Virginia Lawyers Weekly VA Lawyers Weekly
Restrictive covenants in defendant doctors’ employment contracts with plaintiff cannot be enforced because they are too broad and violate public policy.
Overview
Plaintiff Metis Group was under contract with the U.S. Army to provide psychological services. Defendant doctors, Allison and Kohls, worked for Metis as independent contractors. After their one-year agreement with Metis expired, they began working for defendant Preting LLC, which was also under contract with the U.S. Army, to provide psychological services.
At issue in this case are noncompete provisions in the employment agreements defendant doctors signed with Metis. When Matis learned Allison and Kohls were providing services under Preting’s contract, Metis sent cease and desist letters to all three defendants, and later sued the doctors for breach of contract and Preting for tortious interference of contract.
All three defendants have filed a plea in bar, arguing that the noncompete provisions are unenforceable.
“The Agreements contained identical provisions including certain restrictive covenants at issue. Specifically, although captioned as a ‘non-solicitation’ provision, the first provision is essentially a non-compete clause and although captioned as a ‘non-solicitation of employee’ provision, the second provision is a non-solicitation of both employees and independent contractors of The Metis Group. …
“The noncompete is limited to the ‘term of the Agreement.’ The term of the Agreement is indefinite. It commences upon the effective date of the Agreement and continues until terminated by either Party upon written notice. …The ‘non-solicitation’ provision is in force during the term of the Agreement and the ‘Restrictive Period’ under § 4.2. The restrictive period under § 4.2 is defined as twenty-four (24) months following the termination of the Agreement.”
Analysis
“The restrictive covenants are actually facially invalid and there was no credible evidence that The Metis Group needed the restrictions to be as broad as they were drafted.
“The non-compete provision under § 5.1 prevents the Defendant doctors from engaging in any professional services with the United State Army anywhere in the world and for any purpose, whether or not such purposes compete with The Metis Group’s business model. …
“[T]he restriction under § 5.1 applies to the U.S. Army for whatever programs for which it may need support regardless of the program involved or place of performance. The restrictions include ‘any professional psychological service’ for the ‘Client’ – defined as the United States Army.
“Consequently, if the Army sought the services of Drs. Allison and Kohl to start up a completely new project overseas with a different unit, they would be prohibited from providing those services without Metis even if The Metis Group had never performed work in that specific area or specific space.
“ At the same time the non-solicitation provision under § 5.2 prohibited the solicitation of covered employees or contractors even if the reason for causing the employees or contractors to pursue opportunities elsewhere was unwholly unrelated to The Metis Group’s business needs. …
“The restrictive covenants violate public policy because they are designed to perpetuate a monopoly although the work itself performed was limited to a particular government project.
“For example, here the consultants were hired for a specific task order. When the task orders were completed there was no more work to be done. A contract that prohibits a party from seeking employment at a time the employer had no work for the contractor and did not offered to subsidize the contractor’s livelihood is almost unconscionable.
“There was no credible evidence The Metis Group kept in touch with the contractors or attempted to secure work for them in any areas or else it would have discovered sooner that the contractors were still working. There was no credible evidence as to why The Metis Group needed to create an impermeable barrier preventing others from soliciting their employees or other independent contractors to perform any other work regardless of the nature of the work or location.”
As to the tortious inference claim against Preting, “[t]here must be a valid contract or a valid business expectancy. More importantly, the particular contractual relationship being preserved must be valid. Here, due to the severability clause, the contract itself is valid, but this lawsuit is brought on the unsustainable premise that the defendants have interfered with the unenforceable restrictive covenants.”
The pleas in bar are sustained.
The Metis Group v. Allison, et al. CL-2019-10757, Jan. 8, 2020; Fairfax Cir. Ct. (Tran). Timothy B. Hyland, Elizabeth A. Dwyer for The Metis Group, Phillis H. Rambsy for Stephanie P. Allison, Charles M. Elmer for David A. Kohls and Ballston Psychology PLCC, Declan Leonard for Preting LLC. VLW 020-8-003, 11 pp.
