Patient First Richmond Medical Group, L.L.C. v. Blanco
83 Va. Cir. 3, 2011 Va. Cir. LEXIS 107 (2011)
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Rule of Law:
Under Virginia law, restrictive covenants in employment agreements, such as non-compete and non-solicitation clauses, are unenforceable if they are functionally overbroad by prohibiting activities not in direct competition with the employer or are ambiguous due to the use of undefined key terms.
Facts:
- Ameanthea Blanco, a Family Nurse Practitioner, began working for Patient First Richmond Medical Group, L.L.C. in 2006.
- In January 2010, Blanco signed an employment agreement containing a two-year non-compete clause and a non-solicitation clause.
- The non-compete clause restricted Blanco from directly or indirectly performing medical services, including as a shareholder, within a 7 or 15-mile radius of Patient First locations.
- The non-solicitation clause prohibited Blanco from soliciting or hiring any person employed by Patient First in the preceding 12 months for any reason, without geographic or functional limitation.
- In April 2010, while still employed by Patient First, Blanco began forming her own clinic, The Practice.
- Blanco solicited two doctors employed by Patient First to work for her new clinic.
- Blanco resigned from Patient First on August 13, 2010.
- Shortly after her resignation, Blanco opened The Practice, which was located within a seven-mile radius of the Patient First facility where she had worked.
Procedural Posture:
- Patient First Richmond Medical Group, L.L.C. (Plaintiff) filed a complaint against its former employee, Ameanthea Blanco (Defendant), in the trial court.
- The complaint sought injunctions to enforce a covenant not to compete and a covenant not to solicit other employees.
- The Defendant, Blanco, filed a demurrer to the complaint, arguing that the restrictive covenants were unenforceable as a matter of law.
- The case is before the trial court to rule on the Defendant's demurrer.
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Issue:
Are non-compete and non-solicitation covenants in an employment agreement unenforceable as overbroad and against public policy when they prohibit indirect activities like stock ownership in any related company and use vague, undefined terms to describe the restricted activities?
Opinions:
Majority - Judge Frederick B. Lowe
Yes, the non-compete and non-solicitation covenants are unenforceable. Restrictive covenants are invalid if they are overbroad or uncertain, and these provisions fail on both counts. The non-compete clause is functionally overbroad because it prohibits indirect involvement, such as owning stock in a publicly traded company, which is not in direct competition with Patient First. Furthermore, the covenant is impermissibly vague because critical terms like 'medical services' and 'indirect' performance are not defined, forcing the employee to guess what conduct is prohibited. This ambiguity offends public policy. Similarly, the non-solicitation clause is overbroad as it contains no geographic or functional limitations, preventing Blanco from hiring any former Patient First employee for any type of job anywhere in the world, which exceeds the employer's legitimate business interests.
Analysis:
This decision reinforces Virginia's strict approach to interpreting restrictive covenants in employment contracts. It emphasizes that for such a covenant to be enforceable, it must be narrowly tailored to protect only the employer's legitimate business interests against direct competition. The ruling serves as a clear warning to employers that functional overbreadth (e.g., barring stock ownership) and ambiguity from undefined terms are fatal flaws. Future enforceability of non-compete clauses will likely hinge on the precision of their language and a clear connection to preventing direct competition, rather than broadly limiting an employee's livelihood.
