Legal Trickery – Eric A. Parzianello

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Hiring Your Competitor’s Employee? Undertake a Cost-Benefit Analysis

Posted by Eric Parzianello on November 3, 2010

Are you contemplating stealing away a competitor’s employee for your own company? While you may ultimately not have to pay damages for interfering with your competitor’s business, your defense costs may be significant.

On October 25, 2010, the Florida First District Court of Appeal reversed a trial court’s decision, prior to trial, to dismiss a lawsuit brought by a physician group against a former employee and her new employer. In Southeastern Integrated Med., P. L. (“SIMED”) v. North Florida Women’s Physicians, P. A. (North Florida) , SIMED and Dr. Carroccio entered into a Employment Agreement. Dr. Carroccio agreed to provide professional services to SIMED’s patients as a full-time medical doctor. The parties’ Employment Agreement contained a covenant not to compete which provided that upon termination of employment, “Dr. Carroccio was restricted for two years from providing medical services within a twenty-five mile radius of any SIMED medical office.”

Eleven months into the Employment Agreement, SIMED learned that North Florida solicited Dr. Carroccio to leave SIMED and to work at North Florida despite having knowledge of the Employment Agreement. Dr. Carroccio accepted the offer to work for North Florida and informed SIMED that she was quitting. SIMED sued Dr. Carroccio and North Florida alleging that it suffered damages in the loss of legitimate business interests, including substantial relationships with specific patients.

The trial court found that North Florida’s conduct was not actionable because it had a legitimate, competitive business purpose, “i.e., North Florida was free to compete with SIMED in recruiting physicians to its practice.” The trial court therefore dismissed the complaint. However, the appellate court found that it was improper for the trial court to consider North Florida’s motives in recruiting Dr. Carroccio without hearing evidence on the issue. It therefore sent the case back to the trial court for further proceedings.

While North Florida may ultimately prevail in the trial court, it will have already paid considerable attorney defense costs for the original proceedings in the trial court, then in the appellate court, then back in the trial court and then, perhaps, in the appellate court again. If you’re planning to hire an employee with a non-compete agreement away from a competitor, consult your counsel and develop a cost-benefit analysis. That employee may provide a considerable amount of profit for you. On the other hand, the analysis may conclude that the potential upside does not outweigh the cost of litigation.


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