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Sunder v. Mandalapu

ATL-C-171-00 (N.J. Super. Ch. Div. 2003) (Unpublished)

NON-COMPETITION—Where a physician employee was virtually driven out and didn’t seek to open a competing business in the first place, a court refused to enforce an otherwise enforceable 15 mile restrictive covenant even though the former employee’s new office was located inside, but near, the edge of the distance restriction.

A pediatrician hired a doctor to work for her. The doctor’s employment agreement had a non-competition provision. That provision restricted the employee during the period of employment, and for two years afterwards, from working at an office within fifteen miles of the employer’s office. During four years of employment, the employee-doctor and her boss had an extremely stormy relationship. The employee had a very passive personality and the employer was loud, demanding, and overbearing. Eventually, the employee left. It appeared that she did not intend to open her own practice, but was unable to find another job. As a result, she did, in fact, open her own office, located 12-½ driving miles away by the shortest route and 14.3 miles by the fastest route. The Court refused to find that the employee had violated a valid restrictive covenant. It considered it to be important that the office was tension ridden and it made sense that the meek employee eventually quit. It also considered it an important factor that the employee apparently had no intention to open her own practice when she quit. The Court admitted that “[w]hile any geographical limitation is arbitrary, there [was] no reason to believe that a 15, as opposed to a 14-mile, restriction [was] necessary to protect [the employer’s] practice.” The employer admitted that the distance was not intended to be a radius restriction and what was intended was to protect the employer’s relationship with her existing patients. The Court believed that the bulk of the existing practice’s patients were located between the two offices. It thought this to be important because if that were the case, even if the employee were to move her office several miles further away, “the bulk of her patients would be well within 15 miles” of her new office. Consequently, according to the Court, under those circumstances there could be “no real claim that the location of [the employee’s] new office need be moved to protect [the employer’s] relationship with her patients.” The Court asserted that it was not making “a determination as to when a geographical limitation ceases to serve a legitimate end and when it becomes an impermissible limitation on competition; [it decided] only that in this case a 15-mile as opposed to a 12-mile prohibition [was] unreasonable and unnecessary to protect any legitimate concern [of the former employer].” Further, the Court believed that to enforce the restriction would impose a hardship on the employee. It felt the circumstances under which the employee chose to leave the old office did not result from her own wrongdoing and a court should be hesitant to impose hardship on the employee when the employee appears to have only borne a small part of the responsibility for the circumstances giving rise to her quitting her old job. Further, the Court was concerned that if the employee moved her office further away, she would be in jeopardy of losing her privileges at the hospital where she had established her reputation because that hospital required affiliated doctor’s offices be within a thirty minute drive.

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