Competition from former employees

admin · Apr 6, 2008

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Many emploment agreements have clauses in them regarding competition in the area after the ending of employment. In many cases courts have held them unreasonable. Reasonable ones have been upheld.
While specific to the USA, I came across this commentary:

The Indiana Supreme Court handed down its opinion in Central Indiana Podiatry v. Kenneth Krueger. Justice Boehm started the opinion with a clear statement about the case:

We hold that noncompetition agreements between a physician and a medical practice group are not per Se void as against public policy and are enforceable to the extent they are reasonable. To be geographically reasonable, the agreement may restrict only that area in which the physician developed patient relationships using the practice group's resources.
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I really like the "To be geographically reasonable, the agreement may restrict only that area in which the physician developed patient relationships using the practice group's resources." as sensible.

Full comentary of Central Indiana Podiatry v. Kenneth Krueger

What say you?

NewsBot · May 31, 2008

The Rebublican Herald are reporting:
Judge rules doc can keep Schuylkill County offices open

A podiatrist with three Schuylkill County offices can keep all of them open, a county judge ruled Friday.

Dr. Peter Johnson did not violate a noncompetition clause in his contract with Advanced Centers for Podiatry & Wound Care Inc., Judge John E. Domalakes ruled in a seven-page opinion and order.

Domalakes thereby denied the request by the Lehighton corporation for an injunction that might have forced Johnson to shut his Tamaqua office.

“Plaintiff ... has not met its burden to show that an injunction is needed,” Domalakes wrote.

Advanced Centers, for which Johnson once worked, sued to enforce a contract clause prohibiting Johnson from working opening an office within 20 miles of one to which he was assigned.

However, Domalakes ruled that Johnson was assigned to the corporation’s Brodheadsville and Kingston offices, and that none of his three offices — Ashland, Mahanoy City and Tamaqua — are within 20 miles of either.

Furthermore, there was no evidence Johnson was hurting Advanced Centers’ business and that the public interest in competition and the interest of Johnson’s patients would be hurt by granting an injunction, Domalakes ruled.
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Full story

NIKO · Jun 2, 2008

The question of geographical reasonability has always been a vexed one. In general courts will seek not to intervene in commercial contractual agreements. The concern is that they will impune the nature of such agreements and therefore the effective nature of business. It is a matter of public policy.

This is the case mostly in Australia and I would say in most jurisdictions with particular reference to the USA and anticompetitive clauses. However, Courts will more than likely intervene in situations which are too restrictive and onerous. The balance is for the judiciary to reinforce the message that individuals can knowlingly enter into contractually binding agreements v restrictive agreements which are construed as being unfair.

The legality of contractual terms are often investigated on the basis of specific clauses, then in the context of the overall agreement. The striking out of a specific clause however, will not necessarily strike out the entire agreement. The use of such clauses however, would be part of any agreement of this type and can at times be implied clauses of employment contracts. Other related issues regarding competition can revolve around confidentiality, the use of confidential information from one business in the running of another and so on.

NIKO

Lorraine Munro · Aug 22, 2008

Why would you even bother going to court. I believe life is too short. If you are a reasonable practitioner and have been good to YOUR clients they are not going to leave . They WILL be faithful to you. After all there are enough busness for everyone!!! Isn't there?
Cheers Lorraine

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