Trade Secret and Non-Compete Litigation

LFDS Wins Jury Verdict That Physician Covenant Not to Compete is Unenforceable

On February 8, 2008, a Dallas County jury found that a physician covenant not to compete was not reasonable and imposed a greater restraint than is necessary to protect the goodwill or other business interests of the former employer. The trial lasted two weeks.

LFDS represented a physician, Dr. A. J. Applewhite, who contended that the terms of the covenant not to compete were unenforceable. The covenant was with his former employer, Wound Care Consultants (WCC). The parties practiced in the area of wound care and hyperbaric medicine. At the time of the trial, Dr. Applewhite was the Medical Director of the Wound Care and Hyperbaric Center at Methodist Hospital Dallas.

WCC contended that the covenant was enforceable, that Dr. Applewhite had breached the agreement, and that it was entitled to damages exceeding $1.2 million. The jury determined that WCC was entitled to no damage recovery from Dr. Applewhite.

The jury also found that WCC had not properly paid Dr. Applewhite for bonuses and awarded him $38,600. It also found that WCC committed the first breach of the employment agreement.

Both parties alleged breaches of fiduciary duty by the other. At a hearing on post-verdict motions, the District Court decided that neither party was entitled to recovery for fiduciary duty breach as a matter of law.

WCC is a professional corporation owned by Jeff Stone, D.O.

The restrictive covenant at issue included a time restriction of 18 months, a scope restriction of wound care, hyperbaric and aerospace medicine, and a geographic restriction of a 20-mile radius of various hospitals and facilities located primarily in Dallas County.

After the hearing on post-verdict motions, the parties entered a confidential settlement agreement.

Representing Dr. Applewhite were Jim Flegle and Carol Farquhar.

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