Labor & Employment Law Daily Wrap Up, REMEDIES, DAMAGES—D.C. Cir.: Denial of preliminary injunction in noncompete case upheld, (Apr 28, 2025)

By George Basharis, J.D.

The court affirmed that financial losses from customer theft can be remedied through damages rather than injunctive relief, dealing a potential blow to employers seeking to enforce noncompete agreements.

The D.C. Circuit has affirmed a lower court’s ruling denying a preliminary injunction in a noncompete dispute between a public advocacy company and its former CEO. The decision reinforces the high bar plaintiffs must clear when seeking preliminary injunctions for alleged noncompete violations (Clevinger v. Advocacy Holdings, Inc., No. 23-7116 (D.C. Cir. Apr. 25, 2025)).

Noncompete agreement. Advocacy Holdings, Inc., which operates under the name OneClickPolitics, sued its former CEO for allegedly violating a noncompete agreement. According to Advocacy Holdings, the company helps clients influence public policy through an online platform that connects supporters to legislators and policymakers via emails, social media, and telephone calls.

The former executive had worked for Advocacy Holdings since 2016, initially as Vice President before being promoted to CEO. After his promotion, he signed an employment agreement containing several restrictive covenants: a one-year noncompete provision, a one-year customer non-solicitation provision, and a five-year confidentiality provision regarding company information. The agreement also included a stipulation that Advocacy would suffer “irreparable harm” if the executive violated any of these restrictions.

In 2023, the executive resigned from the company. His former employer alleged that following his departure, he flagrantly violated the noncompete agreement by stealing the company’s customer list, establishing two competing businesses, soliciting its customers, falsely claiming to those customers that the employer was closing its lobbying services, and creating a near duplicate of a soon-to-be-released version of the OneClickPolitics platform. The company even claimed the former executive had copied typographical errors from its platform.

Injunction sought. After the employer filed its lawsuit against its former executive for breach of the noncompete agreement, it moved for a preliminary injunction to halt his alleged competitive activities. The district court initially denied the motion entirely, finding that the employer had failed to establish it would suffer irreparable harm without injunctive relief.

Following this ruling, the employer moved for reconsideration and submitted additional evidence purportedly showing how the former executive had copied its platform. In response, the district court partially granted the motion, enjoining the executive from “using Advocacy Holdings’ platform design and interface.” However, the court declined to enjoin the executive from operating his competing businesses or from soliciting his former employer’s customers. The employer appealed the partial denial of its preliminary injunction request to the D.C. Circuit.

Appeal. The D.C. Circuit explained that to obtain a preliminary injunction, a movant must establish four factors: (1) likelihood of success on the merits, (2) likelihood of irreparable harm absent preliminary relief, (3) that the balance of equities tips in the movant's favor, and (4) that an injunction is in the public interest.

The court of appeals focused its analysis on the irreparable harm prong, noting the high standard required. The court emphasized that such injury “must be both certain and great” and that financial injuries are “rarely irreparable because they are presumptively remediable through monetary damages.” The court addressed the employer’s claims of two principal injuries without a preliminary injunction: loss of customers and reputational harm.

Customer loss. The court rejected the employer’s contention that it would be impossible “to even generally calculate the loss of future revenues from stolen customers.” The court noted that the employer failed to substantiate this claim, and that courts often find damages from customer loss to be calculable.

Moreover, the D.C. Circuit found that the employer’s financial injury was not so severe as to threaten its continued existence. The court pointed out that the employer had stated in its opening brief that it was “performing better than ever” and had told the district court it was “roughly cash flow break even” and “not going out of business any time soon.”

Reputational injury. The court similarly dismissed the employer’s argument concerning reputational harm stemming from the former executive’s alleged misrepresentations to customers. These alleged misrepresentations included claims that employer was “closing,” that there were “major changes underway,” and that the employer was “transitioning to another platform.”

The court noted that there was nothing to suggest that these alleged misrepresentations were directed to anyone besides the specific customers of his former employer that the executive had solicited. Nor had the employer demonstrated that those customers had passed along those misrepresentations to others. Therefore, the court found that this injury essentially amounted to a loss-of-customers injury, which could be remedied with monetary damages.

Contractual stipulation. The employer also pointed to the stipulation in the noncompete agreement that stated the company would suffer “irreparable harm” if the executive violated any of the restrictions or obligations. However, the court declined to consider this argument because the employer had not raised it in its initial preliminary injunction motion despite the stipulation being fully available to it at that time. The court deemed the argument forfeited.

Sliding scale approach. The employer additionally argued that the district court erred by not evaluating all four preliminary injunction factors under a “holistic, sliding-scale analysis,” where a strong showing on one factor could compensate for a weaker showing on another. The D.C. Circuit noted it was questionable whether this sliding-scale approach remains good law after the Supreme Court’s 2008 decision in Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7 (2008), which can be read to require movants to establish each preliminary injunction factor independently. However, the court found it unnecessary to resolve this question.

It deemed the employer’s sliding-scale argument was forfeited because the company did not raise it until its reply brief. Furthermore, the court observed that even under the sliding-scale approach, a movant’s failure to show any irreparable harm is grounds for refusing to issue a preliminary injunction, regardless of the strength of the other factors.

The D.C. Circuit affirmed the district court’s order, acknowledging the contempt the employer expressed in its legal briefs regarding the former executive’s conduct. However, the court of appeals determined that the employer failed to establish the necessity for a preliminary injunction to remedy the injuries claimed. The court explained that should the employer successfully prove its allegations during trial, monetary damages awarded by the district court would provide adequate compensation for any injuries sustained.

The case is No. 23-7116.

Judge: Walker, J.

Attorneys: Kenneth E. Chase (Chase Law & Associates) for Chazz Clevinger. Anand Vijay Ramana (Vedder Price) for Advocacy Holdings, Inc., d/b/a OneClickPolitics.

Companies: Advocacy Holdings, Inc.; OneClickPolitics

Cases: RemediesDamages TortClaims DistrictofColumbiaNews GCNNews