Veterinary Doctor’s Non-Compete Invalidated When Terms Unreasonably Favor Employer

Case Background

Dr. Morgan MacKay worked as a doctor of veterinary medicine at Merryfield Animal Hospital, a clinic owned by Dr. Engstrom, from May 15, 2000, to April 16, 2002.  There were two employment contracts between Dr. MacKay and Merryfield that described employment from May 15, 2000, to May 15, 2001, and a second covering May 1, 2001, to April 30, 2002.  Each contained restrictive covenants and was supported by adequate consideration, specifically the second agreement listed a substantial pay increase.  The non-compete agreement prohibited Dr. MacKay from owning or working at another veterinary facility within seven miles of Merryfield for a period of two years.

Dr. MacKay voluntarily terminated his employment in a letter to Dr. Engstrom dated April 16, 2002 stating that he “could no longer tolerate the veterinarian service practices that were occurring at Merryfield”.  Following this decision, he began to work at New Haven Central Hospital, a veterinary facility located 6.2 miles from Merryfield, clearly within the seven-mile radius prohibited area as defined in the non-compete covenant.

Merryfield sued Dr. MacKay to enforce the terms of the non-compete agreement and curtail further employment at New Haven Central Hospital.  Dr. MacKay however contended that the terms of the agreement afforded Merryfield an unnecessary and unfair amount of protection, to the degree that it rendered the covenant unreasonable and unenforceable.

The Court’s Decision

The court found in favor of Dr. MacKay and held that the terms of the non-compete agreement “afforded greater protection to the plaintiff [Merryfield] than is reasonably necessary and the non-compete is unenforceable”.  The court supported its ruling with the argument that it had the obligation to ensure that the agreement should only afford a fair degree of protection to the interest of the employer while also safeguarding the interests of the employee himself.  The agreement went well beyond creating reasonable protections for Merryfield and unnecessarily restricted Mr. MacKay’s career opportunities and his ability to earn a living.

The language of the restrictive covenant was so broad and general that it prohibited several activities that Merryfield did not engage in.  For instance, the agreement prohibited Dr. MacKay from delivering veterinary care to horses, cattle, sheep, or swine even though Merryfield did not treat those types of animals.

Additionally, the wording of the agreement was so vague that it would have even prevented Dr. MacKay from working as a meat inspector.  Even the finite restriction of a seven-mile radius was deemed unreasonable given the specific circumstances of the veterinary industry in the area.  The language of the agreement would prevent Dr. MacKay from bringing in animals to New Haven Central Hospital if he was employed at a clinic that lacked surgical facilities, as was the case with the vast majority of the veterinary facilities outside the seven mile prohibited radius.

Conclusion

While the restriction of seven miles for two years is reasonable at face value, it becomes clear that it can easily transform into an incredibly unreasonable restriction in light of certain facts.  It was the use of vague language throughout the document and the unforeseen consequences that ultimately invalidated the restrictive covenant between Dr. MacKay and Merryfield.

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