The judge concluded that a noncompete agreement with the doctor’s former practice group was flawed both by vague terminology and the undue burden it placed on the discharged physician.
The restrictive covenant would have forced Dr. Thomas Fame to choose between finding a new career locally or moving away to practice allergy medicine, Judge Charles N. Dorsey said as he barred enforcement of the provision.
The ruling benefits the doctor, his patients and the community at large, said attorney Devon J. Munro of Vinton, who represented Fame.
The doctor’s former practice group has asked for a rehearing and plans to appeal, said defense attorney Tommy Joe Williams of Roanoke.
The ruling came in a Dec. 14 opinion in Fame v. Allergy & Immunology PLC (VLW 015-8-142).
Fame had an active allergy practice at Lewis-Gale Medical Center in Salem when he left that hospital in 2010 to join the Allergy & Immunology practice group at a Salem office. Fame, a non-owner employee of the group, started work without any written agreement.
The parties signed a “Nonmember Employment Agreement” in February 2011.
“Fame knew what he was signing and intended to be bound by it,” Dorsey said in reciting the facts of the case.
The deal included a noncompetition provision triggered by termination of employment. The covenant barred Fame from competing with A&I for two years in a specified area with a radius of about 50 miles.
Fame, who reportedly amassed a loyal group of patients, was nonetheless fired by the group on May 1 of this year. He sued the next month seeking an order that he was not bound by the noncompetition agreement.
Fame also publicized his plight, arguing the covenant would force him to abandon local roots and give up his work on a church-based medical mission to Haiti.
Fame contended the case could be resolved on paper, but Dorsey rejected a summary judgment motion Aug. 27. The judge heard evidence and listened to the lawyers on Oct. 14.
In his opinion, Dorsey invalidated Fame’s agreement because it “severely hampers his ability to earn a livelihood.”
Citing parallels to a 1995 Newport News Circuit Court case, Dorsey said Fame could relocate and establish a new practice in another area, but the move would involve “certain difficulties.”
The judge did not elaborate, but Fame had pointed to his awards for locally based charitable and civic work. Besides the medical mission to Haiti, he was active in a local Rotary Club.
“This covenant unacceptably precludes the employee from pursuing his field in his chosen home. As such, it is unduly harsh and oppressive, and is thus unenforceable,” Dorsey wrote.
Reviewing the law on noncompetition provisions, Dorsey also said the agreement was undermined by ambiguity.
A noncompete clause is unenforceable if it is “ambiguous and capable of multiple interpretations, any of which are functionally overbroad,” the judge said.
Fame’s agreement foundered on conflicting interpretations, Dorsey ruled. The noncompete clause listed 20 localities but was not explicit about how it prohibited practice in those jurisdictions.
The administrator for the practice group testified the agreement barred Fame from seeing patients from those localities. The defendant’s pleadings offered a different interpretation, contending the list of cities and counties referred to places where Fame could not treat patients, regardless of where the patients came from.
“If A&I is unable to definitely interpret their own contract provision, it would be the epitome of unreasonableness to expect Dr. Fame to be able to do so,” Dorsey wrote.
The first interpretation was overly broad, the judge decided, “as it would require Dr. Fame to screen his patients for connection to the Roanoke Valley regardless of whether he was practicing in Radford, Reno, or Rwanda,” Dorsey wrote.
The agreement included language barring Fame from any position whatsoever in a competing business. Dorsey said that limitation was not narrowly tailored to protect A&I’s legitimate business interests.
Dorsey found no problem with the two-year time frame of the agreement.
Munro, the doctor’s attorney, said the ruling advances opportunities for physicians.
“I think that you are always going to run afoul of ‘undue hardship’ as a prong if you are forcing someone to leave their home,” Munro said.
The impact is magnified for a specialist like Fame, he said.
“If he were just a general practitioner, you could make an argument that he could go make a living in a rural area,” Munro said.
Professional non-competes should be outlawed, Munro contended.
Williams, the lawyer for A&I, said the General Assembly should instead map a course for professionals seeking to protect their business interests.
“There comes a point when the covenant is so restricted, it restricts nothing. This really calls for the legislature to set out in a statute, if possible, the frontiers of these agreements as to physicians,” Williams said.
Lauren Ellerman of Roanoke, who often handles noncompete cases but was not involved in the Fame lawsuit, welcomed Dorsey’s guidance.
“It is great to see a circuit court taking up the ‘undue burden’ element of the test and actually applying it. It’s rarely done, though clearly an element that the courts should consider,” Ellerman said.
Limiting the geographical scope of the covenant is key to avoiding “undue burden,” she added.
“The problem is when the contract defines community as an entire region that a patient might travel from,” Ellerman said.