Covenant to Not Compete Clause

[gordseskimopie]

What is the name of your state (only U.S. law)? Vermont

Thanks in advance for any help! Here is a quote from my contract:

"Covenant Not to Compete: The Doctor agrees to neither engage in any act of practice within a 10 mile radius of the Hospital, to include practice in the towns of Bristol, Vergennes, or Middlebury, for a period of three years after the date of termination of his employment with the hospital without explicit written permission of the Director of the hospital, nor to contact or recruit the patients or employees of the hospital to any practice he might join or establish beyond this radius except by a professional announcement in the newspaper."


My question: Parts of the towns mentioned are within the 10 mile radius. Parts of them are not within the radius. Is this worded in a way that I can, or cannot work in the parts of the towns that are beyond the 10 mile radius? eg.)Can I work in Middlebury, 11 miles from the hospital?

Thanks again!

 

[Zigner]

What is the name of your state (only U.S. law)? Vermont

Thanks in advance for any help! Here is a quote from my contract:

"Covenant Not to Compete: The Doctor agrees to neither engage in any act of practice within a 10 mile radius of the Hospital, to include practice in the towns of Bristol, Vergennes, or Middlebury, for a period of three years after the date of termination of his employment with the hospital without explicit written permission of the Director of the hospital, nor to contact or recruit the patients or employees of the hospital to any practice he might join or establish beyond this radius except by a professional announcement in the newspaper."


My question: Parts of the towns mentioned are within the 10 mile radius. Parts of them are not within the radius. Is this worded in a way that I can, or cannot work in the parts of the towns that are beyond the 10 mile radius? eg.)Can I work in Middlebury, 11 miles from the hospital?

Thanks again!

Seems to me that the towns are explicitly defined and that would override the 10 mile radius.

I am not speaking to the overall enforceability of the non-compete agreement...just helping with the clarification of terms.

 

[swalsh411]

I am highly skeptical that any Court would enforce a non-compete that does not allow you to practice medicine where you live. Generally speaking, Courts frown upon agreements that attempt to limit a person's ability to be a productive member of society (and pay taxes). The restriction against soliciting former patients or employees is more enforceable however. I would take the agreement in its entirety to a local attorney for review. You may be limiting your practice unnecessarily.

 

[Mass_Shyster]

I am highly skeptical that any Court would enforce a non-compete that does not allow you to practice medicine where you live.

You probably should have taken a look at Vermont case law before you posted that.

 

[gordseskimopie]

swalsh411
I am highly skeptical that any Court would enforce a non-compete that does not allow you to practice medicine where you live. Generally speaking, Courts frown upon agreements that attempt to limit a person's ability to be a productive member of society (and pay taxes). The restriction against soliciting former patients or employees is more enforceable however. I would take the agreement in its entirety to a local attorney for review. You may be limiting your practice unnecessarily.



Re: the second sentence in your reply:

In my contract, it states that I may not contact or recruit patients and employees, except by professional announcement. I take this to mean that I cannot contact a patient or an employee of the hospital seeking to transfer our previous relationship to a new business, but if a patient or employee were to transfer to my new place of business on their own accord, that would not violate the contract.

Is this what you are suggesting?

Thanks for your responses.

 

[Zigner]

Is this what you are suggesting?

I think that what is being suggest is that you contact a local attorney to review your contract.

 

[latigo]

You probably should have taken a look at Vermont case law before you posted that.

Agreed! *

Assuming they are supported by adequate consideration and they serve to protect a legitimate business interest, non-compete covenants are universally upheld where the duration and geographical restrictions are found to be within reasonable limits.

Even though they aren’t favored and are to be strictly construed against the employer, it seems unthinkable that a court would rule that a ten-mile radius amounts to an unwarranted restraint of trade.
______________________________

[SUP][*] See: Summits 7, Inc., vs. Stacy Lasker, Vermont Superior Court Docket No. 1328-03 (2003), citing: Johnston v. Wilkins, 2003 Vt. 56;
Fine Foods, Inc. v. Dahlin, 147 Vt. 599 (1987) (case law affirming issuance of injunction).

Also citing:

Lake Land Emp. Group of Akron, LLC vs. Columber, 804 N.E.2d 27, 32 (Ohio 2004); 51 A.L.R.3d 825 (1973) (continuation of employment satisfies requirement of consideration).[/SUP]

 

[ecmst12]

I don't necessarily think that a 10 mile restriction, even expanded to those particular towns, would be considered overly restrictive. A 50 or 100 mile radius, more likely.

 

[tranquility]

I don't necessarily think that a 10 mile restriction, even expanded to those particular towns, would be considered overly restrictive. A 50 or 100 mile radius, more likely.

Along with Latigo's:

Even though they aren�t favored and are to be strictly construed against the employer, it seems unthinkable that a court would rule that a ten-mile radius amounts to an unwarranted restraint of trade.

While I would agree with both in my state (CA), in Vermont, a 100 mile *radius* would encompass the whole state. Even a 50 mile one, depending on where you center it, will cover most. When I look at a map and note the cities, I suspect the OP is talking about a 10 mile diameter area if those are the only one's he is worried about. That may very well be an acceptable limitation.

But, we don't know if there was "compensation" for the covenant. That is not usually how it is in employment contracts, but for the sale of a business. (Which the OP may have done.) Still, there are many employment contracts that have been found valid in Vermont. One interesting discussion in Systems and Software, Inc. v. Barnes, 886 A. 2d 762 - (Vt: Supreme Court 2005) discussed a case from a neighboring state that would have helped the defendant. While distinguishing the case from what the defendant wanted, the court said:

� 13. We find unavailing defendant's reliance on Concord Orthopaedics Professional Ass'n v. Forbes, 142 N.H. 440, 702 A.2d 1273 (1997), for the proposition that the superior court was required to narrow the parties' agreement to restrict defendant from soliciting only plaintiff's current customers. In Forbes, a doctor left the employ of a physician's group and then sued his former employer, claiming that a covenant banning him from competing with the group within a twenty-five-mile radius of its business was unenforceable. Id. at 1274-75. The court upheld the agreement with respect to patients the doctor had treated while working for the group, but determined that the group lacked any legitimate interest in preventing the doctor from competing for new patients in the area. Id. at 1276. The instant case is distinguishable because, while working for plaintiff, defendant acquired specific information concerning plaintiff's customers, products, and services that could allow him to gain an advantage in competing against plaintiff for new clients. That was not the situation in Forbes.

Here, the covenant purports to prevent the OP to "engage in any act of practice" in the radius along with Forbes' limitation anywhere. ("(N)or to contact or recruit the patients or employees of the hospital to any practice he might join or establish beyond this radius except by a professional announcement in the newspaper.")

While the distance alone is probably not a problem, it is certainly worth the OP's time to see an attorney to view the cost/benefit of opening a practice where he wants.

 

[latigo]

I don't necessarily think that a 10 mile (sic)restriction, even expanded to those particular towns, would be considered overly restrictive. A 50 or 100 mile radius, more likely.

To add to your “carry-on-bag” of sparse knowledge of the subject matter of this forum, such covenants have been upheld and injunctive relief granted where the geographical scope extends beyond state borders - e. g., an employer’s established interstate marketing area.

It is not so much a matter of linear distance, but whether the restraints in time, geography and scope of activity are no more “than necessary to protect the goodwill or business interest of the promisee”. As quoted from the specific Texas Act - Section 15.50.

 

[ecmst12]

And Texas has what to do with this thread exactly?