Non-Compete Not Enforced

The Iowa Court of Appeals declined to enforce a non-compete provision against a physician who had left his employment at the College of Medicine of the University of Iowa after concluding that he would not obtain tenure. From the summary on the court’s web page:

Dr. Thomas Warren was employed as anassistant professor with the College of Medicine at the University ofIowa. He was primarily engaged inresearch, but saw patients one day each week at Cancer Care of Iowa City. He signed a non-compete agreement whichprohibited him from practicing medicine within two years or fifty miles afterhe left the University. Dr. Warren cameto realize he was not going to achieve tenure, and he resigned his positionwith the University. He became employedwith Iowa Blood and Cancer Care, P.L.C. (IBCC), in Cedar Rapids. The University filed an action against Dr.Warren seeking an injunction to prohibit him from practicing medicine inviolation of the non-compete agreement. The district court denied the University’s request for an injunction,and it appeals. OPINION HOLDS: TheUniversity has not met its burden to show the restriction was reasonablynecessary for the protection of the University’s business. Dr. Warren had limited contact with patientswhile at the University. He arranged totransfer his patients from Cancer Care to other physicians there. We conclude Dr. Warren did not attempt tosolicit or “pirate” the patients of Cancer Care. The University has not shown it suffered or will suffer a loss ofbusiness due to the practice of medicine in Cedar Rapids by Dr. Warren. We also find the restrictive covenant isprejudicial to the public interest. There was evidence that the federal government had designated CedarRapids as underserved by physicians. Based on these findings, we conclude we need not decide whether therestrictive covenant is unreasonably restrictive of the employee’s rights. We affirm the decision of the districtcourt.

(Mike Frisch)