On 1 June 2015, Dr. Jean Valjean and Dr. Richard Cohn, proprietors of, Neurological Associates, a limited liability entity, employed Dr. Elizabeth Blackwell. The two directors operated the small facility out of the State of Longville, about 20 miles from the largest city. Given that Neurological Associates was a small company, it could not afford to pay Blackwell at the prevailing market rate. However, the doctor accepted the terms because she wanted to work lesser hours than she had done in larger hospitals. She also desired to be close to her loved ones. Among the terms, her employment contract had included an arbitration item in which the employer (NA) and employee (Blackwell) agreed to a non-committal arbitration in the case of a disagreement. Other terms included a fringe package, on-call duties after the normal hours of work, an annual vacation, and, of course, the compensation details. However, missing from this agreement was a non-compete clause, as well as a restrictive covenant, both of which are standard elements in any contract. The directors later presented these clauses to Blackwell in a rather Machiavellian nature, telling her that payroll would not process her paycheck until she signed the separate document. Nonetheless, the doctor was not keen on this development and signed the agreement, effectively eliminating any possible legal assistance with regards to understanding the terms of the document.
By August of the same year, Blackwell was already disagreeing with the directors of Neurological Associates over some matters, the most notable of which was what she perceived as being overworked. Specifically, she was dissatisfied with the long and frequent vacations that the two doctors went on during the summer, thus spreading her thin as she did not even have an assistant. Subsequently, she scheduled a meeting with Cohn to discuss the issue and hopefully come up with a fair schedule. However, Cohn was unwilling to negotiate and informed Blackwell that her salary was commensurate with the work she did at Neurological Associates. He further enticed her with a position of partner in the future if she worked diligently. Little changed during the month of September as Blackwell attended to twice as many patients as Valjean and Cohn despite the two having returned from their vacations. After weeks of pleading for more support, the facility agreed to contract a new physician to help her manage the workload. Unfortunately, this initiative was only nominally helpful as her caseload soon increased.
Later in the month, Blackwell’s employer refused to give her some days off to study for a board of certification exam, insisting that she postpone it until the caseload reduced. During this period, the doctor started to receive employment proposals from recruiters who were keen to have her services at Galway Hospital that even promised a better salary than the one she was receiving at Neurological Associates. She, nonetheless, rejected those advances as she was aware of the restrictive covenant in her employment contract. However, the employer continued to isolate her, leaving her overwhelmed with a massive caseload. After returning from her exams, she submitted a resignation letter, providing a 60-day notice of her desire to leave her employer for Galway where she was even offered a position as partner. However, Cohn was unwilling to release Blackwell from her contract, citing the non-compete clause that restricted her from moving to a competitor.
Many businesses tie down their employees to restrictive covenants as they believe they are essential to their status as going concerns. Management is concerned that if individuals employed at the company do not have some form of restrictive contract, there is a likelihood that they may share business secrets with a competitor and, in effect, undermine its competitiveness. Some of the aspects that covenants safeguard against include training offered to employees, the goodwill that clients generate, associations with prospective customers, proprietary company data, and trade secrets. A restrictive covenant enables a company to maintain its position in the market, ensuring that industry fairness is upheld. Blackwell’s restrictive clause was rather necessary as it prevented her from going away with the experience she had gained at Neurological Association and sharing it with a competitor. There was also a legitimate concern that she would leverage the network she had created at NA and direct clients to Galway Hospital.
Blackwell’s case against Neurological Associates is unique and requires careful analysis of the facts as both parties have somber facts that substantiate their position. In this regard, a balancing test is crucial, largely because it gives preference to opposing interests. If one party presents facts that give them an unfair edge over the other, it is fair to dismiss that information. In the Blackwell v. Neurological Associates case, by claiming that she had little time to go over the terms of the contract, the plaintiff had a slightly unfair edge over the defendant. Blackwell had 24 hours to study its contents and even email it to her lawyer for a qualified analysis. A day is reasonably long enough to do due diligence. Regrettably, Blackwell never used the time and resources available to scrutinize the contract. As such, the lack of time argument should be dismissed.
The element of scope and duration details the geographical location in which one can render their services within a particular period. Under its terms, a company’s former associate can be barred to working in a specific geographical area and within a particular frame of time. Ideally, this provision limits the former employee from aiding a direct competitor. Through it, a past operative cannot use the experience and skills gained to act in a way that undermines the employer’s position in the industry. This logic led Valjean and Cohn to include a restrictive covenant that barred Blackwell from offering her services in deed and in writing to a competitor operating within a 50-mile radius. This restriction extended to a maximum of three calendar years. One can construe the agreement as being fair since it prohibited the doctor from offering the services she learned at Neurological Associates for three years. Ideally, this would give the entity enough time to alter its mode of operation. The restrictive contract was, therefore, neither unfair nor biased. Rather, it protected the small facility from unfair competition by players in the industry. In fact, one can interpret the contract as preventing a rival from having an unfair advantage.
Considering that both parties are unwilling to cede their position, a non-judicial solution may be necessary. Both parties need to review the covenant’s terms. Notably, Neurological Associates should loosen its scope and duration limitations from three to one year. One year is sufficient to prevent the passing of company secrets to a competitor. It is also enough for Blackwell to practice medicine in Longville close to her family.
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