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Wednesday, May 20, 2015

Golden v. California Emergency Physicians: Ninth Circuit Addresses "No Employment" Clauses and Business and Professions Code Section 16600

In Golden v. California Emergency Physicians, ___ F.3d ___ (9th Cir. 4/8/15), plaintiff Donald Golden, M.D., was affiliated with defendant California Emergency Physicians Medical Group (CEP), "a large consortium of over 1000 physicians that manages or staffs many emergency rooms, inpatient clinics, and other facilities in California and other, mostly Western states." Golden sued CEP for numerous causes of action, and the parties settled before trial.

On the record before the Court, Golden waived any and all rights to employment with CEP or at any facility that CEP may own or with which it may contract in the future. When the parties reduced the agreement to writing, Golden refused to sign and attempted to have the agreement set aside. The district court rejected this effort, and Golden appealed. The Ninth Circuit reversed, holding as follows:

Section 16600 of the California Business and Professions Code instructs that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” Section 16600 does not merely prohibit covenants not to compete. It is broadly drawn, with limited exceptions, to void all contracts that restrain the lawful pursuit of a profession, trade, or business.

On this basis, the Ninth Circuit reversed the district court and remanded for the district court to "determine in the first instance whether the no-employment provision constitutes a restraint of a substantial character to Dr. Golden’s medical practice."

The opinion is available here.

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