Vu v. Allied Foot & Ankle, P.C.

DEBORAH S. EYLER, J. Must we sew and sew solely to survive So some low so- and-so can thrive! No! He’ll fry in Hades if it’s up to the ladies, Waistmaker’s Union Local 25! So sings the chorus of lady picketers in Fiorello!, the Broadway musical about the life of Fiorello H. LaGuardia. 1 The diminutive politician began his legal career in the early 20th Century as a pro-labor activist, fighting sweatshop owners.

Before becoming mayor of New York City, he served several terms in Congress. In 1933, he co-sponsored the Norris-LaGuardia Act, 29 U.S.C. §§ 101 to 115, which “place[d] restrictions on the power of [federal] equity courts to grant injunctions in labor disputes.” Dist. 1199E, Nat’l Union of Hosp. & Health Care Employees, Div. of R. W.D.S. U., AFL-CIO v. The Johns Hopkins Hosp., 293 Md. 343, 345 , 444 A.2d 448 (1982). “ ‘This purpose reflected] the feeling in this ⁶⁶⁶ country during the 1930’s that courts of equity were unduly hampering the labor movement by enjoining necessary and proper union activities, especially by means of ex parte injunctions.’ ” Id. (quoting Leonard F. Cohen, The Maryland Law of Strikes, Boycotts, and Picketing, 20 Md. L.Rev. 230, 239 (I960)). Many state legislatures followed suit, enacting “Little Norris-LaGuardia Acts,” patterned on the federal legislation.

Maryland’s Act, also known as the “Maryland Anti-Injunction Act” (“Maryland Act” or “Act”), became law in 1935, and now is codified at Md.Code (1991, 1999 RephVol., 2007 Supp.) sections 4-301 et seq. of the Labor and Employment Article (“LE”). In the case at bar, Dang H. Vu, D.P.M., contends that his contract dispute with Allied Foot & Ankle, P.A. (“Allied Foot”), his former employer, is governed by the Maryland Act; and, under the Act, he is entitled to recover damages against a bond Allied Foot posted when it sought and obtained a Temporary Restraining Order (“TRO”) against him. As we shall explain, we disagree that the Act applies to the parties’ dispute.

We therefore shall affirm the order of the Circuit Court for Carroll County denying Dr. Vu’s motion for damages against the bond. FACTS AND PROCEEDINGS Dr. Vu, the appellant, is a podiatrist. In 2002, he was hired as an at-will employee of Drs. Stroh and Butler, P.A.

(“S & B, P.A.”). On April 17, 2003, he and S & B, P.A. entered into an employment agreement (“Agreement”) that contained a five-year non-competition clause. The following year, on January 1, 2004, Drs. Stroh and Butler divided their practice.

Dr. Butler formed Allied Foot, the appellee. Under the terms of the division of the practice, Dr. Vu became an employee of Allied Foot, and S & B, P.A., purported to assign the Agreement to it. On June 8, 2006, after purchasing another podiatry practice, Dr. Vu formed Family Podiatry, LLC (“Family Podiatry”). ⁶⁶⁷ On June 30, 2006, he submitted a termination letter to Allied Foot, stating that he was resigning from employment effective July 30, 2006. In August 2006, Dr. Vu began practicing as Family Podiatry.

In short order, on August 23, 2006, Allied Foot sued Dr. Vu, alleging that he was violating the non-competition clause in the Agreement. The complaint stated claims for breach of contract and in tort and requested injunctive relief, including a TRO. The next day, August 24, 2006, Allied Foot’s counsel notified counsel for Dr. Vu and both appeared in chambers before the judge assigned to the matter (who remained assigned to the case). After hearing from counsel, the court granted the TRO, upon Allied Foot’s posting a $50,000 bond.

The TRO prohibited Dr. Vu from practicing podiatry within a 20-mile radius of Allied Foot’s offices. That area included several of Family Podiatry’s offices and Carroll County Hospital Center, where Dr. Vu performed procedures. The bond as originally posted was for $25,000. It was increased to $50,000 at the judge’s direction.

The bond is entitled, “PLAINTIFF’S INJUNCTION BOND TO DEFENDANT — Temporary Restraining Order.” On August 29, 2006, Dr. Vu filed a motion to dismiss the complaint for failure to state a claim for which relief may be granted. He argued that, under the terms of the Agreement, Pennsylvania contract law applied and, under that law, the non-competition clause was unenforceable. He did not present any argument specific to Allied’s request for injunctive relief. 2 The motion to dismiss was heard by the court the same day it was filed. The court ruled in part to deny the motion and continued the hearing to the following day, August 30, 2006. ⁶⁶⁸ At the conclusion of that hearing, the court denied the motion to dismiss in its entirety.

Immediately thereafter, it held an evidentiary hearing on Allied Foot’s preliminary injunction request. Allied Foot called four witnesses. Dr. Vu testified on his own behalf and called one witness. In closing argument, with respect to the request for injunctive relief, neither counsel made any mention of the Maryland Act.

The court denied the motion for preliminary injunction on the primary ground that Allied Foot had not presented sufficient evidence to show that it was likely to prevail on the merits of its breach of contract and other claims. The court dissolved the TRO and ruled that the case would continue on a regular track. On November 16, 2006, Dr. Vu filed a motion for summary judgment, which Allied Foot opposed. On March 1, 2007, not long before the scheduled hearing on the summary judgment motion, Dr. Vu filed a “Motion to Assess Damages Under Bond Number 30BSBED364” (“Bond Motion”).

For the first time, he argued that the Maryland Act was controlling and entitled him to compensation against the bond for approximately $15,000 in lost income from the practice of podiatry during the seven days the TRO was in effect, and for attorney’s fees incurred in contesting the injunction. The motion for summary judgment hearing was held on March 16, 2007, before the deadline for Allied Foot to respond to the Bond Motion. During the hearing, the court made reference to the Bond Motion, stating that it would be taken under consideration. The court held the motion for summary judgment sub curia.

Thereafter, Allied Foot filed an opposition to the Bond Motion, and Dr. Vu filed a reply. Allied Foot argued, among other things, that the Maryland Act had had no application to its injunction request. On July 19, 2007, the court issued a memorandum opinion and order granting summary judgment in favor of Dr. Vu, on the merits of the breach of contract and other claims. The memorandum opinion did not mention the Bond Motion.

Two ⁶⁶⁹ weeks later, on July 31, 2007, the court issued a brief order, entered on August 2, denying that motion. Allied Foot noted an appeal from the grant of summary judgment and Dr. Vu noted a cross-appeal from the denial of the Bond Motion. Allied Foot voluntarily dismissed its appeal in this Court. Dr. Vu’s cross-appeal remains.

He poses two questions for review, which we have rephrased: I. Did the circuit court lack discretion to deny the Bond Motion, and therefore err in denying it?

II

If the circuit court had discretion to deny the Bond Motion, did it abuse its discretion in doing so? For the reasons we shall explain, we hold that the circuit court had discretion to deny the Bond Motion, and did not abuse its discretion in doing so. DISCUSSION I. (A) We begin with a review of the Maryland Act.

Part I consists of definitions and general provisions, about which we shall have more to say. Part II, consisting only of LE section 4-307, completely eliminates a circuit court’s jurisdiction to grant certain prohibitory injunctive relief. 3 Part II is not implicated in this case. ⁶⁷⁰ Part III, comprised of LE sections 4-310 through 4-320, limits a circuit court’s power to grant injunctive relief in a “labor dispute,” in circumstances not already covered by Part II. Specifically, in a labor dispute, except as a stop-gap measure to prevent imminent irreparable harm, the court may not grant injunctive relief unless the plaintiff has complied with certain legal obligations and has made particular efforts to resolve the dispute. LE § 4-313.

Further, the court “may not issue a temporary or permanent injunction in a case that involves or grows out of a labor dispute” unless notice, as specified, has been given, and a hearing is held. LE § 4-314. The hearing must be “in open court” with testimony taken and the opportunity for cross-examination. LE § 4-314(2).

In addition, the court must make particular factual findings, including that an “unlawful act” has been threatened or committed and, unless restrained, will be committed or continued; the plaintiff will be injured “substantially and irreparably” if ⁶⁷¹ relief is not granted; the balance of hardship weighs in favor of the plaintiff; the plaintiff has no adequate remedy at law; and public authorities have failed to or cannot protect the plaintiffs property. LE § 4-314. 4 LE section 4-316, entitled “Bonds,” requires that a bond be posted before a court may grant certain injunctive relief. It states, in relevant part: (a) Required for temporary restraining order or temporary injunction. — Before a court issues a temporary restraining order or temporary injunction in a case that involves or grows out of a labor dispute, the plaintiff shall post bond with the court. (b) Amount. — (1) Bond under this section shall be in an amount sufficient to compensate each person who is enjoined for any loss, expense, or damages that improvident or erroneous issuance of the temporary restraining order or temporary injunction causes.

(2) The amount shall include reasonable counsel fees and other reasonable costs that a defendant incurs in defending against other injunctive relief in the same case if the court denies the injunctive relief. (Emphasis added.) Dr. Vu asserts that Allied Foot’s suit against him “involve[d] or gr[ew] out of a labor dispute,” so the court’s decision to issue a TRO was (or at least should have been) governed by ⁶⁷² the Maryland Act. As he reads LE section 4-316(b), if the TRO was “improvident[ly] or erroneously] granted,” he is entitled to recover against the bond losses he sustained as a consequence of his being enjoined from practicing podiatry at certain locations from August 24 through August 30, 2006. He maintains that, so long as the TRO was granted improvidently or erroneously, which he claims it was, the court was without discretion to deny his Bond Motion.

In Part III of the Act, a “[l]abor dispute case” is defined as follows: A case shall be held to involve or grow out of a labor dispute when the case involves: (1) persons who are engaged in a single industry, trade, craft, or occupation, employees of the same employer, or members of the same or an affiliated organization of employees or employers, regardless of whether the dispute is between: (i) 1 or more employees or associations of employees and 1 or more employers or associations of employers; (ii) 1 or more employees or associations of employees and 1 or more employees or associations of employees; (iii) 1 or more employers or associations of employers and 1 or more employers or associations of employers; or (2) a conflicting or competing interest in a labor dispute of a person participating or interested in the labor dispute. LE § 4-310 (emphases added). “Labor dispute” is earlier defined in Part I of the Act to include[ ] any controversy, regardless of whether the disputants stand in the proximate relation of employee or employer, concerning: (1) terms of conditions of employment; (2) employment relations; (3) the association or representative of persons in negotiating, setting, maintaining, or changing terms or conditions of employment; or ⁶⁷³ (4) any other controversy arising out of the respective interests of employee or employer. LE § 4-301(c) (emphases added). Dr. Vu maintains that the dispute over whether he breached the non-competition clause of the Agreement was a “labor dispute,” under LE section 4 — 301(c)(4), because it was a controversy “arising out of the respective interests of the employee or employer”; and that Allied Foot’s suit against him was a “labor dispute case” because, notwithstanding that it was between only one (former) employee and one (former) employer, it involved people in the same occupation (podiatry).

LE § 4-310(l)(i). Allied Foot responds that the dispute over whether Dr.Yu violated the non-competition clause of the Agreement was not a “labor dispute” under LE section 4-301(c)(4), and its suit against Dr. Vu was not a “labor dispute case” under LE section 4 — 310(l)(i). It points out that LE section 4-303 directs that the Act be “interpreted and applied in accordance with the policy stated in § 4-302 of this subtitle”; and that policy and the legislative findings supporting it read as follows: (a) Findings. — The General Assembly finds that: (1) governmental authority has allowed and encouraged employers to organize in corporate and other forms of capital control; and (2) in dealing with these employers, an individual worker who is not represented by an organization is helpless to exercise liberty of contract or to protect personal freedom of labor and, thus, to obtain acceptable terms and conditions of employment. (b) Statement of policy. — The policy of the State is that: (1) negotiation of terms and conditions of employment should result from voluntary agreement between employees and employer; and (2) therefore, each individual worker must be: ⁶⁷⁴ (i) fully free to associate, organize, and designate a representative, as the worker chooses, for negotiation of terms and conditions of employment; and (ii) free from coercion, interference, or restraint by an employer or an agent of an employer in: 1. designation of a representative; 2. self-organization; and 3. other concerted activity for the purpose of collective bargaining or other mutual aid or protection.

LE § 4-302. Citing LE section 4-302, Allied Foot argues: “It is beyond logic to suggest the underlying dispute in this case fits squarely into the stated public policy of the Act; which undoubtedly encourages organized labor, and frowns upon injunctions that restrict such activity.” It maintains that the Act does not apply, and therefore LE section 4-316, pertaining to “Bonds,” does not apply. Rather, in this case, the TRO was issued pursuant to the circuit court’s general equity power and in conformity with Rule 15-501 et seq., which cover injunctions. Rule 15-504(a) provides that a TRO may be granted “... only if it clearly appears from specific facts shown by affidavit or other statement under oath that immediate, substantial, and irreparable harm will result to the person seeking the order before a full adversary hearing can be held on the propriety of a preliminary or final injunction.” Before the TRO is granted, a bond must have been filed, “in an amount approved by the court for the payment of any damages to which a party enjoined may be entitled as a result of the injunction.” Rule 15-503(a).

Allied Foot posits that this language makes the decision by a court to grant relief against a bond issued on a TRO discretionary, not mandatory. (B) We conclude that Dr. Vu’s contention that the dispute in question was a “labor dispute,” and that Allied Foot’s case against him was a “labor dispute case,” within the meaning of ⁶⁷⁵ the Act, was not properly preserved below and, in any event, is substantively without merit. We have searched the record and have found nothing to show or even suggest that the TRO was issued pursuant to the Act, as opposed to pursuant to the court’s general equity power and Rule 15-514. No record was made of the August 24, 2006 in-chambers TRO hearing.

That fact alone militates against the TRO’s having been issued under the Act, as the Act requires, as we have explained, that before a temporary injunction is issued, a hearing be held in open court. LE § 4-314(2). If in opposing the TRO Dr. Vu was of the position that the court’s decision was controlled by the Act, it was incumbent upon him to raise that point immediately so as to afford the court the opportunity to conduct a hearing that would satisfy the requirements of the Act. Dr. Vu does not argue that he informed the court that its decision was governed by the Act but the court did not take measures in conformity.

Rather, we only can glean from the record that Dr. Vu willingly participated, without objection, in proceedings on August 24, 2006, that were not in conformity with the Act. In other words, he proceeded as if the Act did not apply, but later asserted— and no w argues — that it did. The TRO and the bond themselves make no mention of the Act. Dr. Vu did not file any written opposition to the issuance of the TRO based on the Act.

Indeed, his only filing between the time suit was filed and the court’s ruling on August 30, 2006, dissolving the TRO, was a motion to dismiss, asserting only that the non-compete covenant was unenforceable under Pennsylvania law, but not addressing the propriety of the TRO issuance. The transcript of the August 30 hearing reveals that Dr. Vu (through counsel) did not argue that the injunction was issued contrary to the Act, or that the court should dissolve it because it was granted in violation of the Act. Indeed, the argument Dr. Vu advanced that the injunction should be dissolved w as predicated upon the Maryland common law of injunctions, not upon statutory law. ⁶⁷⁶ As noted above, the right to proceed for damages against a bond posted pursuant to LE section 4-316 depends upon whether the TRO or temporary injunction was issued “improvident[ly] or erroneously].” LE § 4-316(b)(l). Given that the Act eliminates the circuit court’s power to grant certain prohibitory injunctive relief, circumscribes its power to grant other injunctive relief, in a labor dispute case, and specifies not only the procedure that must be followed but also the substantive findings that must be made for the court to issue an injunction in a labor dispute case, logic dictates that, if the Act applies at all, the question whether a temporary injunction was issued “improvident[ly]” or “erroneously]” depends, in the first instance, upon whether it was issued in conformity with the Act.

In his argument to this Court, Dr. Vu overlooks that logical connection and assumes that an injunction may be found to have been issued “improvidently” or “erroneously” irrespective of the requirements of Act. We disagree with that assumption. The “Bond” enforcement rule in LE section 4-316 is part of a statutory scheme and must be considered in its context, which is to limit injunction as a remedy in labor dispute cases. See Stachowski v. Sysco Food Services of Baltimore, Inc., 402 Md. 506, 516 , 937 A.2d 195 (2007) (statutory language must be interpreted in light of “statutory scheme as a whole”).

In that context, an enhanced right to proceed against a bond, when, despite the restrictions imposed by the Act, an injunction wrongly has been issued and damages have resulted, is a fail safe provision. Accordingly, if the Act applied to this case, as Dr. Vu maintains it does, he only would be entitled to damages against the bond if the temporary injunction were issued improvidently or erroneously under the Act. In order to challenge the issuance of the temporary injunction under the Act, however, Dr. Vu had to have opposed its issuance under the Act when the injunction was sought. If a party opposing an injunction ever is to assert, later, that the injunction was issued improvidently or erroneously under the Act, he must have raised the Act as a defense to the issuance of the ⁶⁷⁷ injunction; otherwise, the issue is waived, as the court will have had no reason to consider the requirements of the Act in deciding whether to issue the injunction.

See Umeko, Inc. v.