Recently, a Virginia Circuit Court Judge in Virginia Beach, Virginia held that a non-competition agreement was overbroad and unenforceable because the non-compete barred indirect involvement by the employee as a shareholder in potentially non-competing businesses.
In Richmond Medical Group, LLC v. Ameanthea Rica Blanco, Docket No.: CL10-6211 (Circuit for City of Virginia Beach 2011), click here, the defendant, a former Family Nurse Practitioner for the Richmond Medical Group, entered into an employment agreement containing both non-compete and non-solicitation provisions. The non-compete, in this case, barred the defendant from performing medical services “of the type performed for” the plaintiff during the twelve months preceding the termination of employment. The non-compete also barred the defendant from performing urgent medical care services, within 15 miles of any of plaintiff’s medical centers.
Of special importance, the non-compete and non-solicitation provisions prohibited the defendant from competing or soliciting in virtually any capacity, including for herself “as an agent, officer, director, member, partner, shareholder, independent contractor, owner, or employee.”
Here, the Court found that the non-compete and non-solicitation provisions fail because “it leave[s] uncertain exactly what services the defendant could or could not provide without violating the covenant not to compete.” The Court appeared to give weight to the fact that the non-compete barred the defendant from competing as an “agent, officer, director, member, partner, shareholder, independent contractor, owner or employee”, thereby barring the defendant from even “owning stock in a publically traded company if some part of that company provided the same medical services as the defendant. . .” The judge found that barring one from being a stockholder in a publically traded company “is virtually inherently overbroad.”
This recent decision is yet another example of the restrictive treatment Virginia courts frequently apply to non-competes. In drafting these restrictions, employers would be well-served not to prohibit employees from passive investment activity. Employers are advised to restrict the language of non-competes to activity which directly competes with the employer’s business.