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Legal Alert:
Non-Compete Language Held Unenforceable
DATE:
JULY 14, 2003
TO: CLIENTS
& FRIENDS
FROM:
MARK A. COEL, ESQ. & C. ANTHONY RUSSO, ESQ.,
TRANSACTIONAL AND REGULATORY DIVISION
RE:
COVENANT NOT TO COMPETE HELD UNENFORCEABLE
WHEN NOT SUPPORTED BY A LEGITIMATE BUSINESS INTEREST
A recent decision by a
Florida appellate court is likely to impact the
manner in which covenants not to compete in
physician employment agreements are enforced.
Indeed, to the extent followed by the courts,
Florida’s restrictive covenant statute may well have
lost some of its “punch.”
In University of Florida v.
Sanal, the First District Court of Appeal of Florida
(the “Court”) prohibited the University of Florida
(the "University") from enforcing a two-year and
fifty (50) mile restrictive covenant against a
former physician employee. The University alleged
that the former employee violated the restriction
and consequently caused irreparable injury to the
University’s legitimate business interest because he
went to work for a competitor within both the
prohibited geographic area following the termination
of his employment. The Court, however, rejected this
argument concluding that because the University was
unable to demonstrate that the physician was
interfering with substantial specific prospective
patients, the University had in turn failed to
establish "legitimate business interest" upon which
enforcement of the restriction could be based.
The decision creates a
somewhat confusing and potentially dangerous
precedent for parties seeking to enforce restrictive
covenants. While courts always have the opportunity
to consider the reasonableness of a restriction from
a geographic standpoint, this case seemingly ignores
the geographic issues and relies on the
interpretation of a key component of the statute
which itself may create a would-be “slippery slope”
in cases to come. |
