Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alsd-1_13-cv-00614/USCOURTS-alsd-1_13-cv-00614-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

---

IN	THE	UNITED	STATES	DISTRICT	COURT

FOR	THE	SOUTHERN	DISTRICT	OF	ALABAMA

SOUTHERN	DIVISION

ERIC	DAWSON,	 )

)

Plaintiff–Counterclaim	Defendant, )

)

v.	 ) Civil	Action	No.	13-0614-KD-M

)

AMERITOX,	LTD.,	 )

)

Defendant–Counterclaim	Plaintiff. )

ORDER

This	action	is	before	the	Court	on	Defendant	Ameritox,	Ltd’s	(Ameritox)	motion	for	a

preliminary	injunction and	memorandum	in	support	(docs.	4,	5);	plaintiff	Eric	Dawson’s	

motion	to	dissolve	the	temporary	restraining	order,	memorandum, and	evidence	in	

support	(docs.	26-28);	and	Ameritox’s	supplemental	brief	in	support	of	the	motion	for	

preliminary	injunction (doc.		29).		Upon	consideration	of	the	pleadings	and	the	documents,	

the	motion for	preliminary	injunction	is	DENIED,	in	part, to	the	extent	that	Dr.	Dawson	is	

enjoined	from	performing	any	services	for	any	competitor	of	Ameritox,	including	

Millennium	Laboratories,	Inc.		Accordingly,	the	hearing	on	the	motion	for	preliminary	

injunction,	presently	set	for	January	8,	2014 is	cancelled.	

I.		Background

Ameritox	provides	specialized	services	for	health	care	providers	nationwide	

including	medication	testing,	medication	monitoring,	laboratory	services,	and	management	

tools	for	patient	care.	 Dr.	Dawson,	a	licensed	Doctor	of	Pharmacy,	and	Ameritox	negotiated	

his employment	with	Ameritox as	its	“Assistant	Director,	Medical	Science	and	Health	

Outcomes	Research”	with	a	“Start	Date”	of	“April	11,	2011”. (Doc.	26-5,	Ameritox	internal	

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email;	Doc.	1,	p.	40,	Letter	from	Ameritox	to	Dr.	Dawson	dated	March	29,	2011	and	

confirming	the	state	date)		On	March	29,	2011, Dr.	Dawson signed	a	one-paragraph	

agreement	wherein	he	agreed	that	during	his	employment	with	Ameritox and	for	one-year	

thereafter,	he	would	not	solicit,	entice, induce	or	approach	Ameritox	clients	within	the	state	

of	Maryland	to	become	clients for	any	other	company	with	respect	to	products	or	services	

sold	or	under	development	by	Ameritox,	or	to	reduce	or	cease	doing	business	with	

Ameritox,	and	would	not	authorize	or	assist	such	actions by	any	other	person.			He	also	

agreed	not	to	solicit or	recruit	Ameritox’s former	or	current	employees	to	work	for	a	third	

party	or	engage	in	activity	that	would	violate	any	agreement	with	Ameritox. (Doc.	1,	p.	18)		

Later,	on	April	7,	2011,	Dr.	Dawson signed	a	two-page	Confidentiality	and	

Noncompetition	Agreement. (Doc.	5, p.	52-53)	 Again,	he	agreed	not	to	solicit	or	approach	

Ameritox	clients	to	become	clients	for	any	other	company.	(Id.,	¶2(i))		However,	the	scope	

widened	to	include	the	United	States.		Again,	he	agreed	not	to	solicit	or	recruit	Ameritox’s	

former	or	current	employees.	(Id.,	¶2(i))		Importantly,	he	also	agreed	that	during	his	

employment	and	for	one-year	thereafter,	he	would	not,	as	an

employee .	.	.	of	any	company	or	other	commercial	enterprise,	directly	or	

indirectly	engage	in	any	business	or	other	activity	in	the	United	States	or	

Canada	which	is	competitive	with	or	render	services	to	any	firm	or	business	

organization	which	competes	with	Ameritox	in	any	activity	in	which	I	was	

directly	involved	while	engaged	by	Ameritox	or	any	similar	services	being	

provided	by	Ameritox	at	the	time	of	termination	of	such	employment.	

(Id.,	¶2(iii)).	

The	Agreement	also	contained	a	clause	wherein	Dr.	Dawson	acknowledged	that	he	

would	have	access	to	confidential	information	and	agreed	not	to	disclose,	use or	exploit	any	

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confidential	information	obtained	during	his	employment.		Specifically,	Dr.	Dawson	agreed	

that:

During	and	after	my	employment,	I	will	not	(i)	use	or	exploit	in	any	manner	

the	Confidential	Information	for	myself	or	any	person,	partnership,	

association,	corporation	or	other	entity	other	than	Ameritox,	or	(ii)	remove	

any	Confidential	Information,	or	any	reproduction	thereof,	form	the	

possession	or	control	of	Ameritox.	

(Id., ¶3)

Dr.	Dawson’s	first	day	of	work	at	Ameritox	was	Monday,	April	11,	2011.	 (Doc.	1,	p.	

40)		During	his	employment,	Dr.	Dawson	worked	as	a	liaison	between	Ameritox customers	

and	its	medical	department	and	laboratory.	(Doc.	1,	p.	26,	Declaration	by	Kathryn	

Bronstein,	Vice	President	of	Medical	Affairs	at	Ameritox).			He	had	access	to	confidential	

and	sensitive	business	information	regarding	Ameritox’s	Rx	Guardian	CD	database	which	

allows	it	to	provide	services	to health	care	provider	customers	and regarding	Ameritox’s	

strategic	business	projects	related	to	genetic	and	mental	health	testing	protocols	and	plans	

for	expansion.	(Id.,	p.	26-27).	 On	December	3,	2013,	Dr.	Dawson	resigned	to	take	a	position

as	National	Director	of	Clinical	Affairs with	Millennium	Laboratories,	Inc., (Millennium)	a	

direct	competitor	of	Ameritox.	 (Doc.	1,	p.	32,	email	from	Dr.	Dawson	to	Bronstein)

After	notice	from	Ameritox	of	its	position	that	he	was	in	violation	of	the	Agreement,	

Dr.	Dawson	filed	a	complaint	for	declaratory	judgment	in	the	Circuit	Court	of	Mobile	

County,	Alabama,	seeking	a	declaration	that	his	employment	was	not	in	violation	of	the	

Agreement	or	that	the	Agreement	was	not	enforceable.		Ameritox	removed	the	action	to	

this	Court	and, upon	information	that	Dr.	Dawson	would	begin	work	with	the	competitor	

Millennium	on	December	19,	2013,	filed	its	motion	for	temporary	restraining	order	and	

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preliminary	injunction,	answer	and	counterclaim,	and	motion	for	expedited	discovery.	 A	

temporary	restraining	order	was	entered	on	December	20,	2013.		

II.	Preliminary	injunction

A.	Statement	of	the	law

“A	district	court	may	grant	[preliminary]	injunctive	relief	only	if	the	moving	

party	shows	that:	(1)	it	has	a	substantial	likelihood	of	success	on	the	merits;	

(2)	irreparable	injury	will	be	suffered	unless	the	injunction	issues;	(3)	the	

threatened	injury	to	the	movant	outweighs	whatever	damage	the	proposed	

injunction	may	cause	the	opposing	party;	and	(4)	if	issued,	the	injunction	

would	not	be	adverse	to	the	public	interest.”	Siegel	v.	LePore,	234	F.3d	1163,	

1176	(11th	Cir.	2000)	(en	banc);	accord	Alabama	v.	U.S.	Army	Corps	of	Eng'rs,	

424	F.3d	1117,	1128	(11th	Cir. 2005); Schiavo ex	rel.	Schindler	v.	Schiavo,	

403	F.3d	1223,	1225–1226	(11th	Cir.	2005)	(per	curiam);	Klay	v.	United	

Healthgroup,	Inc.,	376	F.3d	1092,	1097	(11th	Cir.	2004).

“A	preliminary	injunction	is	an	extraordinary	and	drastic	remedy	not	to	be	

granted	unless	the	movant	clearly	establishes	the	burden	of	persuasion	as	to	

the	four	requisites.”	All	Care	Nursing	Serv.,	Inc.	v.	Bethesda	Mem'l	Hosp.,	Inc.,	

887	F.2d	1535,	1537	(11th	Cir.1989)	(quotation	marks	omitted).	Failure	to	

show	any	of	the	four	factors	is	fatal,	and	the	most	common	failure	is	not	

showing	a	substantial	likelihood	of	success	on	the	merits.	See,	e.g.,	Schiavo,	

403	F.3d	at	1226	n.	2,	1237;	Church	v.	City	of	Huntsville,	30	F.3d	1332,	1342	

(11th	Cir.	1994);	Cunningham	v.	Adams,	808	F.2d	815,	821	(11th	Cir.	1987).

American	Civil	Liberties	Union	of	Florida,	Inc.	v.	Miami-Dade	County	School	Bd.,	557	F.3d	

1177,	1198	(11th	Cir.	2009)

B.	Elements

1.	Substantial	likelihood	of	success	on	the	merits

Ameritox asserts	that	Dr.	Dawson’s	non-compete	agreement	prevents	Dr.	Dawson	

from	working	for	Millennium	in	any capacity.		Dr.	Dawson	responds	that	the	non-compete	

agreement	is	void	under	Alabama	law	for	two	reasons:		1)	Non-competes	of	professionals,	

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like	Dr.	Dawson,	are	prohibited	by	Alabama	law;	and	2)	Pre-employment	non-compete	

agreements,	like	the	one	Dr.	Dawson	signed,	are	void	under	§	8-1-1	Alabama	Code	1975.1

The	Court	agrees	that	the	non-compete	agreement	is	void	because	it	was	signed	

prior	to	his	employment	with	Ameritox.		In	Pitney	Bowes,	Inc.	v.	Berney	Office	Solutions,	823	

So.2d	659 (Ala.	2001),	the	Court	stated	that	the	“employee-employer	exception	to	the	

voidness	of	noncompete	agreements	[§ 8-1-1(b)]	does	not	save	a	noncompete	agreement	

unless	the	employee-employer	relationship	exists	at	the	time	the	agreement	is	executed.”	

Id., at	662 (italics	in	original)	(citation	omitted).		

Ameritox	attempts	to	avoid	the	holding	of	Pitney	Bowes with	two	arguments.		At	the	

TRO	hearing,	Ameritox	argued	that	Pitney	Bowes was	distinguishable	because	§ 8-1-1	was	

only	applicable	to	merger	situations.		Ameritox	has	provided	no	authority	for	this	

proposition.		The	argument	is	not	persuasive	as	there	is	no	indication from	the	plain	

language	of	§	8-1-1 that	it	was	meant	to	be	limited	to	only	mergers.

					 Ameritox	also	contends	that	§ 8-1-1	does	not	apply	to	contracts	which	only	partially	

restrain	trade. 2		Ameritox	states	that	Dr.	Dawson’s	pre-employment	contract	is	only	a	

partial	restraint	of	trade.		Specifically,	Ameritox	argues	that	because	Dr.	Dawson	could	

work	in	other	capacities	as	a	pharmacist,	banning	him	from	the	specialty	that	he	has	

																																																							 1 Although	Maryland	law	applies	pursuant	to	the	non-compete	agreement,	Ameritox	does	

not	contest	that	the	agreement	is	void	if	it	violates	public	policy	as	set	forth	under	Alabama	

law.			See	Ex	parte	Howell	Engineering	and	Surveying,	Inc., 981	So.2d	413,	419 (Ala.	2006)	

(“Section	8–1–1	expresses	the	public	policy	of	this	State	as	to	contracts	restraining	

employment.”)	(citing	Clark	Substations,	L.L.C.	v.	Ware, 838	So.2d	360,	363	(Ala.2002)).

2		The	Court	notes	that	the	non-compete	agreement	in	Pitney	Bowes was	less	a	restraint	on	

trade	than	Dr.	Dawson’s	non-compete	agreement.		However,	the	court	still	applied	§	8-1-1

to	find	it	void.		823	So.	2d	at	661.		

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pursued	over	the	last	two	years	(clinical	drug-testing	and	medical	monitoring)	only	

partially	restrains	Dr.	Dawson’s	trade.

First,	it	is	not	likely	that	Dr.	Dawson’s	non-compete	agreement,	which	prevents	him	

from	working	in	any	capacity	with	Millennium	anywhere	in	the	United	State	or	Canada,	

could	be	considered	a	partial	restraint	of	trade.		The	case	relied	upon	by	Ameritox	for	this	

proposition,	Akzo	Nobel	Coatings,	Inc.	v.	Color	& Equipment,	LLC, 451	F.	Appx.	823	(11th Cir.	

2011),3 is	readily	distinguishable.		In	Akzo,	Martin,	an	independent	contractor	who	sold	

automobile	paint,	had	signed	a	one-year	non-compete	with	Akzo.		Martin	terminated	his	

contract	with	Akzo	and	wanted	to	sell	a	competitor’s	paint.			The	court,	relying	on	the	fact	

that	Martin	was	allowed	to	sell	Akzo	paint	during	the	one-year	non-compete	period,	

determined	that	the	non-compete	was	not	a	“substantial	limitation	upon	Martin’s	

opportunity	to	continue	the	same	business	he	previously	pursued.”	Id., at	825.		 Thus,	not	

only	was	Martin	not	an	employee,	which	as	explained	below	subjects	the	agreement	to	the	

restrictions	of	§	8-1-1,	Martin	was	allowed	to	continue	his	same business.	

However,	the	Court	need	not	decide	whether	the	non-compete	agreement	is	a	

partial	restraint	of	trade	because	such	a	determination	is	of	no	consequence	to	the

conclusion.		Section	8-1-1	applies	to	an	employee’s non-compete	agreement	whether	that	

agreement	is	a	partial	or	total	restraint	of	trade.	 In	fact, it	is	§	8-1-1	which	allows	for	

partial	restraint	of	trade	agreements	with	employees.		

																																																							 3		Unpublished	opinions	are	not	considered	binding	precedent,	but	may	be	cited	as	

persuasive	authority.	Rule	36-2	of	the	United	States	Court	of	Appeal	for	the	Eleventh	

Circuit.			

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Ameritox’s	argument	to	the	contrary	is	based	primarily	on	Ex	parte	Howell	

Engineering and	Surveying,	Inc., 981	So.	2d	413	(Ala.	2006).		In	Howell, the	Court	considered	

whether	a	no-hire	agreement	between	employers	violated	§	8-1-1.		The	Court	determined	

that	because	the	agreement	was	only	a	partial	restraint	of	trade, it	was	“not	void	under	§	8-

1-1 even	[though	there	was]	no	corollary	noncompetition	agreement	with	an	employee....”

Id.,	at	422-423.			The	Court	also	stated	that	“to	the	extent	Dyson,	Defco,	and	Sevier, conflict	

with	this	opinion,	they	are	hereby	overruled.” Id.,	at	423.		The	Howell opinion	was	based	on	

the	decision	in	Southeast	Cancer	Network,	P.C.	v.	DCH	Healthcare	Authority,	869	So. 2d	452	

(Ala.2003).4		A	review	of	the	cases	on	which	the	Howell	Court	relied	is	necessary	to	put	the	

issue	in	context.		

Dyson	Conveyor	Maintenance,	Inc.	v.	Young	&	Vann	Supply	Co.,	529	So.2d	212	

(Ala.1988)	and	Defco,	Inc.	v.	Decatur	Cylinder,	Inc.,	595	So.2d	1329	(Ala.1992)	both	involved	

a	no-hire	provision	between	employers.		The	Court	held	the	no-hire	provisions	void	

because	there	was	no	underlying	employer - employee	non-compete	agreement	that	

complied	with	§	8-1-1.		Then,	in	Southeast	Cancer,	the	Court	held	that	an	agreement	for	the	

exclusive	practice	of	oncology	at	DCH	Hospital between	DCH and	Oncology	Associates, did	

not	restrain	Southeast	Cancer,	or	its employees,	“in	a	manner	that	violates	§	8-1-1,	Ala.	

Code	1975.” Id.,	at	458.

The	difference	between	the	conclusions	of	Dyson/Delco	and	Southeast	Cancer was	

that	Southeast	Cancer allowed	the	agreement,	which	was	determined	to	be	only	a	partial	

																																																							 4 In	Southeast	Cancer,	Oncology	Associates	had	an	exclusive	contract	to	practice	oncology	at	

DCH	Hospital.		Southeast	Cancer	was	not	allowed	to	practice	oncology	at	the	hospital.		

Southeast	Cancer	sued	the	hospital	and	alleged	that	the	contract	between	Oncology	

Associates	and	DCH	violated	§	8-1-1.		

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restraint	of trade,	without	consideration	of	whether	there	was	an	underlying	employer	–

employee	non-compete	agreement	that	complied	with	§	8-1-1.		Rather,	unlike	Dyson/Delco,	

Southeast	Cancer examined	whether	the	exclusivity	agreement	itself	violated	the	principles	

of	§	8-1-1.		

Previously,	in	Sevier	Insurance	Agency,	Inc.	v.	Willis	Corroon Corp.	of	Birmingham,	

711	So.	2d	995	(Ala.	1998),	the	Court	considered	whether	a	non-solicitation	agreement	

between	an	employer/employee	was	valid	under	§	8-1-1.		In	the	opinion,	the	Court	

acknowledged	a	conflict	in	case	law	as	to	whether	non-solicitation	agreements	(in	addition	

to	non-compete	agreements)	were	governed	by	§	8-1-1.		The	Court	held	that	because	nonsolicitation	agreements	between	an	employer/employee	restrains	trade,	§	8-1-1	applies.			

The	Court	also	broadly	stated	that,	“’partial	restraint	of	trade’	is	subject	to	§	8-1-1,	but	will	

be	upheld	when	it	is	properly	restricted	as	to	territory,	time	and	persons	and	where	it	is	

supported	by	sufficient	consideration.”	Id., at	999.		

Thus,	when	the	Howell case	was	considered	there	was	arguably	conflicting	

precedent	regarding	when	a	contract	that	partially	restrains	trade	implicates	§	8-1-1.			

Dyson/Defco prohibited	any	type	of	contract	that	partially	restrained	trade	unless	the	

employee/individual	affected	had	signed	a	non-compete	that	complied	with	§	8-1-1.		

Southeast	Cancer allowed	a	contract	that	partially	restrained	trade,	and	indicated	that	§	8-

1-1	was	not	implicated	because	“DCH	and	Oncology	Associates'	agreement	does not	on	its	

face	prohibit	Southeast's	physicians—who	are not	parties	to	the	agreement—from	

practicing	oncology”.		Southeast	Cancer, 869	So.	2d	at	457.			Sevier,	which	did	not	otherwise	

discuss	partial	restraint	of	trade	contracts	outside	the	employer-employee	context,	

seemingly	held	that	all	partial	restraint	of	trade	contracts	were	subject	to	§ 8-1-1.		

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As	previously	stated,	Howell overruled	Dyson,	Defco,	and	Sevier to	the	extent	they	

were	inconsistent	with	Howell.		Thus,	the	context	of Howell is	crucial	to	understand	what	

was	overruled.		Howell	involved	a	no-hire	agreement	between	employers,	not	an	

agreement	between	an	employee/employer.		Howell	made	clear	that	no-hire	agreements	

between	employers	did	not	run	afoul	of	§ 8-1-1.		Howell did	not	address	partial	restraint	in	

the	context	of	employee-employer	agreements.		Thus,	the	Court	is	not	convinced	that	

Howell	counsels	that	employee	non-compete	agreements, that	only	partially	restrain	trade,

are	exempt	from	the	restrictions	of	§ 8-1-1.

As stated	in	Sevier,	“[i]t	would	make	no	sense	for	the	Legislature	to	draft	an	

exception	...	but	not	intend	for	either	the	statute	or	the	exception	to	apply....”	711	So.	2d	at	

1000.		Section	8-1-1	clearly	applies	to	non-compete	agreements	between	employersemployees	and	provides	for	an	exception	to	their	voidness	if	the	non-compete	agreement	

only	restrains	trade within	a	certain	territory,	i.e.,	partially.		The	extent	of	restraint	of	trade

allowed is	defined	by	the	exception;	employees	may	agree	to	not	engage	in	similar	business	

or solicit	old	customers	within	a	specified	county,	city	or	part	thereof.			Thus,	it	is	

nonsensical	to	say	that	§ 8-1-1	does	not	apply	to	employee	non-compete	agreements	that	

only	partially	restrain	trade.			

Thus,	because	§ 8-1-1	is	applicable	to	Dr.	Dawson’s	non-compete	agreement,	it	must	

be	determined	whether	Dr.	Dawson’s	non-compete	violates	§ 8-1-1.		As	previously	stated,	

Pitney	Bowes answers	this	question.		Non-compete	agreements	are	valid	only	if	signed	by	

an	employee.			Prospective	employment	is	not	sufficient	because	a	person	that	has	been	

offered	employment	to	begin	in	the	future	does	not	have	an	employer-employee	

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relationship.		Pitney	Bowes, 823	So.	2d	at 662	(“Absent	the	employee-employer	relationship	

when	the	agreement	is	executed,	the	agreement	is	void.”) (citation	omitted).	

			 Accordingly,	as	to	the	enforceability	of	the	non-compete	agreement	between	

Ameritox	and	Dr.	Dawson,	the	Court	finds	that	Ameritox	does	not	have	a	substantial	

likelihood	of	succeeding	on	this	breach	of	contract	claim.		Therefore,	the	Court	finds	that	

the	Temporary	Restraining	Order	should	be	terminated	to	the	extent	it	prohibits	Dr.	

Dawson	from	performing	any	services	for	any	competitor	of	Ameritox,	including	

Millennium	Laboratories,	Inc.			

							 2.	Remaining	elements

Since	Ameritox	has	failed	to	meet	its	burden	as	to	the	first	of	the	four	prerequisites	

for	entry	of	a	preliminary	injunction,	the	Court	need	not	address	the	remaining	three.

C.		Confidentiality	provisions

The	parties	do	not	dispute	that	Dr.	Dawson	is	subject	to	the	confidentiality	

provisions	of	the	employment	agreement	and	that	a	preliminary	injunction	is	appropriate	

as	to	those	provisions.		Therefore,	it	is	ORDERED,	ADJUDGED	and	DECREED	as	follows:

1.	Dr.	Dawson	is	enjoined from	using	or	disclosing	any	of	Ameritox’s	proprietary	

and/or	confidential	business	information.

2.	Dr.	Dawson	is	directed	to	immediately	return	to	Ameritox	all	Company	

documents	and	information,	with	the	exception	of	documents	and	information	pertaining	

to	his	personal	compensation.

3.	Dr.	Dawson	is	enjoined	from	deleting,	destroying,	erasing,	modifying,	or	

otherwise	altering	any	and	all	electronic	media,	including,	but	not	limited	to,	work	and	

personal	e-mail	accounts,	external	hard	drives,	thumb	drives,	or	other	portable	media,

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Dropbox	accounts,	network	drives,	computers,	cellular	phones,	smart	phones,	and	personal	

digital	assistants,	that	have	stored	Ameritox’s	documents	or	information,	or	were	used	to	

transfer	or	temporarily	store	Ameritox’s	documents,	data,	or	information,	or that	referred	

or	related	to	Ameritox,	Ameritox’s	business,	Ameritox’s	employees	or	existing	or	

prospective	customers,	or	work	completed	to	date,	until	such	time	that	this	Court	gives	him	

leave	to	so	do.

4.	 Dr.	Dawson	is	directed	to	preserve	all	documents,	data,	and	information	

pertaining	to	the	offer	of	employment	extended	to	him	by	Millennium, communications	

between	Dr.	Dawson	and	Millennium	and/or	with	other	individuals	regarding	his	

prospective	employment	and	employment	with	Millennium,	and	communications	between	

Dr.	Dawson	and	Millennium	and/or	with	other	individuals	regarding	their	knowledge	of	

and/or	access	to	Ameritox’s	confidential	business	or	proprietary	information.

DONE	this	the	6th	day	of	January	2014.	

s/	Kristi	K.	DuBose

KRISTI K.	DuBOSE

UNITED	STATES	DISTRICT	JUDGE

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