On June 1, 2011, in Peconic Surgical Group, P.C. v. Cervone, the New York State Supreme Court, Suffolk County, granted a medical group's motion for a preliminary injunction and temporary restraining order enforcing a restrictive covenant (non-compete clause) contained in two (2) physicians' employment agreements.
The plaintiff, Peconic Surgical Group, P.C. ("PSG"), is a medical group consisting of surgeons. Before joining PSG, the defendant surgeons signed employment agreements with PSG, in which they agreed that, for a period of three (3) years after leaving PSG, they would not engage in the practice of surgery within fifteen (15) miles of PSG's office.
After both defendant surgeons resigned from their positions, PSG brought suit alleging that the surgeons violated the restrictive covenant by opening an office approximately three (3) miles from PSG's office.
As the court noted, when enforcing "restrictive covenants among professionals, great weight is given to the interests of the employer in restricting competition within a confined geographic area. The rationale therefor is that professionals are deemed to provide unique or extraordinary services. In fact, the interests of the employer have enjoyed solicitous consideration by the courts when the restrictive covenant is in an employment agreement between doctors."
Using this rationale, the court held that the three-year, fifteen-mile restriction on the surgeons' practice was reasonable in time, geographic area, and scope. Also, because the geographic area in question was served by several hospitals, the court found that that enforcement of the restrictive covenant was not harmful to the public.
The court then stated that PSG "has demonstrated a strong probability of irreparable harm if the preliminary injunction were denied. Not only would PSG lose the investment it made in hiring the defendants and establishing the practice for which they were hired, a loss that is not readily compensated by money damages, it would also lose patients and revenues to [defendants'] new practice, as well as the goodwill associated with the practice, which is difficult to quantify."
This decision reinforces the need to weigh the availability of professional services in a given area when determining the enforceability of a non-compete agreement.
Before signing a non-compete agreement, we always recommend that employees have a New York non-compete attorney review the agreement to ensure that the employee understands the terms of the agreement and the ramifications of signing it.
