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IN THE UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF FLORIDA

PENSACOLA DIVISION

ANESTHESIA HEALTHCARE

PARTNERS INC, et al.,

Plaintiffs,

v. Case No: 3:11cv149/MCR/EMT

ANESTHESIA HEALTHCARE

SOLUTIONS OF NORTH FLORIDA LLC, et al.

Defendants.

_______________________________________________________________________

REPORT AND RECOMMENDATION

Before the court is plaintiffs’ motion for a preliminary injunction (doc. 7),

which was referred to the undersigned on April 29, 2011. Plaintiffs seek to enjoin

defendants Anesthesia Healthcare Solutions of North Florida, LLC (“AHS”), David

W. Simpson, M.D. (“Dr. Simpson”), and Brett S. Sullivan, M.D., from using the name

“Anesthesia Healthcare Solutions” because they contend it is an unlicensed use of

their proprietary mark in violation of the Lanham Act, Title 15 U.S.C. §§ 114 et seq

(id.). Plaintiffs further seek to enjoin AHS and Dr. Simpson from providing

anesthesia related services to Baptist Hospital, Inc. (id.). Defendants responded in

opposition (doc. 8), and the court granted plaintiffs motion for leave to reply (see

docs. 14, 17, 19). The court held an evidentiary hearing on May 16, 2011, during

which the parties submitted exhibits and presented arguments. After careful

consideration, it is the opinion of the undersigned that plaintiffs’ motion for a

preliminary injunction should be denied.

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FACTUAL BACKGROUND

On October 26, 2006, Anesthesia Healthcare Partners of Florida, Inc. (“AHP”)

entered into an agreement (“Hospital Agreement”) with Baptist Hospital, Inc.,

(“Baptist”) to provide anesthesia services to Baptist, including administrative

support and medical staff (doc. 8, ex. 2). The contract commenced February 1, 2007,

and continued for three years, until it ended on its terms on January 31, 2010 (doc.

8, p.1).

To fulfill its contract with Baptist, on June 18, 2007, AHP entered into the

Physician Independent Contractor Agreement (“Agreement”) with defendant Santa

Rosa Anesthesia Associates, P.A. (“Santa Rosa”) .1

 The Agreement references the

Hospital Agreement explicitly and states:

Pursuant to the Hospital Agreement AHP has agreed to contract with

various Anesthesiologists . . . as are necessary and appropriate to

provide administrative and professional services at the Hospital’s

Department of Anesthesiology . . ..

The parties to the Agreement were:

Anesthesia Health Care Partners of Florida, Inc., a Florida corporation

(“AHP”) and Santa Rosa Anesthesia Associates, P.A., a professional

association licensed in the State of Florida (“Physician”).

(Doc. 8, ex. 6, p. 1). As will be discussed in more detail below, Drs. Simpson and

Sullivan are defendants to this case but were not parties to the agreement.

AHP agreed to pay “Physician” an annual stipend that increased contractually

each year until the Agreement ended by its terms on June 4, 2010 (doc. 8, ex. 6, p.

1, ¶ 5; p. 4, ¶ 1). In return, “Physician” agreed to provide anesthesia services and

abide by a list of terms and conditions for the duration of the agreement (id. at p. 2-

4). In addition, “Physician” agreed to the following restrictive covenants:

1

 The Agreement states it is “dates as of the 18th day of June, 2007," and Simpson signed the

Agreement on June 18, 2007. AHP’s representative did not sign until July 9, 2007 (doc. 8, ex. 6).

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8. Not directly or indirectly, alone or as a partner, officer, director,

shareholder, or employee of any other entity, provide

anesthesiology services of any type within a two (2) mile radius

of Hospital during the term of this Agreement and for a period of

one (1) year after the termination or expiration of this Agreement

for any reason, absent AHP’s prior written approval. Physician

agrees that breach of this provision, which he/she acknowledges

is reasonable in both scope and duration, shall cause irreparable

harm to AHP for which monetary damages cannot be calculated.

. . .

10. For a period of one (1) year after the termination or expiration of

the Agreement for any reason, not solicit, directly or indirectly,

with anyone currently employed with or contracted by AHP to

terminate their employment or engagement with AHP and to

become employed or engaged by any business enterprise with

which Physician may then be associated, affiliated or connected.

11. Except to the extent contemplated in the event of a Direct Service

Agreement, relinquish all privileges in anesthesia and resign

from the medical staff of Hospital effective with the termination

of this Agreement.

(Doc. 8, ex. 6, p. 3). The execution block of the agreement read “FOR: PHYSICIAN”

and “FOR: AHP” (id. at 9). Simpson signed for “Physician”, and Greg Wachowiak,

CEO of AHP, signed for AHP (id.).

The Hospital Agreement terminated at the end of January 2010 and the

Agreement ended the following June 4. Baptist and AHP negotiated for a new

contract but were unable to reach agreement and discontinued negotiations in July

2010 (doc. 8, p. 2 and ex. 1). Meanwhile, the parties continued to perform under the

terms of both the Hospital Agreement and the Agreement. In August 2010, Dr.

Simpson submitted a proposal to Baptist’s administrator to become the new

anesthesia provider (doc. 8, ex. 1, ¶ 8). When negotiations with AHP fell through,

Baptist management had decided the hospital was not going to enter into a new

agreement with AHP regardless of circumstances, and it accepted Dr. Simpson’s

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proposal (id. at ¶ 9). Dr. Simpson formed AHS on August 11, 2010, to provide

services to Baptist (doc. 7, p. 8; doc. 8, ex,5, ¶ 9). On October 4, Baptist sent AHP a

letter terminating its services as of November 5, 2010 (doc. 8, ex. 3). AHP terminated

its agreement with Santa Rosa on or about the same day (doc. 7, p. 5).

During November 2010, Baptist’s management and attorneys exchanged

several emails and telephone calls with AHP representatives, during the course of

which AHP represented it was not releasing Dr. Simpson from the non-compete and

non-solicitation clauses of the Agreement (doc. 8, ex. 1, ¶ 11; doc. 19, ex. 1, ¶ 10-11;

pl.’s ex. 2). At some later point, AHP also learned that its former employee, Aaron

Barter, was working for AHS; AHP believes Dr. Simpson solicited Barter (doc. 19, ex.

1, ¶¶ 25-26).

Plaintiffs instituted this action on March 28, 2011, alleging several counts of

breach of contract, tortious interference with contractual relationships, trademark

infringement, dilution of trademark, and violation of the Florida Trade Secrets Act,

Florida Statutes Sections 688.001 et seq. (doc. 1). On April 1, 2011, plaintiffs filed the

motion for preliminary injunction under consideration.

LEGAL STANDARD - PRELIMINARY INJUNCTION

Plaintiffs seek a preliminary injunction to stop defendants from performing

anesthesia services for Baptist and using the AHS business name. To succeed on

a motion for preliminary injunction, the moving party must show:

(1) a substantial likelihood of success on the merits; (2) a substantial

threat of irreparable injury if the injunction were not granted; (3) that the

threatened injury to plaintiffs outweighs the harm an injunction may

cause the defendant; and (4) that granting the injunction would not

disserve the public interest.

Int’l Cosmetics Exch., Inc. v. Gapardis Health & Beauty, Inc., 303 F.3d 1242, 1246 (11th

Cir. 2002) (quoting Levi Strauss & Co. v. Sunrise Int’l Trading Co., 51 F.3d 982, 985

(11th Cir. 1995)); Siegel v. LePore, 234 F.3d 1163, 1178 (11th Cir. 2000). “A preliminary

injunction is an extraordinary and drastic remedy not to be granted unless the

movant clearly establishe[s] the burden of persuasion as to the four requisites.” Int'l

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Cosmetics Exchange, Inc., 303 F.3d at 1206; Siegel, 234 F.3d at 1176; see also Texas

v. Seatrain Int’l, S.A., 518 F.2d 175, 179 (5th Cir. 1975) (grant of preliminary injunction

“is the exception rather than the rule”).2 The purpose of a preliminary injunction is

to preserve the status quo while the case is litigated, and in considering whether to

issue an injunction, the court must balance “the conveniences of the parties pending

the final adjudication with consideration being given to whether greater harm might

come from granting the injunction or denying it.” Dent Wizard Int’l Corp. v. Brown,

612 S.E.2d 873, 875 (Ga. Ct. App. 2005).

A. Plaintiffs’ First Required Proof: Substantial Likelihood of Success on the Merits

Plaintiffs make two primary claims here. First, they claim that Dr. Simpson

and Dr. Sullivan conspired to create a new corporation under which they are doing

business, and that the name of their corporation, AHS, is so close to and so easily

confused with AHP’s registered marks as to constitute trademark infringement. 

Second, plaintiffs say that Dr. Simpson breached restrictive covenants in the

Agreement by (a) violating the non-compete portion of the Agreement by contracting

with Baptist to provide anesthesia services, (b) soliciting away an AHP employee,

and (c) not surrendering his hospital privileges at Baptist. In order to keep the two

issues separated (although there is a great deal of overlap), the following discussion

will deal with each of the two main issues as they relate to the plaintiffs’ burden of

proof. 

 1. Independent Contractor Agreement

Under Georgia law, the elements for a breach of contract claim are breach and

damages to a party with the right to complain.3 Graham Bros.’ Const. Co., Inc. v.

C.W. Matthews Contracting Co., Inc., 285 S.E.2d 282, 286 (Ga. Ct. App. 1981); Ga.

2

 In Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir.1981) (en banc), this court adopted as

binding precedent all of the decisions of the former Fifth Circuit handed down prior to the close of

business on September 30, 1981.

3

 The Independent Contractor Agreement states that the parties agree to construe and enforce

the Agreement in accordance with the laws of the State of Georgia (doc. 8, ex. 6, p. 7, ¶ 12).

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Code. Ann. § 13-3-1 (West 2010). Plaintiffs are seeking a preliminary injunction to

enforce restrictive covenants within the contract. Georgia courts apply three levels

of scrutiny to restrictive covenants depending on the type of contract. Dent Wizard

Int’l Corp., 612 S.E.2d 873, 875. Strict scrutiny applies to employment contracts,

middle or “lesser” scrutiny applies to professional partnership agreements, and low

scrutiny applies to sale of business agreements. Id. The principle lies in the

suspicion of restraints in trade:

A restrictive covenant in an employment agreement is in partial

restraint of trade and will be enforced only if the restraint imposed is

reasonable, is founded on a valuable consideration, is reasonably

necessary to protect the interest of the party in whose favor it is

imposed, and does not unduly prejudice the interests of the public.

Waldeck v. Curtis 1000, Inc., 583 S.E.2d 266 (Ga. Ct. App. 2003). Professional

partnership agreements are analyzed with middle level scrutiny because parties

generally have equal bargaining power, the restrictions are mutually advantageous

to the parties, and “consideration flows equally among the contracting parties.” 

Physician Specialists in Anesthesia, P.C. v. MacNeill, 539 S.E.2d 216, 221 (Ga. Ct.

App. 2000). A restrictive covenant in a partnership agreement will be enforced if it

is reasonable. The court in MacNeill stated:

The reasonableness of a restrictive covenant is determined by

examining its duration, territorial coverage, and scope of prohibited

activity. This tripartite test is not applied arbitrarily, but as a helpful

tool in examining the reasonableness of the underlying factual setting. 

Id. at 222 (internal quotations omitted). A court can issue a preliminary injunction

only on an enforceable restrictive covenant. Furthermore, if a contract contains one

unenforceable restrictive covenant, all other restrictive covenants are also

unenforceable; Georgia courts do not employ the “blue pencil” doctrine to sever

unenforceable covenants from the contract. Waldeck, 583 S.E.2d at 269; Advance

Tech. Consultants, Inc. v. Roadtrac, LLC, 551 S.E.2d 735, 737 (Ga. Ct. App. 2001).

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2. Trademark Infringement

To prevail on a trademark infringement claim, a plaintiff must show: (1) that

defendant used its mark in commerce without the registrant's consent; and (2) that

the unauthorized use was likely to deceive, cause confusion, or result in mistake.

15 U.S.C. § 1114 (2006); McDonald's Corp. v. Robertson, 147 F.3d 1301, 1307 (11th

Cir.1998). 

B. Plaintiffs’ Second Required Proof: Substantial Threat of Irreparable Injury

1. Restrictive Covenants

The threat of economic loss alone does not justify a preliminary injunction. 

Ferrero v. Assoc. Materials, Inc., 923 F.2d 1441, 1449 (11th Cir. 1991) (“An injury is

irreparable only if it cannot be undone through monetary remedies.” (internal

quotations omitted)). Furthermore, it is inappropriate to “compare the actual losses

sustained to the size of the company.” Id. (injunction is still proper when it would

cause former employee to lose over 50% of income while employer would lose just

2.3%). In contrast, the Eleventh Circuit has held that the loss of customers and

goodwill is an irreparable injury. Bellsouth Telecomm. v. MCIMetro Access

Transmission Serv., LLC, 425 F.3d 964, 970 (11th Cir. 2005) (court enjoined

enforcement of Georgia Public Service Commission’s order directing BellSouth to

negotiate terms with customers, which would result in loss of 3200 customers per

week); Ferrero, 923 F.2d at 1449 (injunction was proper when corporation would lose

goodwill and long-time customers and have to layoff employees if former employee

continued operating business in violation of non-competition clause).

2. Trademark Infringement

Even if plaintiffs show a substantial likelihood of success on the merits,

injunctive relief is improper unless plaintiffs also demonstrate irreparable injury. 

Siegel, 234 F.3d at 1176. The court must consider several factors in determining

whether a plaintiff faces a substantial theat of irreparable injury, including loss of

control of reputation, loss of trade, loss of goodwill, and the likelihood of confusion. 

Ferrellgas Partners, L.P. v. Barrow, 143 Fed. Appx. 180 (11th Cir. 2005) (citing Third

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and Seventh Circuit decisions). A plaintiff’s delay in seeking injunctive relief

“weighs against” their ability to show a threat of irreparable harm. Hi-Tech

Pharmaceuticals, Inc. v. Herbal Health Products, Inc., 311 F. Supp. 2d 1353, 1357

(N.D. Ga. 2004).

The purpose of a strong trademark is to give the owner exclusive use and

control over its reputation. Confusion coupled with an infringer’s inferior services

injures the owner’s goodwill and dilutes the distinctiveness of its product. PepsiCo,

Inc. v. #1 Wholesale, LLC, 2007 WL 2142294 at *4 (N.D. Ga. 2007). The Trademark

Dilution Revision Act of 2006, 15 U.S.C. § 1125(c), provides:

(c) Dilution by blurring; dilution by tarnishment

(1) Injunctive relief

Subject to the principles of equity, the owner of a famous mark that is

distinctive, inherently or through acquired distinctiveness, shall be

entitled to an injunction against another person who, at any time after

the owner's mark has become famous, commences use of a mark or

trade name in commerce that is likely to cause dilution by blurring or

dilution by tarnishment of the famous mark, regardless of the presence

or absence of actual or likely confusion, of competition, or of actual

economic injury.

(2) Definitions

(A) For purposes of paragraph (1), a mark is famous if it is widely

recognized by the general consuming public of the United States as a

designation of source of the goods or services of the mark's owner. In

determining whether a mark possesses the requisite degree of

recognition, the court may consider all relevant factors, including the

following:

(i) The duration, extent, and geographic reach of advertising and

publicity of the mark, whether advertised or publicized by the owner or

third parties.

(ii) The amount, volume, and geographic extent of sales of goods or

services offered under the mark.

(iii) The extent of actual recognition of the mark.

(iv) Whether the mark was registered under the Act of March 3, 1881, or

the Act of February 20, 1905, or on the principal register.

See also PepsiCo, Inc., supra at *4 (“PepsiCo must show that: 1) the PepsiCo Marks

are famous; 2) Sahni commenced using the PepsiCo Marks in commerce after they

became famous; 3) Sahni’s use of the PepsiCo Marks is likely to cause dilution. . ..”). 

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Under Georgia law, injunctive relief is proper against someone who uses the same

or similar trademark, and there is a likelihood of injury to the business’ reputation

or of dilution of the trademark’s distinctive quality. Ga. Code. Ann. § 10-1-451 (West

2010).

The Eleventh Circuit has held that “a sufficiently strong showing of likelihood

of confusion [caused by trademark infringement] may by itself constitute a showing

of substantial likelihood of prevailing on the merits and/or a substantial threat of

irreparable harm.” E. Remy Martin & Co. v. Shaw-Ross Int'l Imports, 756 F.2d 1525,

1530 (11th Cir.1985); see McDonald's Corp., 147 F.3d at 1310. The court evaluates

seven factors to determine whether two marks pose a likelihood of confusion:

 (1) strength of the mark alleged to have been infringed; (2) similarity of

the infringed and infringing marks; (3) similarity between the goods and

services offered under the two marks; (4) similarity of the actual sales

methods used by the holders of the marks, such as their sales outlets

and customer base; (5) similarity of advertising methods; (6) intent of

the alleged infringer to misappropriate the proprietor's good will; and

(7) the existence and extent of actual confusion in the consuming

public.

Tana v. Dantanna’s, 611 F.3d 767, 774-75 (11th Cir. 2010) (citing Welding Servs., Inc.

v. Forman, 509 F.3d 1351, 1360 (11th Cir. 2007)); accord Angel Flight of Georgia, Inc.

v. Angel Flight America, Inc., 522 F.3d 1200, 1206 (11th Cir. 2008) (listing the same

factors and citing Georgia case law). While evidence of actual confusion is the best

evidence to support a finding of a likelihood of confusion, it is not necessary. E.

Remy Martin & Co., 756 F.2d at 1529.

When a trademark is not sufficiently distinctive to tie the trademarked product

to the producer, the trademark holder has exclusive use only to the extent that the

trademark has acquired secondary meaning. Conagra, Inc. v. Singleton, 743 F.2d

1508, 1513 (1984) (trademarked surname acquired secondary meaning sufficient to

assert exclusive use). Whether a trademark has secondary meaning depends on:

(1) the length and manner of its use; (2) the nature and extent of

advertising and promotion; (3) the efforts made by the plaintiff to

promote a conscious connection in the public's mind between the name

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and the plaintiff's product or business; and (4) the extent to which the

public actually identifies the name with the plaintiff's product or

venture.

Id. at 1513; St. Luke's Cataract and Laser Institute, P.A. v. Sanderson, 573 F.3d 1186,

1208-09 (11th Cir. 2009). If the trademark is not distinctive enough to warrant

exclusive use, the holder is not entitled to injunctive relief.

C. Plaintiffs’ Third Required Proof: Threatened Injury to Plaintiffs Outweighs Harm

Caused to Defendants

1. Restrictive Covenants

A restrictive covenant in a professional partnership agreement is void if it

“needlessly oppresses one of the parties without affording any corresponding

protection to the other.” Broome v. Ginsberg, 283 S.E.2d 1, 2 (Ga. Ct. App. 1981)

(non-compete clause that prevented dentist from practicing was unreasonable

because, after he left, the professional corporation existed solely to liquidate assets,

so dentist could not be “competing” with it); compare Broome, supra, with Pittman

v. Coosa Medical Group, P.C., 685 S.E.2d 753, 756 (Ga. Ct. App. 2009). To be

reasonable, the restriction upon the professional must be only as large as necessary

to protect the corporation. Id. (citing Taylor Freezer Sales, Co. v. Sweden Freezer

Eastern Corp., 160 S.E.2d 356 (Ga. 1968)). A restrictive covenant is enforceable, and

a plaintiff can obtain a preliminary injunction, when the professional corporation is

severely damaged despite efforts to rebuild. Pittman, 685 S.E.2d at 756. For

example, in Pittman, a neurosurgeon who founded Coosa Medical Group left the

corporation to work for a different company in violation of a non-competition clause

in his contract with Coosa. Id. at 754. Coosa’s president stated that “‘when a

physician leaves a group and sets up shop across town,’ as opposed to leaving the

community, ‘all sorts of questions get raised. . ..’” Id. at 756. The court found that

injunctive relief was appropriate because Pittman’s actions bore “direct relevance”

on Coosa’s ability to recruit new staff and rebuild the corporation. Id. In sum, a

professional corporation has a legitimate business interest in restricting competition

to protect the trust and confidence it built with its clients. Singer v. Habif, Arogeti

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& Wynne, P.C., 297 S.E.2d 473, 475 (Ga. 1982). However, this interest must be

weighed against the impact on the professional’s ability to conduct business. Id.;

see also Augusta Eye Center, P.C. v. Duplessie, 506 S.E.2d 242 (Ga. Ct. App.1998)

(non-competition clause in former employee’s contract must balance employee's

right to earn a living without unreasonable restrictions with employer’s right to

protection from unfair appropriation of contacts developed while working for

employer).

2. Trademark Infringement 

Whether the threatened harm to the movant outweighs the threatened harm

to the non-movant is a question of equity. See Citicasters Licenses, Inc. v. Cumulus

Media, Inc., 189 F. Supp. 3d 1372, 1382 (S.D. Ga. 2002). The court must consider the

goodwill and name recognition of the parties’ mark, the time and money invested in

the mark, and economic loss if the court issued an injunction. Id. (plaintiff

corporation had forty radio stations and would suffer greater injury than defendant,

though defendant would be harmed). For example, the movant’s assertion that it will

suffer irreparable harm through dilution of its mark must be balanced against the

non-movant’s assertion that an injunction would effectively put him out of business.

See E. Remy Martin & Co., 756 F.2d at 1534 (likelihood of confusion between marks

and harm to goodwill and reputation outweighed non-movant’s assertion that he

would go out of business). The court must evaluate the truth of the non-movant’s

claim in light of the evidence. Id. (non-movant’s business survived five years

without selling wine with the infringing mark). Furthermore, the court may weigh the

fact that a defendant knew he was violating trademark rights and continued to do so

for a long period against the defendant’s asserted harm. Original Appalachian

Artworks, Inc. v. Topps Chewing Gum, Inc., 642 F. Supp. 1031, 1040 (N.D. Ga. 1986)

(manufacturer of “Garbage Pail Kids” continued to intentionally violate “Cabbage

Patch Kids” manufacturer’s rights and could not complain of threatened harm).

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D. Plaintiffs’ Fourth Required Proof: Public Interest

1. Restrictive Covenants

A preliminary injunction cannot have an adverse impact on the public.4 

“Enforcement of an ostensibly enforceable covenant not to compete would not be

adverse to the public interest.” Smallbizpros, Inc. v. Court, 414 F. Supp. 2d 1245,

1251 (M.D. Ga. 2006) (franchisor-franchisee non-compete agreement). However,

Georgia courts recognize that there is also a public interest in having the ability to

choose the professional services it prefers. Morgan Stanley DW, Inc. v. Frisby, 163

F. Supp. 2d 1371, 1382 (N.D. Ga. 2001); see also Merrill Lynch, Pierce, Fenner &

Smith Inc. v. de Liniere, 572 F. Supp. 246, 249 (D.C. Ga. 1983) (“public has a greater

interest in being able to choose whether to follow its broker to a new firm or to

remain at the old firm with a new broker”).

2. Trademark Infringement

Overwhelmingly, courts’ evaluation of this prong focuses on the public’s

interest in preventing confusion in the marketplace. See, e.g., Barrow, 143 Fed.

Appx. 180 (11th Cir. 2005); Davidoff & Cie, S.A. v. PLD Int’l Corp., 264 F.3d 1297, 1304

(11th Cir. 2001).

DISCUSSION

A. Plaintiffs have not shown a substantial likelihood of success on the merits.

1. Restrictive Covenant

The contract specifies representative names for each party, and Santa Rosa’s

4

 Courts generally do not expound on public interest prong because they deny the injunction

on other grounds, thus failing to reach the final prong, or grant the injunction and summarily conclude

it is not against the public interest .

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representative name is “Physician” (doc. 8, ex. 6, p.1). The signature block reads

“FOR: PHYSICIAN” and is signed by Dr. Simpson. Plaintiffs argue the designation

“Physician” in conjunction with Dr. Simpson’s signature shows that Dr. Simpson

was a party to, and is liable under, the Agreement (doc. 19, p. 3). In fact, repeatedly

throughout their pleadings they assert that AHP and Dr. Simpson agreed to certain

things. This argument misstates the terms of the contract and comes close to

lacking in professionalism. Misleading the court is improper. In addition, plaintiffs

contend that some of the provisions to which “Physician” agrees could only refer

to a person, not a business (doc. 19, p. 5-6). For example, “Physician” is required

to hold a valid medical license and carry professional malpractice insurance (doc.

8, ex. 8, p. 2; doc. 19, ex. 1, ¶ 6). Furthermore, Gregory Wachowiak, President of

AHP, stated in his affidavit that “[i]t is not uncommon in the industry for physicians

to request that an agreement be put in the name of a company owned or partially

owned by the physician.” (Doc. 19, ex. 1, ¶ 5). Plaintiffs’ reply adds:

For various reasons, including insurance protection in addition to

standard malpractice insurance, tax deductions and consequences, as

well as other reasons made over the years, the independent contractor

agreements entered into between Plaintiffs and its numerous providers,

including Simpson, is, for the most part, always in the name of an entity

that is controlled by the providers, including Simpson.

(Doc. 19, p. 3). In fact, plaintiffs submitted an almost identical independent

contractor agreement between AHP of Central Georgia, P.C., and Sunrise

Lighthouse, Inc. (see March 14, 2011 Order on December 10, 2008 Agreement in AHP

of Cent. Ga., Inc. v. Sunrise Lighthouse, Inc., et al., Superior Court of Dekalb County,

Georgia, case no. 11CCV1659-9). In that agreement, Sunrise Lighthouse, Inc. was

designated “Anesthetist”, and Sunrise Lighthouse, Inc.’s anesthetist signed under

the block “FOR: ANESTHETIST”. The gravamen of plaintiffs’ argument is that “[t]he

party to the Agreement is inconsequential as many of the obligations imposed in the

Agreement are directed to and limited to the physician executing the Agreement.” 

(Doc. 19, p. 3).

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Contract construction under Georgia law is a three-step process. Rolan v.

Glass, 699 S.E.2d 428, 432 (Ga. Ct. App. 2010). First, the court asks if the language

is clear and unambiguous. If it is, the court enforces the contract according to its

terms. Id. If it is ambiguous, the court applies the rules of construction to resolve

the ambiguity. Id. Only if the contract cannot be construed with steps one and two

does the court proceed to step three, which is to have a jury determine what the

parties intended. Id. The court may use contemporaneously executed writings to

fill in terms or correct obvious errors in the ambiguous document. Ga. Code. Ann.

§ 24-6-3 (West 2010). Parol evidence may be used to explain latent and patent

ambiguities. Id. “A word or phrase is ambiguous when its meaning may fairly be

understood in more ways than one.” Rolan, 699 S.E.3d at 432. Importantly, a

contract is not ambiguous simply because it is difficult to construe. Lay Bros. , Inc.

v. Golden Pantry Food Stores, Inc., 616 S.E.2d 160, 163 (Ga. Ct. App. 2005); Crooks

v. Crim, 285 S.E.2d 84, 87 (Ga. Ct. App. 1981).

Plaintiffs’ arguments fail under Georgia law. By the plain language of the

Agreement, the contracting parties are AHP and Santa Rosa. While it is true that

some of “Physician’s” obligations under the contract are logically construed as

personal obligations, the contract is not illogical by applying the unambiguous

designations it establishes. The Georgia legislature intended contracts to be upheld

in whole when possible, and when construction is doubtful, “that [construction]

which goes most strongly against the party executing the instrument or undertaking

the obligation” is preferred. Ga. Code Ann. §§ 13-2-2(4) & (5) (West 2010). Therefore, 

to the extent “Physician” is unclear—and the undersigned is not persuaded that it

is—the meaning is construed against the drafter. As AHP’s example of an almost

identical agreement makes clear, it drafted this Agreement.

Plaintiffs argument that “this is how the industry does it” is equally

unpersuasive. “The custom of any business or trade shall be binding only when it

is of such universal practice as to justify the conclusion that it became, by

implication, a part of the contract, except in regard to those transactions covered by

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[the Commerical Code].” Ga. Code Ann. § 13-2-2(3) (West 2010). Plaintiffs’ bare

assertion in its reply, without citation to controlling authority, is not sufficient to

show adding parties by implication is “universal practice” in the medical services

industry. Nor is Mr. Wachowiak’s statement that the practice is “not uncommon”

equivalent to a “universal practice.” (See doc. 19, ex. 1, ¶ 5). Therefore, under the

State of Georgia’s rules of contract construction, the undersigned finds that Dr.

Simpson was not a party to the Agreement and is not liable under it.

2. Trademark Infringement

Plaintiffs’ likelihood of success on its trademark infringement claim is tied to 

its claim that AHS’ business name causes a likelihood of confusion. The likelihood

of confusion is addressed in the next section concerning plaintiffs’ lack of showing

a substantial threat of irreparable injury.

B. Plaintiffs have not shown a substantial threat of irreparable injury if injunction

does not issue.

1. Restrictive Covenants

Plaintiffs claim AHP’s business is “worth significantly less” without

exclusivity, and allowing Santa Rosa and Dr. Simpson to continue providing services

at Baptist would “utterly destroy the value of its business.” (Doc. 7, p. 14). The

undersigned does not agree. The Administrator of Baptist Hospital swore in an

affidavit that “[a]t the time of my discussion with Dr. Simpson, Baptist management

had made the decision that it would not enter into a new agreement with AHP under

any circumstances.” (Doc. 8, ex. 1, ¶ 9). AHP therefore has no monetary interest in

providing anesthesia services to Baptist, so AHP’s business worth in terms of

monetary value does not justify a preliminary injunction. See Ferrero, 923 F.2d at

1449. Also, plaintiffs’ counsel argued that AHS might rapidly expand, soliciting

hospitals as far away as Gainesville, and in so doing severely impede AHP’s ability

to be profitable. That contention is speculative and of little value.

On the other hand, AHP’s business worth in terms of goodwill and loss of

customers can constitute irreparable injury. See Bellsouth Telecomm., 425 F.3d at

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970. Whatever goodwill AHP built with Baptist was lost when the parties’

negotiations over a new contract ceased after six months of disagreement. Their

relationship had so deteriorated that Baptist’s Administrator stated Baptist was not

interested in contracting with AHP “under any circumstances.” (Doc. 8, ex. 1, ¶ 9). 

If AHP lost goodwill or customers, it was on account of its failed negotiations, not

Dr. Simpson’s subsequent proposal. For these reasons, Santa Rosa cannot be said

to be “competing” with AHP in violation of the Agreement. In any event, Baptist’s

current agreement for medical services is with AHS, not Santa Rosa, and AHS is not

bound by the terms of the Agreement. Finally, as previously discussed, Dr. Simpson

is not a party to the Agreement, so he is not personally liable for any violation of the

Agreement.

2. Trademark Infringement

Plaintiffs argue the business name Anesthesia Healthcare Solutions of North

Florida, LLC, infringes on AHP’s marks and poses a substantial threat of irreparable

injury to its goodwill because there is a likelihood that consumers could confuse

AHS’ name and services with AHP’s (doc. 7, p. 15). A sufficiently strong possibility

of confusion is grounds for a preliminary injunction. McDonald’s Corp., 147 F.3d at

1310. Applying the Georgia Code and Eleventh Circuit precedent, the undersigned

evaluates the factors to determine if there is a “likelihood of injury to the business’

reputation or of dilution of the trademark’s distinctive quality.” See Ga. Code Ann.

§ 10-1-451; Tana, 611 F.3d at 774-75. AHP holds two marks: one is for the

Anesthesia Healthcare Partners Inc. logo, as a whole, and the other is for the

abbreviation “AHP” (doc. 8, exs. 8 & 9).

AHP’s marks are not very strong or distinct. The four categories of

distinctiveness, listed in descending order of strength, are (1) fanciful or arbitrary,

(2) suggestive, (3) descriptive, and (4) generic. Welding Serv., Inc., 509 F.3d at 1357-

58. The fanciful and arbitrary categories are inapplicable here. “A suggestive mark

refers to some characteristic of the goods, but requires a leap of the imagination to

get from the mark to the product.” Id. A descriptive mark identifies a characteristic

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or quality of the service or product. Id. A descriptive mark must acquire secondary

meaning before it is protected. Id. at 1358. Generic marks do not receive any

protection. Id.

AHP’s marks are similar to the marks in Welding Services, supra. In that case,

Welding Services, Inc. sought protection for the abbreviation “WSI” and its logo. 

The court stated that abbreviations become protectable only if the plaintiff shows the

abbreviation “has a meaning distinct from the underlying words in the mind of the

public.” Id. at 1359. The court found that while Welding Services argued it invested

significantly in building its marks, it did not address whether that investment gave

the abbreviation a meaning distinct from the company’s individual words. Id.

Therefore, the abbreviation was not protected. Plaintiffs here failed to address the

significance of the mark “AHP,” and have not argued that it has any meaning distinct

from the individual words “Anesthesia Healthcare Partners.” Therefore, the

undersigned finds it inappropriate to consider issuing a preliminary injunction based

on AHP’s mark, “AHP”.

While the court in Welding Services noted that “a logo consisting of a

nonprotectable literal element combined with a display or geometric design may be

distinctive enough to receive protection,” it also stated the company’s logo was “not

particularly distinctive, consisting of three letters in a circle.” Id. at 1360. However,

the court declined to address the question of protection of the logo because Welding

Services failed on the ground of likelihood of confusion. Id. There was “undisputed

similarity of services offered, sales methods, and advertising methods,” but the two

logos were not similar. Id. at 1361. Finally, Welding Services asserted it had shown

actual confusion because some customers had asked whether the second company

was “affiliated with WSI,” but the court disagreed:

These incidents have no explicit connection to the stylized logos. As

the district court remarked, their probative value is very low because of

the uncertainty about what might have prompted the inquiries. Welding

Technologies' employees were formerly associated with Welding

Services, so the confusion could just as likely have arisen because of

the personnel rather than the logo. Moreover, the nature of the

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business at issue here requires that the purchasers of the services

must be sophisticated consumers, since the services are technical and

large-scale. Such purchasers are less likely to be confused than casual

purchasers of small items.

Id.; cf. St. Luke's Cataract, 573 F.3d at 1209 (there was a likelihood of confusion

when the defendant used the same name, website, and logo in the same

geographical market to target the same customers for the same services). Like the

logo in Welding Services, Inc., AHP’s logo is not distinctive and consists of the

abbreviation “AHP” placed over the words “Anesthesia Healthcare Partners”

accompanied by a stylized half-ellipsis (doc. 8, ex. 8). The nature of AHP’s business

also lends itself to sophisticated consumers, mainly hospitals, who are not likely to

be confused. Baptist, which is the only hospital AHP claims to have any dealings

with, has certainly shown that it is not confused. Any similarity in the company’s

names is far outweighed by the unlikeliness of confusion. AHP has not shown a

substantial threat of irreparable injury.

C. The threatened injury to plaintiffs does not outweigh the harm caused to

defendants.

1. Restrictive Covenant

Relying on Third Circuit Court of Appeals precedent, plaintiffs argue any injury

to defendants is “‘self-inflicted’ and cannot be deemed irreparable as a matter of

law.” (Doc. 7, p. 17; doc. 19, p. 15-16). They state that Santa Rosa and Dr. Simpson

were aware of the restrictions and Baptist’s legal counsel requested that Dr.

Simpson be released from the restrictions, as other employees had been (id.). 

Plaintiffs also reassert that AHP’s exclusive contracts and reputation are diluted with

“each passing day.” (Doc. 7, p. 17).

The undersigned has previously rejected plaintiffs’ exclusivity and reputation

arguments and will not readdress them here. Under Georgia law, a restrictive

covenant in a professional partnership agreement is void if it is larger than

necessary to protect the corporation or “needlessly oppresses one of the parties

without affording any corresponding protection to the other.” Broome, 283 S.E.2d

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at 2. If enforced, the Agreement harms Dr. Simpson to the extent that it is

enforceable against Santa Rosa, as he is still a member of that enterprise. 

Accordingly, as plaintiffs argue, Dr. Simpson would have to resign as a member of

the medical staff at Baptist (doc. 8, ex. 6, p. 8). He would lose his job. In contrast,

AHP does not appear to gain anything, except to have a court validate the terms of

its contract, which is expired. It is undisputed that AHP will not regain Baptist as a

client, better its reputation, increase its goodwill or even its income. Under the facts

of this case, clause eleven of “Physician’s” obligations under the Agreement, to

“relinquish all privileges in anesthesia and resign from the medical staff of Hospital

effective with the termination of this Agreement,” is an unreasonable restriction on

Santa Rosa, as its owner would be permanently foreclosed from performing

anesthesia services at Baptist Hospital, and Santa Rosa’s ability to remain a

profitable business would be impacted, while AHP would gain absolutely nothing

with respect to Baptist.

Georgia courts do not follow to the “blue pencil” doctrine of severability. 

Waldeck, 583 S.E.2d at 269; see also Pregler v. C&Z, Inc., 575 S.E.2d 915, 916 (Ga. Ct.

App. 2003 (rule is derived from restrictive covenant cases strictly scrutinized as

employment contracts). Therefore, when one restrictive covenant is unreasonable

“either in time, territory, or prohibited business activity,” then all restrictive

covenants in the same contract are unenforceable. Ward v. Process Control Corp.,

277 S.E.2d 671, 673 (Ga. 1981) (employment contracts). For the purposes of a

preliminary injunction, because this restrictive covenant is overly broad and void,

the remaining restrictive covenants also should be void. Id. 

2. Trademark Infringement

Plaintiffs make similar arguments that any harm to AHS is self-inflicted, and

AHP would suffer greater harm because it has spent significant time and money

promoting its marks (doc. 7, p. 18). AHP contends that if it did show AHS infringed

on its mark, AHP would suffer greater harm if the infringement continued. AHS was

formed on August, 11, 2010, while AHP registered its logo in 2008 (doc. 8, ex. 5 & 8). 

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However, for purposes of a preliminary injunction, plaintiffs have not shown that

AHS infringed on a protectable mark, or that AHP suffers a threat of irreparable harm

if AHS continues to do business under that name. Therefore, plaintiffs have not

shown that they face a greater threat of harm than defendants if the court enjoined

AHS from using its name. 

D. Plaintiffs did not show an injunction does not disserve the public interest.

1. Restrictive Covenant

In their motion, plaintiffs only touch on the public interest prong by stating,

without legal support, that it is in the public’s interest to require parties to honor

their contractual obligations (doc. 7, p. 19). In their reply, they cite to two Georgia

Supreme Court cases from 1965 and 1985 for the proposition that “[t]here is a long

line of cases which state that the public interest is better served by the enforcement

of contracts and that restrictions on the practice of medicine do not offend the

public interest.” (Doc. 19, p. 19-20 (citing McMurray v. Bateman, 144 S.E.2d 345 (Ga.

1965) and Rash v. Toccoa, 320 S.E.2d 170 (1984))). A review of the Rash opinion

reveals that counsel for the defendant, in 1984, argued that the court’s recitation of

cases starting in 1898 was “outdated in light of a trend toward more strict

interpretation in cases.” 320 S.E.2d at 172. In rejecting counsel’s argument, the

court stated that the argument was inaccurate, and none of counsel’s supporting

cases dealt with medical partnership agreements. Id. One of the cases counsel

relied on was Singer v. Habif, Arogeti & Wynne, P.C., supra, which is now commonly

cited in cases reviewing all types of professional partnership agreements. See id.

Plaintiffs’ argument that courts should blindly accept contracts restricting the

practice of medicine as being in the public’s interest is outdated, as a review of case

law since 1984 shows. Plaintiffs have not shown that enjoining defendants from

providing services at Baptist would not disserve the public interest.

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2. Trademark Infringement

Plaintiffs address this prong by stating that the public has an interest in

avoiding confusion in the marketplace, and AHS’ similar name as well as Dr.

Simpson’s presence at Baptist will lead to confusion among the public and patients

(doc. 7, p. 19). But the public here are hospitals, not members of the public

generally, so sophistication on the part of the consumer can be assumed. As the

undersigned has already addressed these arguments, they will not be restated here.

For the reasons stated above, but above all because (1) Dr. Simpson was not

a party to the Agreement and therefore could not have violated its restrictive

covenants, and (2) plaintiffs have not shown and cannot show any substantial threat

of irreparable injury, it is respectfully RECOMMENDED that plaintiffs’ motion for

preliminary injunction (doc. 7) be denied.

At Pensacola, Florida, this 20th day of May, 2011.

 /s/ Miles Davis

MILES DAVIS

UNITED STATES MAGISTRATE JUDGE

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NOTICE TO THE PARTIES

Any objections to these proposed findings and recommendations must be filed

within fourteen days after being served a copy hereof. Any different deadline that

may appear on the electronic docket is for the court’s internal use only, and does not

control. A copy of any objections shall be served upon any other parties. Failure to

object may limit the scope of appellate review of factual findings. See 28 U.S.C. §

636; United States v. Roberts, 858 F.2d 698, 701 (11th Cir. 1988).

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