November 30, 2008
Non-Compete Not Enforced
The Iowa Court of Appeals declined to enforce a non-compete provision against a physician who had left his employment at the College of Medicine of the University of Iowa after concluding that he would not obtain tenure. From the summary on the court's web page:
Dr. Thomas Warren was employed as an assistant professor with the College of Medicine at the University of Iowa. He was primarily engaged in research, but saw patients one day each week at Cancer Care of Iowa City. He signed a non-compete agreement which prohibited him from practicing medicine within two years or fifty miles after he left the University. Dr. Warren came to realize he was not going to achieve tenure, and he resigned his position with the University. He became employed with Iowa Blood and Cancer Care, P.L.C. (IBCC), in Cedar Rapids. The University filed an action against Dr. Warren seeking an injunction to prohibit him from practicing medicine in violation of the non-compete agreement. The district court denied the University's request for an injunction, and it appeals. OPINION HOLDS: The University has not met its burden to show the restriction was reasonably necessary for the protection of the University's business. Dr. Warren had limited contact with patients while at the University. He arranged to transfer his patients from Cancer Care to other physicians there. We conclude Dr. Warren did not attempt to solicit or "pirate" the patients of Cancer Care. The University has not shown it suffered or will suffer a loss of business due to the practice of medicine in Cedar Rapids by Dr. Warren. We also find the restrictive covenant is prejudicial to the public interest. There was evidence that the federal government had designated Cedar Rapids as underserved by physicians. Based on these findings, we conclude we need not decide whether the restrictive covenant is unreasonably restrictive of the employee's rights. We affirm the decision of the district court.
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