Part VI of “The Restricting Covenant” Series: Veterinarians and Vehicles
This sixth article in “The Restricting Covenant” Series discusses “mobile” veterinary medical practices, and some unique challenges to securing reasonable geographic restrictions for veterinarians employed in such practices.
Mobile vs. Brick and Mortar Locations
Like most domesticated animals, Maine Coon cats require periodic care and treatment from a veterinarian. For my first Maine Coon cat, I drove to the veterinarian’s office, which was a stand-alone fixed “brick and mortar” location. However, for my second cat, my veterinarian brought her “office” to me in a “vet-mobile,” which is a van-like, full-service veterinary hospital on wheels. This type of moving mobile practice can present some challenges when trying to construct and enforce reasonable and enforceable geographic restrictions for a non-compete or a non-solicit.
Wherever I May Roam
In Heiderich v. Florida Equine Veterinary Services, Inc. (2012), an equine veterinarian entered into a one-year employment agreement that included a two-year post-termination non-compete. Dr. Heiderich was prohibited from owning, managing, being employed by, assisting, participating in, or having any material interest in, any business or profession engaged in a general equine veterinary practice, located within a 30-mile radius of her former employer’s place of business (a fixed, brick and mortar location). Dr. Heiderich resigned, opened her own office outside the 30-mile radius, but traveled to treat horses located within the 30-mile radius.
The trial court issued a temporary injunction against her. It found that her office outside the 30-mile radius was of “no consequence” because she delivered equine veterinary services within the restricted area while employed at her former practice. The trial judge did not “believe it was the intent of the parties to allow [her] to set up an office just outside the 30-mile radius and allow Dr. [Heiderich] and [her new practice] to treat [her former practice’s] clients within the restricted area.”
In a 2-1 decision, the District Court of Appeal of Florida, Fifth District, reversed the trial court’s decision. The majority reviewed the plain language of the non-compete and found that, as written, it did not prohibit Dr. Heiderich from providing equine veterinary services within a 30-mile radius of her former employer’s office, “as long as her business office is outside that radius.” Dr. Heiderich therefore was permitted to have an office outside the restricted area and travel within the restricted area to treat patients.
Geographic Restrictions from the Inside Out
Another case involving a veterinarian and a mobile veterinary practice is Battenkill Veterinary Equine P.C. v. Cangelosi (2003). There, a New York equine veterinary clinic sued Dr. Cangelosi after she left and established her own equine veterinary practice. She agreed to a three-year, 35-mile restriction in her employment agreement with Battenkill. After she resigned, Dr. Cangelosi worked from her home office within five miles of her former employer’s office. She traveled to the clients’ homes to treat their horses, including those she had previously treated while at Battenkill inside and outside the 35-mile restricted area. The trial court entered a preliminary injunction against Dr. Cangelosi.
On appeal, the New York Supreme Court, Appellate Division, Third Department, modified the injunction and narrowed the restrictions. The court found that a three-year, 35-mile restriction was “reasonable” since it was necessary to protect the plaintiff’s legitimate business interests, was not unduly burdensome to Dr. Cangelosi, and did not restrict her from practicing general veterinary medicine anywhere or from engaging in her specialty outside the proscribed area. The court explained that, “irreparable injury may be shown through a loss of patients in a medical specialty, permanent loss of revenues from those patients or clients, and loss of referral business usually garnered from clients,” and that Dr. Cangelosi’s “operation within 35 miles of plaintiff’s clinic in the unique specialty of equine veterinary services is causing plaintiff irreparable injury.”
However, although Battenkill attempted to prevent Dr. Cangelosi from servicing all of the practices’ clients regardless of location, the court construed the language of the non-compete strictly against Battenkill. It refused to go “beyond the literal meaning of its terms,” and found that the covenant did not prohibit Dr. Cangelosi from providing services outside the 35-mile area, even to Battenkill’s former clients1. The court also found that Battenkill had failed to demonstrate that Dr. Cangelosi improperly appropriated its customer lists or used confidential client information because Battenkill could not prove that this information was not ascertainable through public sources, such as horse shows, breeders’ associations, signs on houses and barns, or the phone book.
Targeted and Narrowly Tailored Activity-Based Restrictions
The cases discussed above highlight the need to draft the scope of post-employment restrictions carefully so that they are narrowly, but also adequately, tailored to fit the particular needs of a veterinary practice. For example, since Dr. Cangelosi’s post-employment business activity restriction was limited to “equine services,” rather than all other aspects of veterinary medicine, the courts in Battenkill appeared much more inclined to enforce the three-year, 35-mile restrictions. This is in contrast to other court decisions that have refused to enforce overly broad non-competes involving veterinarians because they did not delineate the type of veterinary medicine sought to be restricted (i.e., small animals vs. large animals, farm vs. home, equine vs. general, etc.). See, e.g., Merry Animal Hospital v. MacKay (Superior Ct. of Conn. 2002) (refusing to enforce a non-compete that restricted DVM from engaging in any aspect of veterinary services for two years within seven miles from any of the practice’s locations).
Also, the majority’s decision in the Heiderich case highlights a concept discussed in other parts of this Series – that many courts will construe a non-compete strictly against the drafter in favor of enforcing the least amount of restrictions necessary to protect the employer’s legitimate business interests. Should the veterinary practice in Heiderich have included specific language in the employment agreement about Dr. Heiderich’s mobile practice within the 30-mile restriction? Should it have included examples of how the restrictions were intended to apply to a mobile practice after she left? Should her employment agreement have included a no-treat restriction or a non-solicitation restriction, separate from the specific geographic restriction?
The goal of this Series is to provide a brief overview and some interesting insights and practical pointers when dealing with unique issues that might arise in the context of restrictive covenants and a particular occupation or industry. It is not intended to provide and should not be construed as providing legal advice. Each situation is different, and if legal advice is needed, you should seek the services of a qualified attorney who is knowledgeable and experienced in this area of the law to address your specific issues or needs. Stay tuned for future articles in this Series, which will discuss the restrictive covenant landscape for other occupations and industries, including farmers, florists, franchisors, and more.
Part 1 - Psychologists and Psychiatrists
Part 2- Barbers and Beauty Shops
Part 3- Recipes and Restaurants
Part 4 - Coaches and Colleges
Part 5- Lawyers and Law
Part 7- Blue Pencils and Brokers
1 The covenant stated: “The parties agree that the Employer’s business is local in scope and that the Employer would suffer serious damage and loss of goodwill if upon termination of this agreement, the Employee competed with the Employer by providing veterinary services for the clients who are currently clients of the Employer. The Employee, therefore, agrees that for a period of three years after the end of their employment, they will not within 35 miles of the Employer’s current business address [be connected in any way with] any business similar to the type of equine veterinary practice conducted by the Employer . . . . It is also agreed that the client list and client information are confidential and the property of the Employer and may not be used for any purpose without the permission of the Employer.”