Veterinarian Non-Compete Held Unenforceable in Virginia

In Farm Veterinary Servs. v. Novak, 61 Va. Cir. 584 (2001), a group of veterinarians had non-compete contracts with their employer.

The veterinarians resigned and began competing with their former employer. The employer sued for breach of contract. The judge held that the non-compete was overbroad, unreasonable, and unenforceable as a matter of law, and dismissed the lawsuit.

The veterinarians’ non-compete contract imposed a $30,000 penalty if the veterinarians were terminated or resigned and thereafter practiced veterinary medicine within 20 miles of the employer’s office for three years post-separation. Specifically, the non-compete provided:

If [the employee] engages in the practice of medicine, either alone, as an employee, in partnership, or as an employee of any professional corporation, with any other person within three years and within twenty (20) miles from the facilities occupied by [the employer] . . . [the employee] agrees to pay [the employer] $30,000.

After a hearing, the Virginia court held that the $30,000 penalty was unreasonable and unenforceable. There was no evidence that the employer had suffered damages that would justify a payment of that amount.

Furthermore, there was no evidence that prohibiting a veterinarian from practicing veterinary medicine in any capacity in a 20-mile radius for over three years was necessary to protect the employer’s legitimate business interest. Such a restriction was unduly harsh on the veterinarian’s right to practice and earn a living.

The key takeaway is to seek advice from legal counsel about your non-compete. Even though the veterinarians here prevailed, they still incurred costs of litigation. It is worth planning to avoid a costly lawsuit.