Memorandum - is noncompete clause enforceable

Dr. Hathaway is interested in what might happen if she litigates this matter. For preparation, a short memo that analyzes whether or not the noncompetition covenant (NCC) in Dr. Hathaway’s employment agreement is enforceable.

The legal research has already been completed – utilize the attached cases only.**NO ADDITIONAL RESEARCH IS REQUIRED**

Request for a memorandum evaluating the enforceability of the non-compete clause of the Employment Agreement. I believe the Employment Agreement is a valid contract, that there was an offer, acceptance, and consideration (no need to evaluate whether the entire Agreement is a valid contract). For purposes of this memorandum, and based on the facts presented by Dr. Hathaway, Dr. Hathaway breached the non-compete clause. Therefore, please do not evaluate whether she breached it. Please simply focus on the enforceability of the NCC.

• GOAL – Dr Hathaway does not want to loose her practice

• Please apply the Issues, Rule, Analysis/Application, Distinguish, and Conclusion format (attached) based on the facts of Dr Hathaway’s case

• The RULE/precedent case – Raimonde v Van Vlerah

• Case Law – additional cases

o Wilson v Kreusch

o Williams v Hobbs

o Rogers v Runfola

• Also, apply the 3prongs (whether it impacts the following and why/why not) in order to do the analysis of each case

o Employer interest (paragraph)

o Employee Interest (paragraph)

o Public Interest (paragraph)

**Need citation for attached cases 

**ONLY USE THE ATTACHED CASES PLEASE

Demand Letter:

Dear Dr. Hathaway, In January, Year 4, you entered into an employment agreement (the “Agreement”) with my client, Back & Neck Specialists. As you are aware, the Agreement sets forth restrictive covenants that bound you after the termination of your employment at Back & Neck Specialists. You are now in violation of these covenants. The Agreement contained a provision prohibiting you from practicing within a 10-mile radius after the termination of your employment. Your new practice, Personal & Athletic Injury Therapists (“Therapists”), is located within this 10-mile radius. Additionally, your marketing tactics have caused considerable damage to Back & Neck Specialists. In light of your breach of contract, Back & Neck Specialists intends to enforce the remedies provided for in the Agreement. Back & Neck Specialists plans to file suit for injunctive and other relief if Therapists does not close its business. In accordance with the Agreement, if this matter proceeds to trial, Back & Neck Specialists will also seek a minimum of 50% of Therapists’ gross receipts and punitive damages for your opportunistic breach of the Agreement.

Blurb from Employment Contract

Upon the termination of employment of Employee pursuant to this Section 6: Employee shall be entitled to send notices regarding the establishment of Employee’s new office to those patients for whom Employee has been the primary chiropractor. Employee shall not be entitled to send such notices to any other patients of the Practice; Any patient requesting, either by telephone or in writing, that records be transferred from Employer’s office to another office on behalf of Employee, shall be accommodated within seven (7) working days of receipt of such request. Employer shall send appropriate copies of all such records, and all reasonable costs incurred in transferring said records will be assumed by Employer; provided, however, that Employer retains the right to maintain originals of such records; Employee shall be entitled to the return of all equipment, supplies, instruments and books brought to the Practice by Employee, as evidence by a specific list (which shall be updated from time to time, as may be appropriate) of such property maintained by Employee and kept on file with Employer; and Employee will be responsible, as determined by Employer, in its sole discretion, for completing any treatment to patients as to whom Employee’s failure to complete such treatment could jeopardize the health of such patient. Covenants For a period of two (2) years following the termination of her employment, however caused, the Employee will not, within ten (10) miles of Employer’s location, directly or indirectly, for herself, on behalf of, or as an employee of any other firm, association, corporation, or other entity, engage in, or be employed by a practitioner of, chiropractic medicine. For the purposes of Section 7, Employer’s location is 211 W. Schrock Road, Westerville, OH 43081. 7 Employee and Employer recognize that the covenants of Section 7 will survive the termination of this Employment Agreement regardless of the cause of such termination.

Case Brief:

Raimonde v. Van Vlerah, 325 N.E.2d 544 (Ohio 1975).

Facts: Employer sought to enforce non-compete covenant to prevent former employee

from accepting similar employment or practicing his profession within 30 miles of

employer’s location for a period of 3 years. The Court of Appeals refused to enforce the

covenant.

Holding and Rationale: The Ohio Supreme Court remanded the case to allow the trial

court to fashion a reasonable non-compete covenant, holding that:

1. Non-compete covenants will be enforced when the restrictions they impose are

reasonable.

2. Non-compete covenants that are unreasonable will be enforced to the extent

necessary to protect an employer’s legitimate interests.

3. A non-compete covenant is reasonable when the employer can show the

restrictions are 1) no greater than necessary for the protection of the

employer’s legitimate business interests, 2) do not impose undue hardship on

the employee, and 3) are not injurious to the public. Factors to consider when

evaluating reasonableness include:

a. Whether the employee represents the sole contact with the customer

b. Whether the covenant seeks to eliminate competition which would be

unfair to the employer or merely seeks to eliminate ordinary competition

c. Whether the covenant seeks to stifle the inherent skill and experience of

the employee

d. Whether the covenant operates as a bar to the employee's sole means of

support

e. Whether the employee's talent which the employer seeks to suppress was

actually developed during the period of employment

Case Brief:

Rogers v. Runfola & Assocs., Inc., 565 N.E.2d 540 (Ohio 1991)

Facts: Two court reporters resigned after 10 years of working for the employer. The

employer sued to enforce the non-compete covenant, which prohibited the former

employees from working as court reporters in the county for two years and from

soliciting the employer’s clients forever. The Court of Appeals held the covenant was

unreasonable.

Holding and Rationale: The Ohio Supreme Court modified the covenant, holding:

1. The original restrictions caused the former employees undue hardship because

court reporting was the only profession in which they were proficient.

2. The employer had a legitimate business interest to protect because he invested

time and money in equipment, facilities, support staff and training and

developed the clientele list.

3. Modifying the covenant to prohibit former employees from soliciting clients

and working as court reporters within the city limits for one year effectively

balances employer’s interest and hardship on former employees.

Case Brief:

Williams v. Hobbs, 460 N.E.2d 287 (Ohio Ct. App. 1983)

Facts: A radiologist sued his former employer after they enforced a non-compete

covenant to prevent him from practicing his specialty at the hospital. The trial court held

the non-compete covenant was unreasonable and did not enforce it.

Holding and Rationale: The Court of Appeals affirmed, holding:

1. Enforcing the covenant would be injurious to public because the former

employee was a specialist radiologist whose skill was uncommon in

community.

2. The covenant also imposed undue hardship on the doctor and community because

the hospital is one of only a few institutions where he could practice his

specialty.

Case Brief:

Wilson v. Kreusch, 675 N.E.2d 571 (Ohio Ct. App. 1996)

Facts: A chiropractor opened up a new office within three miles of his former employer’s

office in violation of the non-compete covenant in the employment contract. The trial

court modified the covenant, holding that the original restriction barring the former

employee from practicing any chiropractic medicine was unreasonable.

Holding and Rationale: The Court of Appeals affirmed, holding:

1. The modifications adopted by the trial court appropriately balanced the interests

of the employer, former employee and public because

a. They preserve the employer’s patient base and limit the former

employee’s ability to compete in the immediately surrounding area.

b. They do not impose undue hardship on the former employee because he is

not required to move his office and can accept new patients.

c. They are not injurious to the public because they have limited impact on

potential new patients.

2. The employer’s delayed enforcement of the covenant increased the covenants

detrimental effect on the employee, who had already established a new office.