaning the clinical and anatomic pathology laboratory services with
customers in additional states but that was based in the State of Colorado
that was sold to Labcorp under the Purchase Agreement) to divert such
customer’s purchases of services associated with the Business to any person
then in competition with Labcorp or its subsidiaries or affiliates;
b. influence or attempt to influence any employee of Labcorp or its
subsidiaries or affiliates, either directly or indirectly, to terminate his or her
employment with Labcorp or any of its subsidiaries or affiliates;
C. engage in a business that competes with the Business; or
d. provide information to, solicit or sell for, organize or own any interest in,
or become employed by or engaged by, or act as agent for, any person
(meaning any individual or corporation, association, partnership, limited
liability company, joint venture, joint stock or other company, business
trust, trust, organization, governmental authority or other entity of any kind)
that is directly or indirectly engaged in a business in Colorado which is
substantially similar to or competes with the Business, except for holding
(solely as a passive investment) not more than five percent (5%) of the
outstanding shares of any publicly held company which may be so engaged
in a trade or business substantially similar to or competes with the Business.

11
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Notwithstanding the foregoing, Papaioanu is not prohibited from engaging in the
following:
a. working for a division, entity, or subgroup of a company that engages in the
Business so long as such division, entity, or subgroup does not directly or
indirectly engage in the Business;
b. owning, working for, providing services in, contracting with or consulting
with a hospital or a health system, including working as a pathologist in a
hospital or health system, and is not competitive with Labcorp’s business
and is not involved in growing the hospital or health system’s business;
c. owning, providing services to, contracting with or consulting with an entity
that owns its own laboratory where such laboratory does not provide
external services; or
d. providing COVID PCR/RPP testing outside the Territory.
3. Except as specifically set forth herein, the terms of the Restrictive Covenant
Agreements are not modified and are subject to the same time and geographic limitations set forth
in the Restrictive Covenant Agreements.
The Court has jurisdiction to enforce this injunction, if necessary.

This 4 day of M marl _. 2024.

A A

United States District Court Jadge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10653315. Public record. Not legal advice.