Veterinarian Non-Compete Held Unenforceable in Virginia
In Farm Veterinary Servs. v. Novak, 61 Va. Cir. 584 (2001), a group of veterinarians had a non-compete contract with their employer.
The veterinarians resigned and began competing with their former employer. The employer sued or breach of contract.The judge held that the non-compete was overbroad, unreasonable and unenforceable as a matter of law, and dismissed the lawsuit.
Here is a brief summary of the case with key takeaways for Virginia veterinarians with non-compete contracts.
The veterinarians’ non-compete contract imposed a $30,000 penalty if the veterinarians were terminated or resigned and practiced veterinary medicine within 20 miles of the employer’s office for three years.
Here is what the non-compete said:
If [the employee] engages in the practice of medicine, either alone, as an employee, in partnership, or as an employee of any professional corporation, with any other person within three years and within twenty (20) miles from the facilities occupied by [the employer], …[the employee] agrees to pay [the employer] $30,000.
After a hearing, the Virginia court held that the $30,000 penalty was unreasonable and unenforceable. There was no evidence that the employer had suffered damages that would justify a payment of that amount.
Furthermore, there was no evidence that prohibiting a veterinarian from practicing veterinary medicine in any capacity in a 20-mile radius for over three years was necessary to protect the employer’s legitimate business interest. Such a restriction was unduly harsh on the veterinarian’s right to practice and earn a living.
Key takeaways for veterinarians:
- The $30,000 payment was a liquidated damages clause. Generally, these types of payments will not be enforced.
- Get advice before switching jobs if you have a non-compete. Even though the veterinarians prevailed, they still incurred costs of litigation. It is worth planning ahead to avoid a lawsuit.