Can Plaintiffs Use an Antitrust Defense as a Weapon to Challenge Non-Competes?
On March 15, 2019, four radiation oncologists alleged that their employer, 21st Century Oncology LLC, and its related entities have maintained an illegal monopoly over the provision of radiation oncology services in three counties in southwest Florida in violation of federal antitrust laws. Dosoretz v. 21st Century Oncology Holdings, Inc., 2:19-cv-00162-UA-UAM, filed in the U.S. District Court for the Middle District of Florida, alleges that the anti-competitive conduct includes requiring the oncologists—the “only radiation oncologists in these counties”—to sign “onerous” non-compete agreements that stifled competition in the counties and “exclusive long-term contracts with key hospitals,” which allegedly created a monopoly on radiation oncology services for patients at those hospitals. The complaint seeks a declaration that (1) the defendants violated the Sherman Act through their anticompetitive practices and (2) the doctors’ non-compete agreements are unenforceable. Alternatively, the doctors seek to restrict the temporal and geographic scope of the overbroad non-competes. The defendants’ motion to dismiss is pending.
It is not easy to prevail on a monopolization claim premised on non-compete restrictions in employment agreements. As explained in Cole v. Champion Enters., 496 F. Supp. 2d 613, 635 (M.D.N.C. 2007), although “[t]here can be little doubt that the Sherman Act applies to [non-competes],” there is little “precedent”; “[o]ne explanation … may be the difficulty involved in proving that a post-employment noncompetition agreement violates the Sherman Act. Such agreements are not per se violations of the Sherman Act but must be analyzed under the rule of reason. To establish a violation under the rule of reason, one must prove that the agreement has an adverse effect on competition in the relevant market.”
The Dosoretz case is worth watching. If it progresses, it may provide valuable insight for non-competition litigants, whether they are asserting or fighting an antitrust claim premised on non-compete agreements.