United States District Court, D. Utah
MEMORANDUM DECISION AND ORDER DENYING PRELIMINARY
N. PARRISH, Judge United States District Court.
the court is plaintiff UHSpro, LLC's motion for a TRO and
for a preliminary injunction against defendant Secure
Documents, Inc. (hereinafter, Med-R). [Docket 7');">7]. The court
held an evidentiary hearing on the motion on May 25, 2017');">7.
Because Med-R had notice of this motion, filed an opposition,
and participated in the hearing on the motion, UHSpro's
request for a TRO is moot. The court, therefore, treats
UHSpro's motion as a motion for a preliminary injunction.
The court DENIES the motion.
UHSpro, LLC was formed in February, 2015. [Tr. 17');">7].
February 26, 2015, UHSpro executed a sales contract with
Med-R, an established company with existing relationships
with medical practices in a number of western states. [Tr.
42]. Although the contract was signed in February, 2015, the
document recited that it was executed on November 18, 2014
and was effective as of that date. [Ex. 2].
sales contract stated that UHSpro “owns exclusive and
non-exclusive rights in the Americas and parts of Europe . .
. for the sale, distribution and servicing of bio-monitoring
screening devices and all other products and Product related
thereto (collectively, the ‘Product').” The
contract designated Med-R “as an authorized
non-exclusive independent representative to sell and promote
all Product provided by” UHSpro. Med-R warranted that
it would “devote such time, energy and skill on a
regular and consistent basis as is necessary to sell and
promote the sale of [UHSpro's] Product during the term of
[the] Agreement.” [Ex. 2].
only biomonitoring screening device for which UHSpro had
“exclusive and non-exclusive rights” at the time
the contract was signed was the MaxPulse device. The parties
to the contract understood that the defined term
“Product” in the sales contract referred to the
MaxPulse device and that a new agreement would have to be
negotiated for any additional products to be marketed.
MaxPulse device measures a patient's heartbeat. UHSpro
also represents that the device can determine if the
patient's arteries are partially closed or hardened. [Tr.
Under the contract, Med-R would use its contacts with doctors
to place the device with medical practices. Doctors would
then use the device on patients and bill insurance companies,
Medicare, Medicaid, and the patients themselves for the
testing. The doctors would then retain a portion of the money
collected for these tests and pay the rest to UHSpro and
Med-R, which would split the remaining net revenue evenly.
the spring of 2015, concerns were raised that the MaxPulse
device did not meet the billing requirements for some of the
tests that the device allegedly performed. After reviewing
the device, UHSpro decided to retrofit the Max Pulse devices
with new components with the goal of expanding the number of
tests that the device could properly perform and that
physicians could bill to patients. [Tr. 168-69; Ex. 103].
August of 2015, UHSpro and Med-R had decided to abandon the
upgraded MaxPulse device all together. [Tr. 17');">71; Exs. 105,
106]. The parties decided instead to market a more expensive
RM-3A device that was manufactured by a different company.
The parties concluded that the RM-3A was more reliable than
the MaxPulse and that it could be used to perform a greater
number of tests. As a result, UHSpro and Med-R concluded that
the RM-3A could be used to increase the patient's bill
and produce greater profits for the physician customers and
themselves. [Tr. 17');">72-7');">74, 239-41; Ex. 104].
Therefore, in August 2015, the parties abandoned the February
26, 2015 contract to market and distribute the MaxPulse
UHSpro and Med-R agreed to move forward with a new
arrangement to market the RM-3A device. Med-R agreed to an
arrangement whereby UHSpro would purchase the RM-3A devices
and Med-R would pay a monthly rental fee for each device. The
parties agreed to the arrangement on a
“month-to-month” basis with the understanding
that Med-R would need to commit to a three month minimum term
for each. Device put into service. UHSpro and Med-R would
continue to evenly split the net revenue derived from the
RM-3A. [Tr. 239; Exs. 105, 106].
October, 2015, UHSpro proposed that the parties execute a new
partnership agreement to reflect the new agreement to market
the RM-3A device. UHSpro used the previous MaxPulse agreement
as a template, and drafted a new contract that incorporated
the previously agreed upon distribution and marketing
arrangement for the RM-3A. UHSpro then emailed the draft
contract to Med-R for approval, but Med-R refused to sign it.
[Ex. 107');">7]. Med-R was concerned about the problems it had
experienced with the MaxPulse device and did not want to
enter into a long-term contract.
the latter part of 2016, UHSpro and Med-R agreed to begin
transitioning to yet another device, the TM-Flow, which could
support even higher billing rates to patients. UHSpro
purchased new TM-Flow devices and began to retrofit some of
the RM-3A devices so that they effectively became TM-Flow
devices. [Tr. 65-68]. The parties distributed the TM-Flow
devices under the same month-to-month agreement they had
previously used for the RM-3A device. [Tr. 17');">78, 194-95].
January, 2017');">7, Med-R conducted a financial analysis of the
month-to-month arrangement with UHSpro and concluded that it
needed a higher percentage of the net revenue derived from
the RM-3A and TM-Flow devices in order to make the
arrangement profitable. In March, 2017');">7, Med-R informed UHSpro
that it required 65% of the net revenue from the devices,
leaving 35% for UHSpro. UHSpro balked at this change to the
revenue split, and Med-R decided to terminate the
month-to-month leasing arrangement. Except for one device,
Med-R returned all of the leased RM-3A and TM-Flow devices to
UHSpro. Med-R acquired TM-Flow devices from another
distributer and provided the devices to existing customers.
Med-R offered to split the existing clients with UHSpro, but
UHSpro declined the offer. [Tr. 249-52].
UHSpro sued Med-R, asserting a number of claims. [Docket 2].
UHSpro also filed this motion for a preliminary injunction.
[Docket 7');">7]. In the motion, UHSpro requests that this court
enter an injunction that orders Med-R to comply with 15
separate mandates. The requested injunction would, among
other things, order Med-R
a. not to breach the February 26, 2015 sales contract,
b. to continue to do business with UHSpro and equally share
net revenues derived from all clients,
c. not to utilize or copy various alleged trade ...