### IN THE COURT OF APP EALS OF TENNESS EE AT JAC KSON N ove mb er

18, 200 8 S es sio n
COLUMBUS MEDI CAL SER VIC ES, LLC

v. DA VID THOM AS AND 

### LIBER TY HEA LTHC AR E C ORP ORA TION

______________________ 

### COL UM BUS MED ICA L SER VIC ES, LLC

v. M

. B. “JU N ” P A C R IS , JR

. , LY N N A JA R D EL EZ A D A WN LO C KE , M A R IA MADARANG, STEPHEN MO NISI T, LI ZA PABALATE, CANDI McMORRAN, MONI CA ROBERTS , AND 

### KI MBERLY CRAWFO RD

A Consolid ated Appeal from the Circ uit Court forShelb y County No. CT-002181-04/CT-006965- 03 James F. R ussell, Ju dge

No. W2008-00345-C OA-R3-C V - Filed August 13, 2009

This appea l involves a claim of tortious i nduceme nt to breac h a non-c ompete cove nant in an
e mpl oy me nt a gr e e me nt. Th e plaint if f sta ff ing a ge nc y e mpl oy e d th e de fe nd a nt the ra pis ts at a State residential c are fac ility for severe ly disabled persons. The plaintiff agenc y staffe d the fa cility under
an exc lusive contract wh i ch was set to expire by its own terms in June 2003. The the rapists had
exec uted re strictive cove nants in their em p loyment agre ements with the plaintiff staf fing age ncy under w hich they we re pr ohibited from working at the State fac ility for one yea r af ter the te rmination of their e mployment with the p l ai n t i ff . The State re quested bids to staff the fac ility under a new contra ct. Through the bidding process, the de fendant staffing age ncy wa s awa rded the contra ct. The defe ndant age ncy then met with the de fendant the rapists (who we re inc umbent employees) , staffe d through the plaintiff a gency, and offered to hire them to continue working at the fac ility. The defe n d a n t s ta f

f in g a g e n c y w a s a w ar e o f th e n o n

- c o mp e te c o v e n a n ts a n d a g r e e d to in d e mn if y the defe ndant thera

pists if the plaintiff staffing age ncy tried to enforc e the c ovenants. The defe ndant thera pists acc epted posit ions with the defendant agency and continued working at the fa cility. The plaintiff age ncy filed this lawsuit aga inst the indivi dual defendant ther apists and the def endant agenc y. After

a benc h trial, the trial court concluded thatthe non-c ompete cove nants wer e enfor cea ble, that the def

endant ther apists had bre ache d their cove nants, and that the de fendant sta ff ing a ge nc y h a d to rt iou sly ind uc e d th e ind ivi du a l de fe nd a nt the ra pis ts t o b rea c h th e ir employment contra cts. The de fendants now appea l. We r ever se, conc luding that, while the plaintiff
a ge nc y h a d a

le git imate pr ote c ta

blebu sin e ss i nte re st, the no n

- c o mpe te c ov e na nts areno t e nf or c e able in l igh t of the ha rd sh ip t o th e de fe nd a nt the ra pis ts andthe a dv e rs e imp a c t onthe pu bli c int e re st. Tenn. R. App . P. 3 Appeal as of Right; Judgment of the Cir cuit Court is Re verse dC o lu m b u s a lso p ro v id e d sta ff to th e S ta te ’s a ff ili a te d W e ste rn T e n n e sse e R e g io n a l O ff ic e (“ W T R O ” ). 1

The f ede r al c our t or der r ega r di ng t he A r l i ngt on Cent er i s not i ncl uded i n t he appe l l at e r ec or d. 2

-2- H OL LY M. K I RBY , J., delivere d the opinion of the Court, in whic h A LA N E. H I G H ERS , P.J., W.S., and J. S TE VE N S TA FF O RD , J., joined.

Paul G . Su mme rs , M ic ha e l K . St a gg , a ndTh oma s H . L e e , N a sh vil le , T e nn e sse e ; andRob e rt L. J. Spence, Jr ., Memphis, Tennesse e, for the appellants, M.B. “Jun” Pacris, Jr., Lynna Jardele za, D awn Lo c ke , M ari a

Ma da rang , St e ph e n M on isi t, L iz a Paba la te , Cand i McMorr a n, Mo nic a Rob e rt s, Kimberly Craw ford, and Liberty He althcar e Corporation.

Cla re nc e A. W ilb on a ndW ill ia m G. Whi tman , M e mph is, Te nn e sse e , a ndSe a n P. Mc De vitt, Berwyn, Pennsylvania , for the a ppellee, Columbus Medica l Services, LLC.

OP IN ION

B ACKG ROUND

The Arlington Developmental C en t er (“Ar lington”) is a re sidential fac ility i n Arlington, Tenne ssee, se rving persons with disabiliti es , b o th physical and menta l, ranging fr om speec h impairments to physical incapa city and varying degre es of menta l retar dation. There are over 200 residents living at the Arlington fa cility. The 24-hour support provided to the re sidents includes thera peutic serv i ce s fr om occupational therapists, speec h thera pists, and physical thera

pists. The thera pists im plement daily ac tivity programs , t h er ap ies, and supports, many using re petition and routine to ena

ble the re sidents to make progre ss over a long period of time.

The ther apists utili zed by A rlington are highly educ ated and specia lized , all with college degre es and some w ith master’s degr ees, and staffing a particula r thera pist posit ion can e ntail a wideranging sea

rch. To do so, A rlington engage d the s ervic es of Pl aintiff/Appellee Columbus M edica l Service s, LLC (“Columbus”), a staffing agency that provides services to state- run mental he alth car e a ndme nta l r e tard a tio n f

a c ili tie s thr ou gh ou t th e Un ite d St a te s. Col umb us se e ks ou t c a nd idate s to fi ll posi t i ons, presc ree ns the ca ndidates, che cks their r efe renc es, bac kground and c rede ntialing, and brings the ca ndidates to the location to meet with the fac ility’s managem en t

. B eg i n ning in 1994, pursuant to a se ries of e xclusive contra cts with the State of Tennessee (“State” ), C olumbus provided Arlin gto n w itha

sta ff of ph ys ic a l, o c c up a tio na l, andsp e e c h lang ua ge the ra pis ts. 1
In the following yea

rs, Arlington bec ame the subject of a f eder al lawsuit arising out of the
car e furnished to its residents. At the conc lusion of the fede ral c ourt ac tion in 2001, Arlington became subject to an o rd er re q u i ri ng strict oversight by the fe dera l district court. To fulfill the manda t es o f t he fe dera l order, the State hired c onsultants to come to Arlington to give the staff intensive, specif

ic tra i n i n g o n t he best pra ctices f or treating the type of patient population at Arlington, with developmental disabilities and mental re tardation. Some of t he Arlington st aff who 2

rec eived the State- provided tra ining were thera p i s t s who wer e employed at Arlington throughThe r ec or d cont ai ns no i ndi ca t i on t hat Thom as w as s ubj ec t t o a non- com pet i t i on agr ee m ent or ot her r es t r i ct i on 3

o n th e u se o f th e k n o w le d g e h e o b ta in e d w h ile e m p lo y e d b y C o lu m b u s.
-3- Columbus. The training was provided to them during working ho u rs t h at wer e paid through Col umb us

. At the time that Arlington became sub j ec t t o the fe dera l consent orde r, it neede d to hire someone to take over its manage ment. David Thomas (“Thoma s”) was then vi ce president and c hief operating office r of Columbus. Thomas contacted Jerry Johns on (“Johnson” ), whom Thomas ha d known for ye ars through pr ofessional a ssociations, and suggested that Joh n s on apply for the manage ment position at Arlington. Johnson was hired, and he serve d as the S u p er i n t en d ent at Arlington from 2001 through 2004.
Sometime in 2002, Thomas stopped working for Columbus. The circ u ms tances of Thomas’s depar ture f

r o m Co lu mb u s ar e u n c le ar , b u t th e p a r ti n g w a s le s s th a n a mi c a b le

. A f te r T h o ma s left Columbus, he began his own business consulting in the disabiliti es field. 3

F ACT S AND P R OC EDU R A L H I S T ORY

Columbus’s exclusive contra ct with the State to sta ff Arlington was scheduled to e xpire by its own terms on June 30, 2003. In the early spring of 2003, in anticipation of the expiration of the Columbus/ Arlington contra ct, t he S tate is sued re quests for pr oposals (“RFPs”) to staff the succe ssor c on tr a c t. U nd e r S ta te pr oc e du re s, the State wo ulda c c e pt b ids fr om a va ri e ty o f v e nd or s a nde va luate them in light of the needs of the fac ility. While cost was a signi fi ca n t component of the bidding pr oc e ss, the State a lso c on sid e re d the te c hn ic a l re qu ir e me nts a nd the qu a lif ic a tio ns of t he en tity submitt ing the bid, and it ultim ately would aw ard the contra ct to the over all “best” bid.

Former Columbu s e mp lo y e eT h o ma s , b y then an indepe ndent consultant, consider ed bidding on the Arlington contra ct but decide d that it was “a l i t t l e b i g ” fo r his newly formed disabilities consulting firm. Thomas contac ted Defenda nt/Appellant Liberty He althcar e Corporation (“ L i b erty” ), a staf

fing age ncy similar to Columbus and a competitor of Columbus. Thomas suggested to Li berty that they collaborate to submit a proposal to the State for Liberty to take over the contra ct to staff A rl i ngton’s thera pists. Given Thomas’s past re lationship with Arlington superintende nt Johnson, Liberty was pe rsuade d that Thomas could be instrumenta l in obtaining the
c on tr a c t f or Li be rty. Li be rty a gr e e d w ithTh oma s th a t, i f it w e rea wa rd e d th e Arlin gto n c on tr a c t, Li be rty woul d p a y T ho ma s a $2 ,0 00 pe r m on th c on su lti ng fe e fo r the du ratio n o f the c on tr a c t. Sub s e q u e n tl y , Co lu mb u s , L ib e r ty , a n d o th e r v e n d o r s s u b mi tt e d p r o p o s a ls to th e St a te for the thera pist contract at Arlington.

OnMa rc h 1 4, 20 03 , th e State se nt Li be rty a ndCol umb us le tte rs no tif yin g th e m th a t th e State intend ed t o aw ard the Arlington contrac t to Liberty eff ective July 1, 2003. The letter stated that Liberty was the “appa

rent best evaluated proposer ,” but inc luded a proviso that the letter was not an
a c c e ptanc e of

a ny of fe r, and that th e State re se rv e d th e ri gh t to re je c t a ny pr op os a l. L ibe rty’ s b id price for the c ontrac t was $3.2 million, only $80,000 less than Columbus’s bid price

. The c ontrac tT h e ra p ists Jo A . P a ly a , C ra ig M ill e n , an d D a v id B . H a y e s w e re a lso n a m e d a s d e fe n d a n ts, b u t C o lu m b u s d id 4

n o t re c o v e r a ju d g m e n t ag a in st th e m a n d th e y a re n o t i n v o lv e d in th is a p p e a l.
-4- to staff Arlington was exec uted by Liberty on Marc h 26, 2003, and by the S tate on May 15, 2003. The c ontr ac t required Liberty to staff thirty-two thera

pist posit ions. If Liberty failed to perform under t h e co ntrac t by July 1, 2003, Liberty fac ed forfeiture of a $500,000 pe rformance bond and liquidated damage s of $10,000 per month per position.

Un de r T e nn e sse e la w, on c e theState ha s a wa rd e d a c on tr a c t, the los ing bid de rs ha ve thi rty days t o appea l the awa

rd; afte r that, the c ontrac t is officially grante d to the best proposer

. See Tenn. Cod e An n. § 1 2- 4- 10 9. Col umb us didno t app e a l th e Stat e’s award of theArlin gto n c on tr a c t to Liberty.
At the time Liberty won the bid to staff Arli ngton, Colum bus employed twenty-two the ra pis ts at A rl ing ton , in c lud ing thenin e the ra pis ts at is su e in this app e a l ( he re inaf te r r e fe rr e d to as the “ Thera

pist Defendants”). The Thera pist Defendan ts a

r eKim berly Cra wford, L ynna Jar delez a, Dawn L ocke ( Locke Wilson), M aria Madar ang, Candi McMorr an, Stephen Monisit, Liza Paba late, M.B. “ Jun” Pacris, Jr., and Monica Roberts. Eac h of these Thera pist De fendants ha d s i g n ed an 4 employment agre ement with Columbus that contained the following non-c ompete provision:
During the period of employment and for a period of one ( 1) yea r af ter termination fo r any re a so n what soev e r, EM PLO YE E s ha ll n ot d ir e c tly or ind ir e c tly so lic it business from, or a gree to provide ser vices to FACILITY. E M P L OYEE sha ll not
se e k to ind uc e a ny pe rs on wh o p ro vid e s se rv ic es for EM P LOY ER t o b re a c h, in wh oleor in p art , a

c on tr a c t or

a gr e e me nt w iththe EM PLO YER , or to t e rm inate same, or f ail or re fuse to re new sa me.
Th e pa rt ie s h e re to r e c og niz e a nda gr e e that E MPL OY EE ’s se rv ic e s p ur su a nt t o th is Agre e me n t are unique and e xtraordina ry, and that damages inc urre d by EMPLOYER
a s a re su lt o f E MPL OY EE ’s brea ch of p re vio us pa ra gr aph wo uldbe dif

fi c ult to
asce rtain or mea sure. Acc ordingly, the parties agre e that in the event of a bre ach of restric tive covenant clause by EMPLOYE E, EMPLOYER will incur minimum liquidated damage s of $10,000 i f a brea ch of this Agreeme nt by EMPLOYEE causes actua l damage s to EMPLOYER in excess of the minimum liquidated damage s of $1 0, 00 0. Th e pa

rt ie s her e to ag re e that the su m of $10 ,0 00 c on sti tut e s a re a so na ble approximation of the minimum ac t u al d amages that would be incurr ed by EM PLO YE R a s a

re su lt o f E MPL OY EE ’s br e a c h, a ndthat th e pr ov ision s o f this para graph do not c onstitut e a pe nalty.
Thus, the non-c ompete provision states that the e mployee “sha ll not dire ctly or indirec tly . . . agree to pr ov i d e s e r v i c e s t o ” A r l i n g t o n f o r o n e y e ar

a f t e r t h e t e r m i n a t i o n o f

h i s e m p l o y m e n tw ith Columbus. It provided for liquidated damage s in the event of a brea ch, stating that $10,000 was “ a rea sonable a

pproxi m ation of the minimum actual dama ges” to Columbus resulting from the thera pist’s breac h of the non-c ompete provision.-5-

After rec eiving the St ate’ s notification of its intent to award the Arlington contrac t to Liberty, Col umb us se nt L ibe rty a

le tte r d a te d M arc h 1 9, 20 03 , in fo rm ing Li be rty th a t Co lumbu s’ s th e ra pis ts
a t A rl ing tonwe re su bje c t to the re st ri c tiv e c ov e na nts , a ndwa rn ing that Co lumbu s in te nd e d to
e nf or c e thec ov e na nts . Co lumbu s w ro te Li be rty th a t it “ e xp ect s that, i n th e e ve nt L ibe rty is ultimately awar ded a c ontrac t to render servi ce s at Arlington, Liberty will continue to re spect Col umb us ’ c on tr a c t righ ts andre fr a in f ro m of fe ri ng e mpl oy me nt o pp ortun iti e s to Col umb us ’ employees that violate Columbus’ rights.” Liberty did not respond to this letter.

Intheme a nti me , L ibe rty h a d c on su lte d w ithind e pe nd e nt c ou ns e l r e ga rd ing the n o n

- c o mpe te
covenants in the Thera

pist De fe n dants’ contr acts a nd rec eived a dvice that the c ovenants we re un e nf or c e able . A ft e r r e c e ivi ng thi s o pin ion , L ibe rty b e ga n to re c ru it the Th e ra pis t D e fe nd ants to continue to work at Arlington through Liberty under the new c ontrac t. Arlington superint en d ent Johnson had an inter est in m ai n t aining continuity of car e for the Arlington reside nts, was please d with the thera

pists’ work, and had been in contac t with former Columbus exec utive Thomas, so he
e nc ou ra ge d L ibe rty to r ecru it inc umb e nt the ra pis ts t o w or

k at A rl ing tonun de r the ne w L ibe rty c on tr a c t. A ro un d M arc h 2 7, 20 03 , J oh ns on se t up a me e tin g f or the inc umb e nt s ta ff

a t A rl ing tonto meet with Liberty’ s Exec u t i v e V i ce P re s i d en t , R i ckR o b i n s o n (“ R o b i n s o n ”) , L i b er t y ’s v i ce p re s i d ent of op e rati on s, Karen P e re t ( “ Pe re t” ), a ndTh oma s, the reon be ha lf of Li be rty. Th e Li be rty re pr e se ntativ e s in fo rm e d th e Arlin gto n sta ff that Li be rty h a d b e e n a wa rd e d th e su c c e sso r c on tr a c t,
rea ssured them about t he transition, and invi ted t hem t o apply for positions with Liberty. Thomas introduced himself a s a member of the Liberty team. He began “talking up Liberty” and “pre senting the m in a fa vo ra blelig ht” a t A rl ing ton . Some e vid e nc e su gg e sts that, at the me e tin g, Th oma s to ld the incumben t C o l u m bus therapists that the enf orce ability of their non-c ompete agr eeme nts was qu e sti on able , c omm e nti ng that he ha d dr a ft e d the c on tr a c ts du ri ng his te nu rea t Co lumbu s a ndfe lt the y w ou ld n ot s ta ndup in c ou rt . T o q ue ll the ir c on c e rn s, Th oma s a nd /or oth e r L ibe rty repr esentatives assured the Arlington employees that Liberty would indemnify them for any losses
re su lti ng fr om C olu mbu s’ s atte mpt to e nf or c e theno n- c omp e te a gr e e me nts

. On appr oximately April 17, 2003, Liberty’s rec ruiting te am, consisting of Senior Recr uiter Lori (Schultz) K

rantz , Ron Johnson, and Peret, visited Arlington to interview candidates to staff the
succe ssor contra ct. Their goal was to r etain the incumbent Columbus staff to c ontinue working at Arlin gto n fo r Li be rty. Re c ru ite rs a sk e d the e mpl oy e e s if the y h a d n on -c omp e te re stric tio ns in the ir employment contra cts, and some Columbus incumb en t s responde d that they did. Before eac h interview pr ocee ded, Liberty require d the candidate being intervie wed to sign a form letter, date d Ap ri l 14 , 20 03 a nd dr a ft e d by Li be rty. Th e fo rm le tte r state d that Li be rty wante d “ to d isc us s w ith [the e mpl oy e e ] the po ssi bil ity of wo rking tog e the r in the fu tur e .” Th e le tte r inc lud e d a pr ov iso that, by signing it , the e m p l o yee a cknowledge d that he or she had “c ontacted L iberty He althcar e,” and that “Liberty did not ini tiate contac t with me.” The employee’s signature purportedly a cknowledge d that “ Li be rty H e a lth c are ha s ma de it c le ar t o me that it is no t su gg e sti ng that I b re a c h o r t e rm inate any existing contract I have for a position at Arlington.” Liberty’s intervie ws of the Columbus
c a nd idate s to ok

pla c e du ri ng wo rk

ho ur s.

In mid-May of 2003, Liberty presente d employment agre ements date d May 14, 2003, to the Thera pist Defendants, among others. The e mployment agree ments were prese nted the day bef ore the State exe cuted the suc cessor contra ct with Liberty.T h at st atu t e p ro v i d es: 5

I t i s unl aw ful f or a ny per s on , by i nd ucem ent , per s uas i on , m i s r epre s ent at i on , or ot her m eans , t o i nd uce
o r p ro c u re th e b r e a c h o r v io la tio n , re fu sa l o r fa ilu re to p e rf o rm a n y law fu l co n tra c t b y a n y p a rty t h ere t o ; an d , i n ev ery ca se w h ere a b rea ch o r v i o l ati o n o f su ch co n t rac t i s so p ro cu red , t h e p erso n so pr ocur i ng or i nduci ng t he s am e s hal l be l i abl e i n t r ebl e t he am ount of da m age s r es ul t i ng f

r om or i nci dent t o t he brea ch of t he cont r act

. T he part y i nj ured by s uch br eac h m ay bri ng s ui t f or t he brea ch

an d fo r su ch d am ag es.

T en n

. C o d e A n n

. § 4 7 -50 -10 9 (20 0 1 ).
-6- In a le tter date d June 4, 2003, Columbus not ified the incumbe nt Arlington employees that their employment contra cts would be terminated as of June 3 0 , 2 0 0 3

. T he letter warned the employees that Colum bus would take lega l action against them if they worked f or Liberty at Arlington in violation of their contrac ts

. C o l umbus repre sentatives also met with some of the Th e ra pis t D e fe nd a nts abo ut C olu mbu s’ s lo ss o f the Arlin gto n c ontr act, i mpl yin g th a t w hil e Col umb us mig ht “ ov e rl oo k” thethe ra pis ts w or kin g f or the State , Co lumbu s w ou ld n ot “ make [i t] easy fo r L iberty” to e mploy the therapists at Arlington. While Columbus was able to offer alternative employment to some of the ther apists who had non-c ompete agr eeme nts, Colum bus of fe re d n o c omp ara

blea lte rn a tiv e e mpl oy me nt t o th e nin e Th e ra pis t D e fe nd a nt s. The Th e ra pis t Def endants looked f

or compa rable employment in the sam e geogr aphic a rea and beyond, w ith no
su c c e ss. Fin all y, des pi te thewa rn ing s f ro m Co lumbu s, on Ju ly 1 , 2 00 3, the nin e Th e ra pis t Def endants, a mong others, began working at Arlingt on under e mployment agree ments with Liberty.

OnDe c e mbe r 1 2, 20 03 , a s p ro mis e d, Col umb us fi le d a la ws uit a ga ins t th e Th e ra

pis t De fe nd a n t s i n t h e tr i a l c o u r t b e l o w , a l l e g i n g t h a t t h e t h e r ap i s t s b r e a c h e d t h e i r c o v e n a n t s no t to compete by pr oviding services at Arlington through Liberty’s staff ing service s. On April 15, 2004, Columbus fil ed a se cond lawsuit in cha ncery court a gainst David Thomas and Liberty, alleging that they unlawf

ully induced the The rapist Def endants to bre ach the ir employment agre ements, and that they intentionally interfer ed with C olumbus’s existing and prospective busi ness re lations with the Thera pist Defendants and the S tate of Tenne ssee. Col umbus’s claims of unlawf ul inducement we re brought pursuant to both common law a nd statute. See Tenn. Code Ann. § 47-50- 109. Columbus 5 sought compensatory damage s, punitive damages, treble damage s pursuant to the statute, attorney’s fee s, and costs. The two c ases we re consolidated i n the t rial court below. Columbus l ater enter ed into a settlement agre ement with T h o m as , an d o n August 24, 2007, a conse nt order w as ente red, dismiss ing Thomas from the law suit with prejudice.

The trial c ourt conduc ted a be nch trial of the consolidated c ases on Au gust 27 through August 30, 2007. Columbus prese nted the testimony of Donald Mooney (“ Mooney”) , the direc tor of oper ations at Columbus. Mooney explained, in pro v idin g e mp lo y e e s f o r s ta te age ncies, Columbus bills t he client dire ctly and then pays the employee s a portion of what it re ce i v es fr om the client ba se d o n a

pr e vio us ly n e go tiate d s a lary . T he di fference is r e ta ine d b y Co lumbu s a s it s compensation. Mooney testified about the purpose of the c ovenants preve nting the employees f rom wo rking a t A rl ing tonfo r a ye ar a ft e r t e rm inatio n o f the ir e mpl oy me nt w ithCol umb us :-7-

A: Columbus’s view is that w e’r e protec ting the eff orts that we’ ve produc ed ther e, there c ru itm e nt that w e ’v e do ne fo r the se ha rd -t o- fi ll p os iti on s. The solution that we’ve provided to our c ustomer, we’ ve gone out and found the solution for the customer, and in some case s, transitioned the employee s to that location, and wefee l we nee d to protect that intere st that we have

. Q: W hat do e s th e no n- c omp e te pr ote c t a ga ins t? W hat is yo ur c on c e rn wh e n y ou a sk pe op le to s ignthe m? A: There are a couple things. Obviously, during the term of the contra ct, we don’ t
want o ur c us tom e r t o c omea ndinv a de ou r e mpl oy e e ba se a nd say, we ’dlik e yo u to
come wor k for the state, or at that location. Second, at the e nd of the c ontrac t, and espe cially in case o f t his Arlington, wher e the e mployee or the succe eding vendor would go around and work with our employees to wor

k for them dire ctly.
Mooney wa s asked how Columbus had been i njured by Liberty hiring its former employee s to work at Arlington:

In this ca s e, i t rea lly comes down to, you know, our e fforts that we’ve done, the solution t hat we’ ve provide d to our customer. Libe rty has gotten the benef it of that solution. In the c ase of

the [The rapist Def

endants], the y continued services there wi tho ut m ini mum

e ff orts t o c on tin ue to ke e p the m the re . W e be lie ve that w e wo uld ha ve ha d a n o pp ortun ity to po ten tiall y n e go tiate a bu yo ut o f tho se c on tr a c t r igh ts with the succe eding vendor – Liberty in this case – that we p o t en t ially could have negotiated the tr ansition of those [The rapist Def endants].
Thus Mooney testified that the e mployees’ non- compete c ovenan ts a r ein te n d e d

to p r otect Columbus from the c lient hiring the employees dire ctly, or to preve nt the employee from working for a
succe ssor age ncy. Liberty’s hiring of the The rapist Def en d an t s gave Libe rty the bene fit of Columbus’s efforts in finding and hiring them, and also preve nted Columbus from in essence “selling” to Liberty the right to employ the Ther apist Defe ndants to work at Arlington, free f rom the constraints of the non-compete agre ements. Asked a bout the impact of e nforc ement of the noncompete pr ovisions on the Arlington residents and the State, Moone y reluc tantl y ag re ed that “the less turnover in this situation, the better, for the citizens [of Arlington],” and that, if the incumbent thera pists were not pe rmitted to continue working at Arlington, the State would lose its investment in the sp e c ia liz e d tr a ini ng of tho se e mpl oy e e s. Mary Ri der, a

former Columbus employee, also testified at trial. She sa id that a fe llow Co lu mb u s e mp lo y e e c a ll e d h e r to me e t w ith T h o ma s , w h o m b o th h a d k n o w n th r ough Thomas’s previous employment with Columbus. Thomas told R ider that he r Columbus non- c o mp e te covenant
was une n fo rc eable . Rider attende d one of the Arlington employee me etings held by Thomas and L ib e rty r e p r e s e n tati v e s , a n d s h e s a idth a t s h e f e lt a s th o u g h s h e w a s b e in g r e c ru it e d b y L ibe rty. Rider conf

irmed that continuity of car e was very important to the patients at Arlington beca use the State had provide d training for the incumbents to serve the unique population there

.Jo h n so n c o rr o b o ra te d P e re t’s te stim o n y o n th is p o in t. 6

-8- Li be rty’ s v ic e pr e sid e nt i n ch arg e of int e lle c tua l a ndde ve lop me nta l di sa bil iti e s, Ka

re n Pe re t,
wa s ca lle d b y C o l u mb u s t o t e s t i f y , a n d s h e a l s o t e s t i f

i e d o n L i b e r t y ’ s b e h a l f

. L i k e C o l u m b u s, Li be rty’ s b us ine ss incl ude d p ro vid ing hig hly e du c a te d a ndsp e c ia liz e d o c c up a tio na l th e ra pis ts, speec h thera

pists, and physical thera pists for fac iliti es with patients wit h intellectual or developmenta l disabilit ies. Under questioning by Columbus, Pere t conce ded that, despite Libe rty’s
awa rene ss o f t h e non-compe te cove nants, Liberty a ctively sought to recr uit and hire incumbe nt Colum b u s e mp loye es to staff the new Arlington contract. Pere t explained that Libe rty’s indepe ndent counsel ha d advised Liberty that the non-compe te cove nants i n t h e C olumbus employment agre ements we re une nforc eable

. Arlington supervisor Johnson told Liberty that, for the be nefit of Arlington’s reside nts, he wanted the incumbent thera pists to continue working at Arlington. P ere t said that, soon afte r Liberty was aw arde d the Arlingt o n contra ct, Johnson gave the employees Liberty’s tele phone number and enc ourage d them t o call and a sk to keep their job positions at Arlington through Liberty. Pere t claimed t hat most of the incumbent employee s first contac ted Liberty using the number the y had been given by Johnson. Asked a bout whether

Liberty would have had diffic ulty filli ng the positions at Arlington had it not h i red the Thera pist Defendants, Peret insisted that Liberty would nonetheless have been able to fully staff A rlington, and that it had done so in other large r fa cilities within a short tim e fr ame.

Inhe r t e sti mon y, Pe re t said that L ibe rty p a id the fo rm e r C olu mbu s e mpl oy e e s mo rethan it had anticipated paying to fill those thera pist positions. Howeve r, Arlington s uperintende nt Johnson specific ally asked Libe rty to keep the Columbus employees at Arlington beca use of the importa nce of continuity of car e at a fa cility such as Arlington. She explained that the term “c ontinuity of care ” 6 in this c on te xt m e a nt m or e than ju st a vo idi ng a br e ak in servic e , but al so me a nt ma int a ini ng the sa me individuals in t he ther apist positions

. She noted that the re sidential patient population at Arlington
was c omprised of pe rsons with profound intellectual and physi cal disabili ties, and she e mphasized theva lueof

bo th the hig hly sp e c ia liz e d tr a ini ng the State ha d p ro vid e d to the Th e ra pis t D e fe nd a nts
a ndthe ir ye ars of e xp e ri e nc e in s e rv ing the Arlin gto n r e sid e nts : Q. What doe s the conc ept “continuity of car e” mean to you, the conce pt that Mr. Johnson mentioned to these e mployees on, I believe , Marc h 17, 2003? A. W hat it

me a nt t o me wa s th a t th e ind ivi du a ls w ho we re a t the fa c ili ty had bee n trained by some of the best consultants in the country during the pre vious seven yea

rs bec ause of t h e C onsent Dec ree . They ha d
a tr e me nd ou s a mou nt of

sp e c ia lty tr a ini ng a ndinf orma tio n th a t is almost imposs ible to match. So i f tho se pe op le we reto l e a ve e mpl oy me nt, thec lie nts ’ daily activi t y programs and physical supports and oc cupational thera py and spee ch supports, particularly with folks with dysphagia, would have suf

fer ed. Now, dysphagia

– tell me when you want me to stop. * * *T h o m a s a p p a re n tly g a v e L ib e rty s a la ry in fo rm a tio n a b o u t A rlin g to n p e rs o n n e l th a t, P e re t sa id , tu rn e d o u t t o 7
b e “ g ro ssly in a c c u ra te .”

R e a lizin g th a t T h o m a s w a s n o t an a tto rn e y , L ib e rty g o t an o p in io n fro m in d e p e n d e n t co u n se l. 8

-9- Q. Ok a y. An d w hat is that? A. Th a t is dif

fi c ulty s wa llo wi ng , w hic h it le a ds to the nu mbe r o ne c aus e of de a th fo r i nd ivi du a ls w ithint e lle c tua l a ndde ve lop me nta l di sa bil iti e s. Q. Ev e ry on e with – and I can’ t pr on ou nc e it s o I wo n’ t try, bu t e ve ry on e wi th this disorder – does e veryone rea ct the same , or do people with this di sorder
re a c t di ff e re ntl y w he n th e y h a ve pr ob le ms? A. They a ll reac t differ ently. There are certain trigger kinds of symptoms that you see in individuals with this particular proble m, that if they are n ot id en t i fi ed – commonly, they are not identified eve n by profe ssionals – can lead to pneumonia and death. Q. But if you were dealing with one of these people on a daily basis, it’s easier to rec ognize this problem than if you a re c oming in new , even though if you
c omein n e w andyo u h a ve sp e c ia liz e d tr a ini ng ; is n’ t th a t c or re c t? A. Yes, that is very true, beca use eac h individual is i diosyncratic, and when you
are dealing wi th this po pu la tio n o f p e op le wh o c a n’ t ta lk t o y ou , w hat is fundame ntal in terms of providing servic es is that y o u understand w hen
so me on e , f

or examp le , tw itc he s th e sh ou lde r, that me a ns the y h a ve pa in i n their leg. Now, that is not something that you w ould ordinarily know, rega rdless of the amount of speciality knowledge or ed u ca tion that you have, be cause that is an individual e xperie nce kind of thing. You have to know “John,” if you w ill, in order to know that this is how he
rea cts when he has – whe n he’s, for e xample, constipate d, when he has ac id indigestion, when any other kinds of symptoms occur

.
Peret c onfirmed Thoma s’s extensive pa rticipation in Liberty’s ef forts to retain the Arlington staff, even noting her disagree ment with Liberty’s dec ision to ut ilize his service s. She indicated that Li be rty h ir e d T ho ma s b e c aus e of his re la tio ns hip wi th A rl ing tonsu pe ri nte nd e nt J oh ns on a ndhis knowledge r elated to the pe rsonnel at Arlington, b el i ev i ng that including Thomas in Liberty’s proposal would enhance L iberty’s c hance s of getting the contra ct. P eret confirme d that Thomas 7 sh are d with Li be rty an d with the e mpl oy e e s at Ar lin gto n his opi nio n tha t th e no n- c omp e te c ov e na nts in the employment agre ements with Columbus were not enf orce able. 8

Th e tria l c ou rt

he ard te sti mon y f

ro m e a c h o f the Th e ra

pis t D e fe nd a nts . A ll w e resu bje c t to the non-c ompete cove nant and lost their emp l o y m ent with Columbus when Colum bus’s contra ct with Arlington was not rene wed. None were offe red a compar able posit ion with Colum bus befor e theArlin gto n c on tr a c t e xp ir e d inJu ne 20 03 , d e sp ite dis c us sio ns wi th C olu mbus abo ut a lte rn a te
e mpl oy me n t

. A l l c o n c e d e d t h a t , u n d e r t h e r e s tr i c t i v e c o v e n a n t , C o l u m b u s w a s n o t o b l i g e d to provide alternate employment. Many m ade efforts to find compar able e mployment elsewher e in the-10-

community or even in other states, to no avail. All of the The rapist Def endants ultimately decided to acc ept L ib e r ty ’ s o f

f e r o f c o n ti n u e d e mp lo y me n t at A r li n g to n a n d in d e mn if ic a ti o n if Co lu mb us too k a c tio n to e nf

or c e theno n- c omp e te c ov e na nts

.
Ea c h o f the Th e ra

pis t De fe nd a nts de sc ri be d his or he r i nd ivi du a l c ir c ums ta nc e s a nde ff orts
a t f ind ing a lte rn a te e mpl oy me nt. Se ve ra l de sc ri be d th e ir the ra py wo rk wi th the Arlin gto n r e sid e nts and the ha

rdship that losing their employment at Arlington would have c reated.

Thera pist Defen d an t Da wn Locke -Willis testified that, at the time that Columbus los t the Arlington contrac t, she was in a difficult divorce and raising two small children, and wa s “[g] oing from a double income to a single income and trying to ma ke ends me et.” I n light of her fina ncial and emotional hardships, she a cce pted Liberty’ s offe r to continue wor king in therape utic service s at Arlington.

Def endant Stephen Monisit worke d with Colum bus as a p h y s ical ther apist at Arlington. When he and the ot her Colum bus employees w ere informed by Arlington superintendent Johnson that Co lumbu s’ s c on tr a c t w a s n ot r e ne we d, Mo nis it s a id, Jo hn so n u rg e d th e m to c on tin ue the ir employment at Arlington through Liberty. A native of the Philippines, Monisi t was sending money to the Phi lip pin e s to su pp ort his fam il y a ndhis wi fe ’s famil y. Le a vin g A rl ing ton , h e sa id, wo uld have r esulted in a pay cu t o f $10,000-$20,000 per yea r. He described his work with the disabled Arlin gto n r e sid e nts : For the yea

rs that I ha ve bee n with A rlington, I just wor king w ith – it’s just so – the pe op le that li ve the re are so fr a gil e a nd it’ s ju st r e a lly ha rdto t e ll. Yo u ju st h a ve thi s fee ling that you wanted to help them and hope fully improve their lifestyle. They don’t ha ve anybody that like us, other people, you know, that they have for their e n ti r e li f e

. T h e y ju s t h a v e th e s ta f f w ith th e m an d I ju s t e n

jo y e d working wi th the m.
Def endant Mari a C h ri s tina Madar ang wor ked for Columbus at Arlington as a physical the ra pis t a nda lso in a ssi sti ve te c hn olo gy , u til iz ing sp e c if ic wh e e lc ha ir s o r o the r e qu ipm e nt to h e lp Arlin gto n res ide nts wi th mus c ulo sk e le ta l or oth e r d e fo rm iti e s. Al so a nativ e of thePhi lip pin e s, Ma da rang ’s fathe r h a d d ie d a ndsh e wa s pro vid ing fi na nc ia l su pp ort to he r m oth e r i n th e Phi lip pin e s. She said that losing he r job at A rlington w ould ha ve been a “tr emendous ha rdship.” She conf

irmed that Arlington superintende nt Johnson urged her and t h e o t h er Columbus employees to continue
wo rking a t A rl ing tonwi th L iberty inorder to prov ide “ c on tin uity o f c arefo r the ind ivi du a ls i n Arlington.”

Testim o n y wa s also given by Def endant Candi McMor

ran, an occupational therapist at Arlin gto n s inc e 19 96 . M c Mo rr a n s a id that Co lumbu s r e pr e se ntativ e s ma de it c le ar that the y w ou ld enfor ce the restric tive covenants and “did not want to make it easy for Liberty to come in.” Afte r Col umb us los t th e Arlin gto n c on tr a c t, Mc Mo rr a n u ns uc c e ssf ull y s ou gh t a n a lte rn a te po sit ionwi th Columbus. S he then looked for employment elsewhe re in the c ommunity, and even intervie wed f or a posi tion in K e n tu c k y f

o r a jo b th a t p a ids o me $ 2 0 , 0 0 0 le s s th a n h e r c o mp e n s a ti o n a t A r li n g to n. At the time, Mc Morra n’s husband was not e mployed, but w as a stay-at- home fathe r, and she ha d two-11-

children at home and she w as pre gnant with a third. McMorr an ende d up acc epting Liberty’s of fer to c on tin ue wo rking a t A rl ing tona t a sli gh t pay c ut.

Def endant Liz a Papolate worked at Arlington as a physica l therapist, having re located f rom the Philippi nes to Tenne ssee. She wa s providing financia l support for her family and her

husband’s famil y. Af

te r C olu mbu s lo st t

he Arlin gto n c on tr a c t, Papo la te pu rs ue d a lte rn a te e mpl oy me nt w ith Columbus but was not off ere d a position. At the tim e, s h e s ai d , t he job marke t for physica l thera pists was not good, and leaving Arlington would have re sulted in a $15,000-$20,000 per yea r pay cut

. P ap o l ate said that, while at Arlington, she re ceive d in-house tra ining provided by consultants hired by the State in “ neurode velopmental techniques,” training that was spec ific to the patient population at Arlington.

The trial c ourt also hea

rd testimony from Ther apist Defe ndant Jo Palya, who had a master ’s degre e and w as employed at Arl i n g t o n in assistive technology. She said that Columbus was “adamant” about e nforc in g t h e re s t rictive c ovenant, but that it offe red he r no alternative employment. Work i n g el s ew h ere would have r esulted in a ne arly $25,000 pe r yea r pay c ut for Palya. Afte r noting that Johnson had urged he r and the other Col u m b u s em p loyees to re main at Arlin gto n to pr ov idec on tin uity o f c are to the re sid e nts , Pa lya de sc ri be d th e c oncept of c on tin uity of ca re a s it applied to the “deve lopmentally delayed” population at Arlington:

It’s a lit tle bit differ ent. They tend to make pr ogress a nd change over a long period of tim e . So it’ s v e ry imp orta nt that th e c are that’ s pr ov ide d is pr e se nte d in the sa me manner , a lot of re petition and routine, for them to be able to lea

rn. An y interr uptio n inthat, w he the r i t’ s a c ha ng e in s ta ff

or c ha ng e in prese ntation of ac tiviti es, can aff ect their ability to learn.

Af te r h e ari ng a ll o f the pr oo f, thetr ia l c ou rt too k th e c a se un de r a dv ise me nt. On Octobe r 26, 2007, the trial c o u rt i s s ued a c omprehe nsive memorandum opinion concluding that the non- compete c ovenants we re e nfo rc eable, that the Ther apist Defe ndants had brea ched the ir employment agre ements, and that Liberty had induce d those defe ndants to do so. A t the outset of its memorandum opinion, the trial court m ad e extensive findings as to Thomas’s conduct and the collabor ation betwee n Liberty and T homas. It noted that Th o mas’s prior
e mpl oy me nt w ithCol umb us ha d g ive n h im “ ins ide r kn ow le dg e ” abo ut Arlin gto n a ndthe Th e ra pis t Def endants, as well as a working relationship with Arlington superintende nt Johnson an d the Arlin gto n e mpl oy e e s. Indis c us sin g L ibe rty’ s a gr e e me nt t o p a y T ho ma s $2 ,0 00 pe r mon th i f L ibe rty wer e aw arde d the Arlington contra ct, the trial court chara cterized it as ha ving “all of the tra ppings of a ‘kick-ba ck’ scheme” calc ulated to place Liberty in an enhanced position to bid for the Arlington cont ract. The trial c ourt seeme d to discredit Thomas’s de nial of any r ole in putting together Li be rty’ s b id f

or the Arlin gto n c on tr a c t. I t ou tli ne d the c on sid e ra ble e ff orts b y T ho ma s a ndLi be rty to rec ruit the Ther apist Def endants to continue wor

king at Arlington for Liberty, despite knowledge of there stric tiv e c ov e na nts

. The trial c ourt then discussed how e nforc ement of the restrictive c ovenants a ffe cted the individual Therapist De fendants. It noted the Ther apist Defe ndan t s’ per sonal circ umstances a nd the ir “ de vo tio n” to the Arlin gto n r e sid e nts :-12- All of [the The rapist Def endants] a

re w ell educated and ve ry dedic ated profe ssionals. The pra cticing t h era pists are truly devote d not only to their chosen profe ssion, but more espe cially t o the individual patients whom they serve

. Con sid e ri ng the ir fa c ia l e xp re ssi on s, theton e of vo ic e , a nde ve n th e c ho ic e of wo rd s, one come s away with the im p ression that the wor k they do is a sort of “ serva nt minist ry” f

or them. One could see it in their face s and hea r it in their voices, a s they testified. Severa l of the individual Defe ndants are natives o f the Philippines. All of them have f

amilies remaining in The Philippines whom th e y s u p port financ ially from their income, and who ar e depe ndent upon that support for the ir livelihood. One of them . . . experience d the death of her f ather during the cour se of the c ontroversy. Ingiv ing he r t e sti mon y a

bo ut s up po rt

fo r h e r m oth e r, wh o is sti ll l ivi ng , s he be c a me overw helmed with emotion to the point it became nece ssary to ta ke a brea k in order to allow her to collect herse lf befor e she c ould proce ed with the cr oss-exa mination. For another w itness, . . . the year 2003 was “ not the best yea r for her.” She has two small children and life for her wa s “a b l u r” at t he time, as she w as going thr ou gh a dif fi c ult div or c e a t th e sa me tim e sh e was exp e ri e nc ing theturmoi l
su rr ou nd ing thec ha ng e in h e r w or k e nv ir on me nt.

Th e tria l c ou rt

c re dit e d th e Th e ra

pis t D e fe nd a nts ’s a sse rt ion s that th e y d id n ot i mme diate ly s e e k to avoid their non-compete covenants, but first sought other e mployment opportuniti es with Columbus and else wher e. It found that they wer e constrained by their pe rsonal cir cumstance s to acc ept employment with Liberty, given the unde rstanding that Liberty would indemnify them if Columbus too k a c tio n to e nf

or c e the ir no n- c omp e te c ov e na nts : Acc ording to the testimony of virtually a ll of the Individual De fendants, after
me e tin g w ith[L ibe rty re pr e se ntativ e s] in mid May, wh e n th e y w e repr e se nte d w ith the Liberty e mployment agree ment, they did not immediately s i g n

. R ather, they
c on tinue d d isc us sio ns wi th C olu mbu s a bo ut o the r p la c e me nt o pti on s u nd e r the ir Columbus contra ct. They sought othe r opportunities on their own as well. One of them

. . . actua lly was offe red an interview in Ke ntucky for w hat she thought was a n assistant superintende nt positi on, which ac tually turned out to b e a p o s i t ion for a “home mana ger” at a salary that was some $20,000 below her the n existing salary. She de c lin e d th e job

. She e xp la ine d tha t her hu sb a ndwa s a “ stay- a t- ho me da d” wi th their two sm all children and she wa s in her sixth month of pregna ncy with their third child at the time. She simply could not afford suc h a substantial re duction in her inc omeun de r the c ir c ums ta nc e s. For the most part the other I ndividual Def endants were in the same or simil ar situation, except they did not re ceive so much as an interview. The rea lity for them
wa s t hat th ere simply we re no job s a va ila ble a t th a t ti me fo r the m to ho no r the ir contra ctual obligation to Colum b u s

. Stated differ ently, Columbus was not in a position t o perf

orm its end of the bar gain by furnishing the ther apists with ongoing employment at all, much less at a co m p ar ab l e wage. By this poi nt in tim e the In div idu a l D e fe nd a nts we re pla c e d inthe po sit ionof bli ndloyalty to Col umb us , wh ic h c arrie d w ithit the pr os pect o f n o jo b at a ll, or a t be st a job a t su bs ta nti a llyS ee sup ra , not e 4. 9

-13- reduc ed income. T he only alternative wa s to sign on with Liberty with the assur ance of continued w ork at [Arlington] and a guar anty of indemnity by Liberty if Columbus should pursue them lega lly.
*** To be sure the burden upon the thera pists, if prec luded from continuing work at the Center , was diff

icult. As earlier noted, for some of the m, the burden w as virtually intolerable.

The trial court then analyz ed the liability of Liberty and the Thera pist De fendants unde r the legal theories asserted by Columbus. As t o the Ther apist Defe ndants, Columbus asserted that they
wer e liable f

or bre ach of

the non-c ompete cove nants. As to Liberty, Columbus asserted that it was liable under

the common l aw and under Tennessee Code Annotated § 47- 50-109 et seq. f or inducing theTh e ra pis t D e fe nd a nts ’ b re a c h o f the ir re stric tiv e c ov e na nts

. 9

The trial c ourt first determined that Thomas and Libe rty, if liable, would be liable unde r the doctrine of

joint and severa l liabilit y, rathe r than comparative f ault, beca use they wor

ked in conc ert with one another

in procuring the T hera

pist Defendants’ brea ch of the ir employment contra cts. It found that Thomas, though re t ai n ed by Liberty, wa s not an employee of Liberty, so Colum bus’s settlement and re lease of Thomas did not operate as a rele ase of

Liberty. Th e tr ia l cou rt ne xt de te rm ine d tha t the no n- c omp e te c ov e na nts in the Th e ra pis t D e fe nd a nts ’ employment agre ements we re r easona ble and e nfo rceable unde r Tenne ssee law . The trial c ourt
rec ognized that Columbus’s claims against Liberty hinged on the existence of a legal and binding non-compe te covenant. It found that Columbus had a legitimate business interest t o b e p rot ecte d by there stric tiv e c ov e na nt:

. . . Columbus i ncurr ed re cruitment and r elocation cost[s] with respe ct to eac h thera pist. In addition to the salary paid to e ach thera pist C o l u m b u s provided
c on tin uin g e du c a tio n at no c os t to the the ra pis ts, so me of

wh ic h in c lud e d s pe c if

ic trai n in g f o r th e u n iq u e p a ti e n t p o p u lati o n a t th e Ce n te r

. . . . [ T ] h a t tr a in in g w a s an integral pa

rt of complianc e with the Feder al C o u rt Order. Considering the sp e c ia liz e d tr a ini ng and th e un iqu e re la tio ns hip s f orme d w iththe patie nts , it is
re a so na bleto co nc lud e that Columbu s had a le git imate bu sin e ss int e re st to p ro te c t.

The trial c ourt found further that the client re striction in the covenant was re asonable . In eva luating thebu rd e n o n th e Th e ra

pis t D e fe nd a nts , th e tr ia l c ou rt no te d th a t th e bu rd e n f

or a ll w a s “ dif

fi c ult ” and for some could be c hara cterized as “intolerable .” Ne verthe less, it found that this burden on the Thera pist Defendants was “outwe ighed” by the “ egre gious” conduc t of Thomas and Libe rty:

Thomas knew that the opportunity for sec u ri n g compar able e mployment for the therap is ts w o u ldb e d if

f ic u lt

. Bu t i t w o u ldn o t h a v e b e e n imp o s s ib le

. I n deed, Columbus had placed 22 of the 32 t h er ap i s t s in other positions. By offering a guarantee of

indemnity to the therapists against enf orce ment by Columbus, Thom asT he no n-com pet e c ov enant f or one T hera pi s t D ef endan t , Jo P al ya, w as d i f f er ent an d di d no t have a l i qu i dat ed 10
dam age s pr ovi s i on. Pa l ya w as f ound not l i abl e t o Col um bus

. Thi s hol di ng w as not a ppea l ed.

O n M arc h 1 3 , 2 0 0 8 , t h i s C o u rt en t ere d an o rd er c o n so l i d ati n g t h e a p p ea l s o f L i b erty an d t h e T h era p i st 11
D e fe n d a n ts. T h e se p a rtie s’ a rg u m e n ts w e re p re se n te d to g e th e r in a jo in t b rie f.
-14- and Liberty removed a ll risk as well as the bur den for t h e t h erapists. Thus, the bu rd e n to thethe ra

pis ts w a s o utw e igh e d b y th e tort iou s in te rf e re nc e of Th oma s. Working in conc ert with Liberty, in the fi n al an alys is, by creating in essence an unfair bidding proc ess which ga ve Liberty an unwar rante d competitive edge

. Th e tr ia l c ou rt

fo un d th a t T ho ma s a ndLi be rty a c te d w ithint e nt t o in du c e br e a c h of the no n- c omp e te
c ov e na nts . T ho ma s, it f

ou nd , a c te d w ithma lic iou s in te nt to “ hu rt his fo rm e r e mpl oy e r” Col umb us , and Liberty knew this and wa s a “w illing participant.”

Ba se d o n th e se fi nd ing s, the tr ia l c ou rt he ld that th e Th e ra pis t D e fe nd a nts ha d b re a c he d th e ir non-compe te agr eeme nts with Col umbus, and that Liberty was liable t o Columbus for inducing the brea ch under

both statutory and common law theories of li ability. The court r ejec ted the ar gument that the $10,000 liquidated damage s clause in the employment agre ements wa s a pena lty. It held that
eac h of the The rapist Def

endants were liable to Columbus for the amount of l iquidated damage s of $10,000, or a total of $90,000. 10
In light of the lack of

proof submitted by Columbus on the amount of a ctual dama ges, the trial court found that the actua l damages as to L iberty wer e the $10,000 in liquidated damage s under the non-c ompete agr eeme nts. The trial court held that Liberty’s c onduct war rante d treble damages o f $ 2 7 0,000 ($90,000 ac tual damage s x 3) under Section 47-50-109. I t also held that Liberty’s conduct wa

rra nted an a war d of $270,000 in punitive damage s under the common law. Noting that Col umb us wa s n ot e nti tle d to re c ov e r bo th p un iti ve a ndstatut ory tr e ble da ma ge s inthe sa me c aus e of ac tion, the trial court aw arde d Columbus a total damage awa rd against Liberty in the amount of $270,000.
Thus, the trial court found the Thera pist De fendants liable for a total of $ 9 0 , 0 0 0 ($10,000
eac h) in liquidated damage s for bre aching the e mployment agree ment, and it held Li berty li able f or a total of $270,000 in e xemplary damage s for inducement of the brea ch. On November 26, 2007, the Ther apist Defe ndants and Liberty filed a motio n t o alter or amend the judgment, whic h was denied. From this order, L iberty and the Thera pist Defendants (collec t i v el y , “Appellants”) now
app e a l. 11

I S S UE S ON AP PE AL

Onapp e a l, A pp e lla nts arg ue that th e tria l c ou rt e rr e d inse ve ra l r e sp e cts. Th e ir ma in
c on te nti on is that th e no n- c omp e te c ov e na nt i n the Th e ra pis t D e fe nd a nts ’ e mpl oy me nt a gr e e me nts is not enforc eable , beca

use Columbus had no legitimate business interest to pro te c t, pa rticularly a fter its contract with Ar lington expired on Ju ne 30, 2003. The y assert that, even if Columbus had a le git imate bu sin e ss i nte re st, it w a s o utw e igh e d b y th e e c on omi c ha rd sh ip o n th e Th e ra

pis t-15-

Def endants a nd the risk of ha rm to t h e p ublic. Furthermore , Appellants cla im, no evidence supported the tria l c ourt’s conclusion that Liberty acted ina ppropriate ly in the bidding process, or that it acted maliciously in causing Colum bus to lose its contract with Arlington. T h e torti ous interfe renc e cla im also cannot be ma intained, Appellants c ontend, bec ause Co l u m bus proved no da ma ge s a s a

re su lt o f L ibe rty’ s c on du c t. T he Ap pe llants a lso arg ue that th e tria l c ou rt e rr on e ou sly
app lie d th e do c tr ineof

joi nt andse ve ra l li abi li ty , rat her than e ng a gin g ina

c omp arativ e fa

ult analysis. Finally, the Appellants argue that the tria l court er red in c alculating dama ges in holding them l i ab le for tr eble a nd punitive damages, and in determining that the liquidated dama ges provision in the employment contrac ts was not a pena lty.

S TANDA RD OF R EVIEW

Because this case was de cided by the trial court, we revie w the trial c ourt’s findings of fa ct de novo on the re cord, pr esumi n g t h o s e facts to be corr ect unless the e vidence preponde rate s otherwise. Vant

ag e Te c h., LL C v . Cr

os s , 17 S.W.3d 637, 644 (Tenn. Ct. App. 1999); Tenn. R. App. P. 13(d). The trial court’s credibility assessments are entitl ed to great weight on appea l, because the court ha d the opportunity to hear the testimony a nd observe the demea nor of the w itnesses. See C & W Asset Acquis ition , LLC v. Oggs , 230 S.W.3d 671, 676 (Tenn. Ct. App. 2007). There fore , we will not reeva luate a trial court’ s fa ctual findings base d on witness cre dibilit y absent c lear and convincing evide nce to the c ontrary. Id. ; se e als o We lls v . Te nn. Bd. of Re ge nts , 9 S.W.3d 779, 783 (Tenn. 1999)

. The trial court’s conclusions of l aw are reviewe d de novo , without any presumption of cor rec tness. Campbell v. Fla. S teel Corp. , 91 9 S.W .2 d 26 , 3 5 ( Te nn . 1 99 6) ; Pr e sle y v . Be nne tt , 860 S.W.2d 857, 859 (Tenn. 1993)

. A N A L Y SIS

We note at the outset of our analysis that Columbus di d not appea l the awa rd of the A rlington contra ct to Liberty. Consequently , an y co n d uct of e ither Liberty or Thomas in securing the Arlin gto n c on tr a c t f

or Li be rty is no t at issu e

. Dama ge s inc ur re d b y Co lumbu s b y r e a so n o f i ts l os s of theArlin gto n co ntr a c t ar e lik e wi se no t at issu e

. Al tho ug h Co lumbu s a pp are ntl y s e ttl e d it s c la ims against Thomas prior

to trial, his conduct obviously remains re levant to the issues at trial. Howe ver, there is no evidenc e in the rec ord that, afte r leaving his employment with Columbus , Thomas was prohibited by agre ement or othe rwise f rom utilizing the information he learned about oper ations at Arlington or his relationship with Johnson or the Columbus employee s for his own gain or for the benef it of Liberty in securing the Arlington contrac t. C o l u m bus has made no a llegation that Thomas’s use of

“insider” information was unlawful. The only basis for liability of the individual Th e ra pis t D e fe nd a nts is b re a c h o f the no n- c omp e te c ov e na nts in the ir e mpl oy me nt ag re e me nts wi th Columbus. The only basis for liability of Liberty is for induce ment of any suc h brea ch.

Enf or c e abi lity o f R e st r ic ti ve Co ve nant

The trial c ourt corr ectly observed that Columbus’s cla ims “ hinge[] upon the existence of a le ga l a ndbin din g c on tr a c t be tw e e n Co lumbu s a ndthe [T herapis t] De fe nd a nts .” Th us , w e fi rs t
a dd re ss the Ap pe lla nts ’ a rg ume nt that th e no n- c omp e te c ov e na nt i n th e Th e ra pis t D e fe nd a nts ’
e mpl oy me nt a gr e e me nts is n ot e nf or c e able

. Ge ne ra lly , co ve na nts no t to c omp e te are dis fa vo re d in-16-

Tenne ssee but will be enf orce d if “they a

re de emed r easona

ble under the particular c ircumstance s.” Allr igh t Aut o P ar ks , Inc . v . Be rry , 4 09 S.W .2 d 3 61 , 3 63 (T e nn . 1 96 6) ; see Baker v . Hooper , 50 S.W.3d 463, 469 (Tenn. Ct. App. 2001). W hile “[t]he re is no inflexible f ormula for d ec iding the ubiquitous question of reasona bleness,” Al

lr ight Au to P a r ks , 4 09 S.W.2d at 363, the Te nnessee Supreme Court has de scribed the analysis to be used:
In gene ral , covenants not to compete aredisfavore d in Tennesse e. See Hasty v. R en t -A -D river, Inc. , 6 7 1 S. W

. 2 d 4 7 1 , 4 7 2 ( T e n n

. 1 9 8 4 )

. T h e s e c o v e n a n ts are viewed a s a re straint of t ra d e, an d as such, a re c onstrued strictly in favor of the employee. Id. Howeve r, if there is a legitimate business interest to be pr otected and the time and ter

ritorial limit ations are rea sonable then non-compe te agr eeme nts are enfor cea ble. I d. at 47 3. Fa c tor s r e le va nt t o w he the r a c ov e na nt i s r e a so na

ble inc lud e : (1 ) the c on sid e ratio n sup po rt ing the c ov e na nt; (2 ) the thr e a te ne d d a ng e r t o the employer

in the absenc e of the covenant; (3) the economic ha rdship imposed on thee mpl oy e e by thec ov e na nt; a nd(4 ) wh e the r the c ov e na nt is inim ic a l to th e pu bli c interest. Id. at 472-73 (citing Allr igh t Auto Pa rk

s, Inc . v . Be rry , 219 Tenn. 280, 409 S.W.2d 361, 363 (1966))

. Also, the t ime and territorial limit s must be no greater than
nece ssary to pr otect the business interest of the employer. Allri ght A uto Parks , 409 S.W.2d at 363. Murfreesboro Med. Clinic, P.A. v. Udom , 166 S.W.3d 674, 678 (Tenn. 2005). In considering the rele vant fac tors, “a threshold question is w hether the employer ha s a legitimate business intere st, i.e. , one that is pr operly protec table by a non-compe tition covenant.” Vant ag e Te c h. , 17 S.W.3d at 644. “The basic re quirement for enfor cea bility of a covenant not to compete is th e ex i s t en ce of a le git imate bu sin e ss i nte re st w hic h is pr op e rl y pro te c ta ble a nd is ac tua lly pr ote c te d by th e a gr e e me nt. Thereis no legitim ate inter est in protec tion from competition, only from unfair c ompetition.” Gr itm an & Ass oc ., Inc . v . St . Am our , No. M2005-00936-COA- R3-CV, 2007 WL 1241255, at *6 (Tenn. Ct. App. Apr . 27, 2007) (c iting Udom , 166 S.W.3d at 678).

Th us , inthe ins ta nt case , we mus t a sc e rt a in w he the r C olu mbu s h a s a le git imate bu sin e ss interest that is protec table by the non- compet e co v en an t at issue. If the employer ha s such a le git imate bu sin e ss i nte re st, we mus t th e n d e te rm ine whe the r the no n- c omp e te pr ov isi on is
rea sonable and enfor cea

ble under the circumstances of this case

. If the court finds that the employer do e s n ot h a ve a

le git imate pr ote c ta

ble bu sin e ss i nt e re st, the n th e no n- c omp e te c ov e na nt i s unenfor cea

ble under Te nnessee law. See C orbin v. Tom Lan ge Co. , No. M2002-01162-COA- R3- CV, 2003 WL 22843167, at *6 ( Tenn. Ct. App. Dec . 1, 2003).

Le gitim at e Busi ne ss I nt e r e st

Inde te rm ini ng wh e the r C olu mbu s in thi s c a se ha s a le git imate pr ote c ta ble bu sin e ss i nte re st,
we are guided by the Supreme Court’s analysis in Hasty v. Rent-A-Driver, Inc. , 671 S.W.2d 471, 47 3 ( Te nn . 1 98 4) , inwh ic h th e Cou rt ob se rv e d:

Of c ourse, a ny competition by a forme r employee may well injure the business of the employer. A n employer, how ever , cannot by contra ct re strain ordinary competition.-17-

Inor de r f or a n e mpl oy e r t o b e e nti tl ed to pro te c tio n, the remus t be sp e c ia l f a c ts prese nt over a nd above or dinary competition. These specia l fac ts must be such that without the covena nt not to compete the employeewould gain an unf air a dvantage in future c ompetition with t he employer

. (Citations omi tted). Therefor e, C olumbus must show specia l fac ts beyond protec tion from ordinary competition that would give the employ ee a n un fair a dv a nta ge in c omp e tin g w iththe e mpl oy e r. Th is Court elaborated on this require ment in Vant age Te ch :
Con si der a tio ns in d e te rm ini ng wh e the r an e mpl oy e e wo uldha ve su c h a n u nf a ir advanta ge include ( 1) whe ther the e mployer provided the employee w ith specialize d training; (2) whe ther the e mployee is given ac cess to tra de or business secr ets or oth e r c on fi de ntia l in fo rm a tio n; and(3 ) w he the r the e mpl oy e r’ s c us tom e rs te ndto associate the employer 's business with the employee due to the employee's r epeated contacts with the customers on beha lf of the e mployer. These considerations may op e rate ind ivi du a lly or

in t a nd e m to giv e ri se to a pr op e rl y p ro te c ta

ble bu sin e ss int e re st.

Vant ag e Te c h. , 17 S.W.3d at 644 (c itati o n s o m i tted). Thus, with due c onsideration to the thre e V a ntage f a c to r s , “ th e e mp lo y e r

mu s t s h o w ‘ s p e c ia l f

a c ts p r e s e n t o v e r

a n d ab o v e o r d in ary competition’ such that the e mployee would havean unfair adva ntage over the employer a bsent the noncompetition agre ement af ter his employment has e nded.” Cor bin , 2003 WL 22843167, at *6 (quoting Has ty , 671 S.W.2d at 473 (c itation omit ted)).

It should be noted at this juncture that the analysis focuse s on the employer and the e mployee who ar e parties to the non-compete agre ement. The c onduct of other player s in this s cena

rio, such as Thomas a nd Liberty, may be rele vant bac kground, but u l t i m at el y has limited relevance to the determination of whether the employer

has a le gitimate protecta ble business interest a nd whether the cove nant is rea sonable a nd enfor cea ble.

Th e tria l c ou rt

in this c a se de te rm ine d tha t Columbu s had a le git imate pr ote c ta ble bu sin e ss interest in light of its recr

uitment and reloc ation costs for the T hera pist Defendants, the specialize d tr a ini ng pr ov ide d b y Co lumbu s, a ndtheun iqu e re la tio ns hip s f orme d b e tw e e n th e Th e ra pis t Def endants a nd the patients at Arlington. The spec ialized training, the court found, “ was a n integral part of c ompliance with the Fede ral Court Orde r.”

Onapp e a l, the Ap pe lla nts arg ue that the tria l c ou rt e rr e d inre a c hin g th is c on c lus ionbe c aus e re c ru itm e nt c os ts andgo od wi ll d o n ot f a ll i nto a ny of

the le ga lly c og niz able bu si ness in te re sts
rec ognized in Te nnessee as outlined in Vant age . In addition, the specia lized training to which the trial court ref

er red w as provided by the State, not by Colum bus. The investment in training, there fore , is not a legitimate business inter est of Columbus. See Girtman , 2007 WL 1241255, at *7- 8. Furthe rm or e , the Ap pe lla nts arg ue , a ny inv e stm e nt by Col umb us in the se Th e ra pis t D e fe nd a nts would be lost rega

rdless, bec ause Columbus’s contra ct with the State to staff Arlington expired by its ow n te rm s o n J un e 30 , 2 00 3. Conse qu e ntl y, Col umb us ha d n o le git imate bu sin e ss i nte re st i n enfor cing the non-c ompete cove nants afte r that date

.B ut l er ’ s l aw s ui t w as broug ht i n a N ew Y ork di s t r i ct court

. Lat er , C & D and s ever al of B ut l er ’ s f orm er 12

em p l o y ees fi l ed an an t i -t rust l aw sui t ag ai n st B u t l er i n an A l ab am a fede ral dis t ri ct co u rt , cl ai m i n g t h at B u t l er’s

en fo rce m en t o f th e n o n -co m p ete co v en an t v i o l ated a n t i -trust law s. T h e t o rti o u s in t erfe ren ce ca se a n d t h e a n t i -trust case
w e re c o n so lid a te d a n d tried in A la b a m a

. S e e C & D , 7 2 0 F .2 d a t 1 5 5 6 -5 7

.

T he part i es agre ed t hat t he cas e w as t o be go verned by t he l aw s of ei t her N ew J er s ey, A l abam a, or T enness ee, 13 depe ndi n g o n t he ci r cum s t anc es

. Bot h t he di s t r i ct c our t a nd t he appe l l at e cour t f ound t hat t her e w as no s i gni fi ca nt (c o n tin u e d ...)
-18- In response, C olumbus argue s that the uni verse of legitimate business intere sts is not limit ed to th e th r e e enumer ated in Vant age ; the Vant

age c ou rt simply he ld that a n e mpl oy e r s e e kin g to enfor ce a non-compe tition covenant must show the existenceof “spe cia l fa cts over and above ordinary c ompetition.” Vant ag e Te c h. , 1 7 S. W .3 d at 64 4. Ina ny e ve nt, Col umb us arg ue s, a mpl e evidenc e s u p p o rt ed the tria l court’s finding that the non- compete c ovenant in this case protec ted Columbus’s investm ent in specia lized training and it s customer relationships. Columbus concedes that the State paid for the Thera pist De fendants’ specia lized training, but claims that the training was made possible by their e mployment with Columbus and notes that the Therapist Def endants we re paid by Columbus during the training. Colum bus also relies on case s from other jurisdictions that have r ecogniz ed a sta ffing age ncy’s legitimate pr otectable business interest in preve nting “opportunistic di sintermediation,” that is, either the improper elimination of the staffing age ncy as the “middle man” or the a ppropriation of the staffing a gency’ s ser vices without proper
c omp e ns a tio n. Ba se d on the fa c ts o f this c a se , Co lumbu s a rg ue s, it h a d a

le git imate bu sin e ss i nte re st in r e stric tin g th e Th e ra

pis t D e fe nd a nts ’ e mpl oy me nt a s pr e sc ri be d in the ir no n- c omp e te a gr e e me nts

. Th e qu e sti on of

wh e the r “ op po rtun ist ic dis int e rm e diatio n” is r e c og niz able a s a le gi timat e business interest protec table by a r estrictive c ovenant ha s not been a ddresse d by a Te nnessee app e llate c ou rt . A n e xp la natio n o f the c on c e pt i s hel pfu l to anun de rs ta nd ing of the Ap pe lla nts ’ argume nt on appea l.

The seminal c ase on this issue appe ars to be Consu ltant s & Designers, Inc. v. Butl er Serv. Group, Inc. , 720 F.2d 1553 (11 Cir. 1983) (“ C & D ”). I n C&D , Butler Service s Group (“ Butler”), an employment age ncy for technica l service employees, c ontrac ted to supply technica l employees to the Tenne ssee Va lley Authority (“TV A”) . The TVAcontra ct was se t to expire on May 3, 1980. Butler’s contra ct with i t s em p l o y ees c ontained a non- compete pr ovision sim ilar to the one in the instant case, r estricting the em p l o y ee s from ac cepting employment with the TVAdirec tly or indirectly for

ninety days following the completion of the ir assignments. C & D , 720 F.2d at 1556. Sometime in 1979, the TVA reque sted proposals fr o m s ev er al technic al servic e employment agenc ies, including plaintiff Butler and de fendant C & D , to supply employees upon the expir ation of Butler’s c ontrac t. C & D was awa rded the TVA staf

fing contra ct. Subsequently, C & D began
so lic iti ng But le r’ s e mpl oy e e s a t TV A to sta ff the ne w c on tr a c t. But le r pu t C&D on no tice tha t it would seek to e nforc e the non- compete pr ovision in t he employee s’ contra cts. Id. at 1555-56.

Butler filed a lawsuit against C & D in fede ral c ourt for tortious interf ere nce w ith its contra ct wi th i ts e mpl oy e e s. Ap ply ing the “ re a so na ble ne ss” stand ard uti liz e d in T e nn e sse e a ndoth e r s ta te s, 12 thefe de ra l dis tr ic t c ou rt he ld that the no n- c omp e te c ov e na nts we re un e nf or c e able

. Th e El e ve nth

13(

. . . cont i nued) 13
di f f er enc e i n t he l aws of t hes e t hr ee s t at es , as ea ch s t at e r el i ed on t he conc ept of r ea s onabl ene s s a s t he t ouchs t one of t he

a n a ly sis. T h e d istric t co u rt q u ip p e d th a t it s t a s k w a s t o “ sa il in to th a t ch e rish e d leg a l h a v e n , ‘Is [th e n o n -c o m p e te
coven ant ] r eas on abl e und er t he ci r cum s t ances ?’ ” S e e C & D , 720 F. 2d a t 1557 ( not i ng t hat t he di s t r i ct c our t r el i ed on th e T e n n e sse e c a se , Al lr i ght Aut o Par ks , 40 9 S.W

. 2 d at 36 3 ).
-19- Cir c uit re ve rs e d, fi nd ing that Bu tle r h a d a le git imate pr ote c ta ble bu sin e ss int e re st in p re ve nti ng its employees and others fr om appropriating Butler’ s service s as “the much maligned but time-honore d middleman” without compensation. Id. at 1557. The appellate court explained that an employment agenc y, as the middleman, provide s costly an d v al u able information to both indi viduals seeking
e mpl oy me nt andto the bu sin e sse s se e kin g s kil le d e mpl oy e e s:
While in a technica l sense the relationship betwee n Butler and its job shoppers was employer- employee, this cha rac terization of the relationship does more to obscure the re levant issues than to enlighten them. It is more r evea ling to recognize Butler’s role a s that of the much maligned but time-honored middleman. Butler serve d as an intermediary in the marke t for highly-s killed, technica lly-trained wor kers. The re wer e indi viduals seeking such employment and firms seeking to employ them. In a pristine world in which information is costless, th er e wo uld be no nee d for the essential s ervic e that Butler performs. The c lient firms and the prospe ctive employees w ould eac h know what the othe r has to off er a n d co u l d negotiate a
c on tr a c t in stantane ou sly a ndc os tle ssl y. Th a t, h ow e ve r, is n ot the natur e of the wo rl d in which we live. Butler and C & D, and the fifteen ot her f irms that applied for the contra ct with TVA, a s w ell as a myria d of other f irms in the technica l service and
re late d in du strie s, e xis t a ndfl ou ri sh be c aus e inf ormatio n is a

c os tly a ndva lua

ble commodity.

Whate ver ancillary services Butler s u p p l i ed to TVA, it was as a provider of information that Butler per formed its essential function. Butler’s role w as to gather , distil l, and provide to T VA information on available and suitable people f or TVA’ s positions an d simult aneously to provide to pr ospective job shopper s information about TVA and the positions it was off ering. Thus, in this sense, Butler wa s serving as a f orm of an e mployment agency. I n the m ar ket for the information in which Butler dealt, it had to compete with: (1) all other te chnica l s ervice firms; (2)
c on ve nti on a l e mpl oy me nt a ge nc ie s; and(3 ) d isi nte rm e diatio n b y f ir ms a ndwo rk e rs

. Disintermediation is the ac tual i zation of the ever -pre sent cry to e liminate the middleman, i.e., direc t solicitation, negotiation and contr acting betwe en the f irm and the worke r. Eliminating the middleman i s at fi rst blush a fac ile and attra ctive alternative. However, middlemen e xist because they provide a useful and highly-valued service. I f Butler’s c ovenant with its j ob shoppers is to have any justification, that justi fication mustbe to pr otect Butler’s r ole as a middleman in the
mark e t f or inf orma tio n b e tw e e n jo b s ho pp e rs a ndc lie nt f ir ms.
Id. at 1558. Thus, the C&D court found that Butl er’ s role as middleman be tween the employee and the employer

had value that war

rante d protec tion.The non- com pet e cove nant s i n C &D w er e for a ni net y-day peri od

. T he C &D co u rt fo u n d t h at t h e a d v erse 14

e ff e c t o n th e e m p lo y e e s w a s n o t su ff ic ie n t t o re n d e r th e re stric tiv e c o v e n a n ts u n e n fo rc e a b le . A s to th e p u b lic in te re st, t he C &D court foun d t hat t he pu bl i c g ai ned fr om enf orce m ent of t he coven ant becaus e i t encouraged a s t affi ng agency
su c h a s B u tler to in v e st m o re e ff o rt in to fin d in g q u a lified e m p lo y e e s fo r T V A

. C &D , 720 F. 2d a t 1559- 60.
-20- The C&D cou rt e xp la ine d th a t, o nc e a n e mpl oy e e ha s b e e n p la c e d w itha c lie nt b us ine ss, abs e nt s omec on tr a c tua l ob sta c le , th e e mpl oy e e a ndthe c lie nt b us ine ss w ou ld be fr e e to s e ve r the ir relationship wit h the employment age ncy and “ cut out the middleman.” T h en o n

- c o mpete re striction in the employees’ contract s , the C&D c ou rt re a so ne d, wa s c ra ft e d to pr e ve nt s uc h “ op po rtun ist ic disintermediation”:

The c ovenant be tween Butler and TVA not to hire one another ’s employee s and the restric tive covenants in Butler’s contra cts with its job shoppers we re c lear ly cra fted to p re v ent such disintermediation. But for these contra ctual constraints the job shoppers a nd the TVA could get the benef it of Butler’s servic es without paying the full price of those service s. The a pplication of Butler’s re strictive cove nant af ter the termination of its contrac t with TVA was de signed t o p ro t ec t against TVA terminating Butler and then hiring e ither direc tly, or ind irec tly through another te c hn ic a l servic e fi rm , the But le r job sh op pe rs

. TV A ha d the po we r an d the ri gh t to te rm inate But le r, bu t no t to abr og a te But le r’ s p ro pe rty in te re st i n it s jo b s ho pp e rs

. Butler’s rights under its employment contra cts nee d not ha ve bee n enfor ced. T hey
c ou ld h a ve be e n s old

. Re ga rd le ss o f w he the r B utl e r w ou ld h a ve str uc k a de a l w ith the job shoppers, TVA , or the successor TSF, Butler was none theless protec ted by the covenant f

rom opportunistic te rmination of the re lationship by TVA. There fore
we c on clu de that

But le r h a d a

le git imate int e re st i n p ro te c tin g f ro m op po rtun ist ic
ap p r o p r i a t i o n i t s i n v e s t m e n t i n a c q u i r i n g t h e i n f o r m a t i o n n e c e s s ar y t o c arr y o n it s business, and that the covenant was rea sonably well cr afte d to car ry out that task.

Id. at 15 59 . T hu s, theEl e ve nthCir c uit fo un d th a t Bu tle r h a d a

le gitimate e nf

or c e able bu sin e ss int e re st i n p re ve nti ng op po rtun ist ic app ro pria tio n o f B utl e r’ s in ve stm e nt i n i ts emp loye e s a ndin pr oc uring the inf

orma tio n ne c e ssa

ry to c arry on its bu sin e ss. Af te r we igh ing But le r’s busin e ss interest against the effe ct of the non- compete c ovena n t o n t he gene ral public, the C&D court determined that the non-c ompete cove nant was r easona ble and e nforc eable

. Id. at 1559-60. 14
Adopting the rea soning in C & D , the federa l district court in Bor g- Wa rne r P

ro te c tiv e Se rv s. Corp. v. Guardsmark, In c. , 9 4 6 F

. Supp. 495 (E.D. Ky. 1996), similarly dete rmined that an
e mpl oy me nt a ge nc y h a d a l egi ti mate p ro te c ta ble bu sin e ss i nte re st i n e nf or c ing theno n- c omp e te
covenants of former

employe e s

. I nth at c a s e , e mp loyme nt agenc y Guar dsmark contr acte d with client Th e Ga p to pr ov ide se c urity gu ard s at on e of Th e Ga p’ s f a c ili tie s. Gu ard sma

rk re c ru ite d th e se c urity guards, did exte nsive scre ening, and pr ovided significant tra ining. When G u ar d s m ark’ s contrac t with The G ap ex p i red, TheGap a war ded the se curity guar d staffing c ontrac t to a Guar dsmark
c omp e tit or , Bo rg -W arn e r. Bor g- W arn e r the n p ro c e e de d to hir e the Gu ard sma rk se c urity gu ard s to work at the Gap f

acility, promising the sec urity guards that it would provide a defe nse in the eve ntThe e m pl oyee s ’ non- com p et e cl aus es pr ovi ded t hat , f or one ye ar f ol l ow i ng t hei r e m pl oym ent , t he 15
G uar ds m ar k e m pl oyee w oul d not pr ovi de s er vi ces fo r any bus i nes s a t w hi ch i t ha d pr ovi ded s er vi ce s t hr ough G u a rd sm a rk d u rin g th e p re v io u s y e a r.

G uar ds m ar k fi r s t fi l ed s ui t i n a Tenne s s ee s t at e cour t and obt ai ned pr el i m i nar y i nj unct i ve rel i ef. 16
N e v e rth e le ss, th e fe d e ra l l a w su it p ro c e e d e d a n d th e d istric t co u rt c o n sid e re d th e issu e o fw h e th e r th e n o n -c o m p e te
coven ant s w er e e nfor cea bl e.

G uards m ar k off er ed eac h of i t s G ap s ecur i t y gu ar ds em pl oy m ent at anot her f aci l i t y. T he court no t ed t hat 17

t he s cope of

t he non- com pet e w as l i m i t ed t o t he s pec i fi c c l i ent s i t e w her e t he e m pl oyee w or ked, a nd f ound a l s o t hat t he

se c u rity g u a rd s w e re lo w -le v e l em p lo y e e s w h o c o u ld e a sily fin d c o m p a ra b le e m p lo y m e n t else w h e re

. B org- W arner , 946 F. Supp. a t 797, 502.
-21- that G ua rd sma rk a tte mpt e d to e nf

or c e its no n- c omp e te c ov e na nts

. Borg-Warner , 946 F. Supp. at 15 497. Borg-Wa

rner filed a la wsuit in Kentucky fe dera l court cha ll en g i n g t h e v ali dity of the noncompete c ovenants a s unenfor cea ble and a s an unre asonable restraint on trade. 16 In addr essing whether

the non-c ompete cove nants wer e enf orce able under Ke ntucky and Tenne ssee law , the district court noted that the issue pre sented a conflict be tween the fundame ntal policy supporting parties’ f ree dom to contrac t and the policy disfavoring contrac tual re s t raints of trade

. Id. at 500. Citing t he Te nnessee Supreme Court ca se of Central Adjust ment Bureau, Inc. v. Ingram , 6 78 S.W .2 d 2 8 ( Te nn . 1 98 4) , th e c ou rt ob se rv e d th a t re c e nt ca se s pla c e d a n “ e mph a sis
on the employer ’s investment in the employee and have evolved [ into] an appr oach ba lancing the importance of t hat factor against the hardship to the employee and the public inter est.” Id. at 500
n. 6; see Centr

al Adju stment Bureau, Inc. v. In gram Assocs., In c. , 622 S.W.2d 681, 685-86 (Ky. Ct. Ap p. 19 81 ) ( e nf

or c ing no n- c omp e te cov e na nts be c aus e the se rv ic e pr ov ide d w a s h igh ly specia lized, and be cause the employer expende d considera ble t ime, eff

ort, and money in training the employees in the business). C i t ing C & D , the Borg-Warnercourt found that Guardsmar k had a le git imate bu sin e ss i nte re st i n p ro te c tin g it se lf fr om o pp ortun ist ic dis int e rm e diatio n b y e mpl oy e e s, clients, or compe titors. The court de scribed the term “disinterme diation,” as “ a twenty- dollar word meaning to cut out the middleman” w ithout compensation for its ser v i ces. Borg-Warner , 9 46 F. Supp. at 502. After weighing this business interest against the hardship to the employees and to the public, the court determined that the non-compete covenant was rea sonable a nd enfor cea ble. Id. ; 17 see also Aerotek, Inc. v . Burt on , 835 So. 2d 197, 201 (Ala. Civ. App. 2001) (r ec o g n i zing t he employment agenc y’s bus iness interest in disintermediation, citing C & D ); Elit e Cleanin g Co. v. Capel , N o. Civ .A . 6 90 -N , 2 00 6 W L 1 56 51 61 , at *8 (D e l. C h. 2006 ) (reco gniz ing a le git imate interest in pre venting disintermediation, but finding that such interest wa s weak i n t h e case of unskilled janitors); Volt S ervs. Group v. Adec co Employment Servs., Inc. , 35 P.3d 329, 334 (Or. Ct. Ap p. 20 01 ) (r e c og niz ing the c on c e pt o f d isi nte rm e diatio n a s a le git imate bu sin e ss i nte re st sufficie nt to support a non-compe te cove nant).

W e are pe rs ua de d b y th e se au th ori ties that th e a vo idanc e of su c h a n o pp ortun ist ic di s i n termediation should be recogniz ed as a legitimate business interest protec table by a noncompete c ovenant. As the C & D c ou rt re c og niz e d, the natur e of

a n e mpl oy me nt a ge nc y’ s b us ine ss is un iqu e in that its ma in s e rv ic e is t o p ro vid e the “ c os tly a ndva lua ble c omm od ity ” of

tim e , e ff ort, and expe nse in finding and putt ing together prospective employees and employers and negotiating
c on tr a c ts r e la te d to the ir e mpl oy me nt. No n- c omp e te pr ov isi on s may b e inc lud e d inthe e mpl oy e e s’-22-

contra cts to protect the a gency’ s investment by preve nting unfair disintermediation, i.e., usurpation of t he ag e n c y ’ s r o leb y th e c li e n t h irin g th e e mp lo y e e s d ir e c tl y o r th r o u g h a n o th e r

e mp lo y me nt agency

. T h u s , to the extent that an e mployment agency ha s invested re source s with respec t to a pa rt ic ula r e mpl oy e e , th e a ge nc y may h a ve a le git imate bu sin e ss i nte re st i n p ro te c tin g it se lf a ga ins t unfair disinterme diation. We now t u rn t o Columbus’s busi ness intere st with the Thera pist Defendants. Here , Col umb us had li ttle i nv e stm e nt o f i ts r e so ur c e s in to the sp e c ia liz e d tr a ini ng of the Th e ra

pis t Def endants. Columbus did pay the employee s while they receive d the training, albe it with the normal re imbursement by the State. Howeve r, the training was require d by and paid f or by the State, not by Colum bus. The training was not just for Columbus employees; all employees at Arlington underw ent training so that they could se rve the unique patient population at Arlingt on in a manner consistent with the fede ral c ourt order governing Arlington.

The fa ctor of w hether

the Ther apist Defe ndants are the “f ace ” of Columbus is complicated somewhat by the unique role of an employment agenc y. Columbus’s customer here is Arlington and theState , n ot the ind ivi du a l patie nts wi th wh om the Th e ra pis t De fe nd a nts de ve lop e d r e la tio ns hip s. Arlington was, of c ourse, a lways mindful t h at t h e Thera pist Defendants were staffe d through Columbus. In fac t, Arlington rema ined a client of Col umbus for purpose s of staff ing behaviora l and ps yc ho log y p os iti on s. Ho we ve r, the Th e ra pis t D e fe nd a nts ’ r e la tio ns hip s w iththe Arlin gto n p a tie nts
o b viously mot ivated Arlington to t ry to kee p the Ther apist Defe ndants working at the A rlington Center. The Therapist Defenda nts wer e not traditional employee s; rather , beca use Columbus is an employment agenc y, t h ey were pa rt of the “ product” or ser vice sold by Columbus. Thus, the Th e ra pis t D e fe nd a nts ’ r e la tio ns hip wi th the patie nts we repa rt of the ir va lue to Co lu mb us . T his could consti tute a “spe cial fa ct” that, unde r Hasty v. Rent-A-Driver , could give “the employee . . .
a n u nfa ir a dv a nta ge in f

utu re c omp e tit ionwi th” Col umb us in the abs e nc e of a no n- c omp e te agre ement. Has ty , 671 S.W.2d at 473.

Th e Ap pe lla nts arg ue that, b e c aus e Col umb us los t th e bidfo r the Arlin gto n c on tr a c t, Co l u m b u s woul d have lost its investment in the Thera pist Defendants regar dless of whe ther they
we relate r h ir e d b y L ibe rty. Th is i s tr ue a ndc ou ld i n th e fi na l a na lys is a ff e c t the we igh t gi ve n to Col umb us ’s bu sin e ss i nte re st. Ho we ve r, in e valuatin g w he the r C olu mbu s h a s a le git imate pr ote c ta ble bu sin e ss int e re st, we mus t c on sid e r the c ir c ums ta nc e s a t the tim e the pa rt ie s e nte re d in to thee mpl oy me nt a gr e e me nt. If Col umb us do e s its job we ll andpla c e s c apa ble e mpl oy e e s w ithits client, t he non-compete covenant provides power ful motivation for the client to kee p Columbus as its staffing agenc y. The fac t that the non-compe te did not, in this instance, suff iciently motivate the State to a wa

rd the bid to Col umb us do e s no t me a n that Col umb us ha d no le gitim ate pro tec ta ble bu sin e ss i nte re st. Without using the “twenty-dollar ” term, the trial court in ef fec t found that Columbus had a legitimate business interest in preve nting unf air disintermediation by Liberty through its recognition that Co lumbu s h a d incurred recr uit me nt andre loc a tio n c os ts w ithre sp e c t to the Th e ra pis t Defen d ants . This finding is supported by evidence showing that Columbus , as the e mployment agenc y, provided the typica l emplo y m en t agenc y service s of re cruiting the employee s and negotiating their employment conditi o n s wi t h the client, Arlington. Overall, we find that the pr e po nd e ranc e of

the e vid e nc e su pp orts the tria l c ou rt ’s c on c lus ionthat Co lumbu s h a d a le git imateT he t i m e a nd t er r i t ori al l i m i t s ar e not chal l enged i n t hi s ca s e. 18

Col um bus c or r ec t l y poi nt ed out t o t he t r i al c our t t hat , under t h e non- com pet e pr ovi s i ons , i t w as not 19

cont r act ual l y ob l i gat ed t o off er t he T hera pi s t D ef endan t s al t er nat e posi t i on s or fi nd em pl oy m ent f or t hem el s ew here

. C o lu m b u s’ s fa ilu re to d o so , h o w e v e r, h a s o b v io u s im p a c t o n th e h a rd sh ip o f t h e T h e ra p ist D e fe n d a n ts th a t w o u ld re su lt fr o m e n fo rc e m e n t.
-23- business interest and that Colum bus could, under a ppropriate circ umstances, pr otect its investment t h r o u g h t h e u s e o f

n o n

- c o m p e t e c o v e n a n t s

. W e c o n s i d e r , t h e n , w h e t h e r C o l u m b u s c a n p r o t e c ti ts business interest in the Ther apist Defe ndants under the circ umstances in this case

.

Re as ona ble ne ss U nde rCi r c um st anc e s o f C as e Having dete rmined that Columbus has a legitimate business interest that is protec table under the non-c ompete cove nant in the Ther apist Defe ndan t s’ employment contra cts, we must next determine whether

the cove nant is rea sonable a nd enfor cea ble under the circ umstances of

this case. Th is i s d on e by ba la nc ing Col umb us ’s bu sin e ss i nte re st a ga ins t th e ha rd sh ip enf

orce men t w ou ld imp os e on theTh e ra

pis t D efen dan ts and the ri sk of ha rm to the pu bli c int e re st. See Udom , 166 18 S.W .3 d at 67 8- 84 (h old ing that th e ph ys ic ia n’ s n on -c omp e te a gr e e me nt w a s u ne nf or c e able be c aus e pu bli c po lic y c on sid e ratio ns ou tw e igh e d th e e mpl oy e r’ s b us ine ss i nte re st) ; se e als o Al lri ght Auto Parks , 409 S.W.2d at 364 (holding that the non-c ompete cove nant is unenfor cea ble bec ause the thr e a te ne d c omp e tit ion to the e mpl oy e r did no t ou tw e igh“ the un du e op pr e ssi on that w ou ld b e fa ll the def endant” ).

Hardshi p on Em ployee s
The trial c ourt made detailed findings of fa ct re garding the ha rdship that would result to the Thera pist Defendants from enfor ceme nt of the non-c ompete cove nants. The tria l court desc ribed the Ther apist Defe ndants as highly educated and “devote d” to the Arlingt on patients. It re counted
ma ny of the ir pe rs on a l c ir c ums ta nc e s at th e ti me th is c on tr ov e rs y a ro se , s uc h a s h a vin g f

a mil y mem b ers in the Phi lippines relying on their financ ial support or going through a diff icult divorce while supporting small children. T h e t ri al court found that the Ther apist Defe ndants did not immed i at el y acc ept Liberty’ s offe r of e mployment; they had discussions with C olumbus about alternative employment with Columbus, and sought c ompara ble employment in the community and beyond. None wer e offe red alternate employment by Columbus, and any e mployment elsewher e 19

was at salary leve ls substantially l ess than their sa lary at Arlington.

Th e t ri al co u rt found that, af ter Columbus’s contrac t with Arlington was not rene wed, the Th e ra pis t D e fe nd a nts “ we re pla c e d in a posi tio n of bli nd loy a lty to Colu mbu s, wh ic h c arrie d w ith it the pr os pe c t of

no job a t a ll, or

a t be st a job a t su bs tant ia lly re du c e d in c ome .” Ba se d o n th e se circ umstances, it found that “ the burde n upon the [The rapist D ef en d ants ], if pre cluded f

rom continuing work at [Arlington] Center, wa s difficult. . . . [F]or some of them, the burde n was virtually intolerable.”

The tr ia l c o u r t th e n w e n t o n to f in d th a t T h o ma s a n d L ib e r ty imp r o p e r ly s e iz e d on the vulnera bility of the Thera

pist Defendants by a gree ing to indemnify them for a ny loss resulting fromW e al s o not e t hat i n C &D , t he El eve nt h Ci r cui t s t at ed t hat , i n eva l uat i ng t he adve r s e i m pac t of e nf or ce m ent 20
of t he non- com pet e on t he em pl oyee s or on t he publ i c i nt er es t , “[ t ] he pr oper pos t ur e f r om w hi ch t hi s i nqui r y i s t o be

u n d ert ak en i s n o t aft er t h e t erm i n at i o n of [t h e em p l o y m en t ag en cy ’s co n t ract w i t h t h e cl i en t ] ( ex po st ), bu t rat h er befo re t he f orm at i on of t he cont r act s [ bet w een t he em pl oy m ent agency and i t s em pl oy ees , an d bet w een t he em pl oy m ent agency and i t s cl i ent ] ( ex ant e)

. ” C &D , 720 F. 2d at 1559. W e r es pec t ful l y di s agr ee

. W hi l e t he ci r cum s t anc es a t t he t i m e t he

co n t ract w ere ex ecu t ed are cert ai n l y pa rt of t h e an al y si s, w e m u st al so l o o k at w h et h er t h e n o n -com p et e co v en an t s are
re a so n a b le a n d e n fo rc e a b le a s a p p lied u n d e r th e c irc u m sta n c e s th a t ex ist at th e ti m e o f e n fo rc e m e n t.
-24- the bre ach of

their non-c ompete cove nant. It conc luded that “the bur den t o t h e t h er apis ts was outwe ig h e d b y th e to r ti o u s in te r f e r e n c e o f T h o ma s w o rk in g inc o n c e r t w ith L ib e r ty inth e f in al analysis, by cr eating in essenc e an unf air bidding p roce ss which gave Liberty an unw arr anted
c omp e tit ivea dv a nta ge .” Th us , a ft e r f ind ing that e nf

or c e me nt o f the no n- c omp e te a gr e e me nts wo uld
re su lt i n n e arl y “ int ole ra

ble ” ha rd sh ip t o th e Th e ra

pis t D e fe nd a nts , th e tr ia l c ou rt fo un d th a t th is ha rd sh ip wa s null if

ie d by the ind e mni fi c a tio n ag re e me nts a lle ge dly imp ro pe rl y off e re d b y L ibe rty fo r p re datory p ra c tic e s.

Re sp e c tf ull y, in e va luatin g th e re a so na ble ne ss ande nf

or c e abil ity of

the Th e ra

pis t Def endants’ non- compete c ovenants, the tria l court’s a nalysis of the har d s hip to the employees sh ou ld h a ve e nd e d w ithits c on c lus ionthat th e bu rd e n on theTh e ra pis t D e fe nd a nts wa s “ dif

fi c ult ”
or “ int ole ra ble .” Th e c on tr a c t is be tw e e n Colu mbu s and the Th e ra pis t D e fe nd a nts , a ndthe y r e ma in thefo c us of

thea na lys is at thi s poin t. An y co nd uc t by Th oma s o r L ibe rty, inc lud ing a ny pr omi se to i n d em n i fy t h e T h er ap i s tDe fe n d an t s i n t h e e v en to f e n fo rc em en tb y C o l u m b u s , i s l ar g el y irrele vant to the iss ue of

wh e the r the ha

rd sh ip to the se ind ivi du a ls o utw e igh s Co lumbu s’ s le git imate bu sin e ss int e re st i n e nf

or c ing theno n- c omp e te c ov e na nt. 20
A pre pond er ance of the e vidence supports the trial court’s finding that the enfor ceme nt of the non-c ompete cove nant by C olumbus placed a heavy bur den on the The rapist Def endants. Unde r these c ircumstance s, we fi nd that the re cord supports a finding that the har dship imposed on the Th e ra pis t D e fe nd a nts by e nf

or c e me nt o f the no n- c omp e te c ov e na nt w a s o ne ro us

.

Pub lic Inte re st

In the ba lancing equat i o n to determine if the non-compe te cove nant is rea sonable a nd enfor cea ble in this case , we also consider whether enfor ceme nt of t he cove nant would be “ inimical to the public interest.” Udom , 166 S.W.3d at 678.

This fac t o r was considered by the court in C&D , cited above , in evaluating Columbus’s business interest in avoiding “opportunistic disintermediation.” The C&D c ou rt fo un d inthat c a se that the public over all benef itted from the ability of the e mployment agency to pr otect its investment in the TVA e mployees (“ job shoppers”)

. C&D , 720 F.2d at 1559-60. The C&D court stated:
The prote ction that Butler believed it acquir ed as a result of this restrictive c overa ge pe rm itt e d Bu tle r t o in ve st at a le ve l c los e r t o th e op timum i n the ass e ts r e qu ir e d to fi ndpe rs on ne l f

or TV A. By pr ote c tin g the fu ture str e a m of inc ome that Bu tle r w ou ld
rec eive f rom its job shoppers, Butler was induced to invest more in sear ching for jobT he C &D c our t appe ar ed t o a s s um e t hat t he “j ob s hopper s ” w oul d not l os e t hei r TV A j obs a s a r es ul t of 21
enf or ce m ent of

t he 90- day cove nant not t o c om pet e. I t appe ar ed t o as s um e i ns t ea d t hat t he r epl ac em ent e m pl oym ent
a g e n c y w o u ld h a v e “ p u rc h a se d ” a “ w a iv e r” o f th e e m p lo y e e s’ n o n -c o m p e te s fr o m B u tler

. C &D , 7 2 0 F

. 2 d a t 1 5 5 9

. We

r es pect ful l y di s agre e w i t h th i s as pect of t he C &D c our t ’ s a nal ys i s

. The cont r ac t a t i s s ue i s be t w ee n t he em pl oym ent
a g e n c y a n d th e e m p lo y e e a n d th e fo c u s is th e b u rd e n c re a te d b y e n fo rc e m e n t, n o t w h e th e r a th ird p a rty w o u ld h a v e p a id t h e e m p l o y m en t ag en cy t o w aiv e it s co n t rac t u al ri g h t s. -25- sh op pe rs than it

oth e rw ise wo uld . T hu s th e pu bli c a t la rg e c a n b e e xp e c te d to ga in fr om the e nf

or c e me nt of thi s andsim ila r r e stric tiv e c ov e na nts to the e xte nt that th e se c ov e na nts e nc ou ra ge op tim a l in ve stm e nt.

Id. a t 15 60

. Inlig ht o f the be ne fi t to the pu bli c of e nc ou ra gin g th e e mpl oy me nt a ge nc y to inv e st 21 in finding qualified per sonnel, the C&D c ou rt fo un d th a t th e no n-co mpet e c ov e na nts in that c a se wer e re asonable and enf

orce able. Id.
Likewise, in thi s case , the public has a n interest in enc ouraging a n employment agenc y such as Columbus to i nvest resour ces into finding and s ecuring qualified thera pists to work with the patie nt p op ulatio n at A rl ing ton . Pe rm itt ing e nf or c e me nt o f the no n- c omp e te c ov e na nts se rv e s th is purpose.

W e mus t als o co ns ide r, ho we ve r, the imp a c t th a t e nf or c e me nt o f the no n- c omp e te c ov e na nts would have on the State, on Arlington, and on Arlington’s vulnera ble patient population. In the trial
c ou rt ’s tho ro ug h a na lys is, it n ote d th a t, i n a sc e rt a ini ng wh e the r a re stric tiv e c ov e na nt i s r e a so na ble and enfor cea

ble, Tenne ssee courts are to e valuate, among other fac tors, the impact that enf orce ment of the covenant w ould have on the public inter est, and c ited Allr igh t Aut o P ar ks , I nc . v . Be rry , 409 S.W.2d 361, 363 (Tenn. 1966). Surprisingly, howe ver, the trial court did not ther eaf ter mention the impact that enf

orce ment of Columbus’s non-compete c ovenant would ha ve on the State or on the Arlington patients. We c onsider this to be a highly significant fa ctor in this case

. As no te d b y th e Te nn e sse e Sup re me Cou rt in dis c us sin g r e stric tiv e c ov e na nts fo r p hy sic ia ns , “re strictive cove nants in the medica l profession raise conc erns r egar ding the public good.” Udom , 166 S.W.3d at 679. The Udom Court e mphasized that the service s provid ed b y medical profe ssionals suc h as physicians go “we ll be yond mere ly providing goods or service s.” Id. at 683.

The e vidence is undisputed that, once Columbus lost the Arlingto n contra ct, Arlington
su pe ri nte nd e nt J e rry Jo hn so n ur ge d the Th e ra pis t De fe nd a nts to re ma in a t A rl ing tonthr ou gh Li be rty in order to maintain c ontinuity of care for the r esidents. Witness af t er w itness discussed the importance of continuity of care to the s ever ely compromised patient popul ation at Arlington, and that “con t i n u i t y of ca

re” to them meant not simply keeping therapist positions filled, but also, as much as possible, kee ping the sa me i nd iv idu als in those positions . Thera py fre quently require d repe tition and routine over a long period of time, with any c hange in staf f or pr esentation sign i fi ca n t l y aff

ecting the patients’ ability to learn and pr ogress. More over, w ith a population of patie nts wh o “ c a n’ t ta lk t o y ou ,” the rapis ts are r e qu ir e d to un de rs ta ndthe ind ivi du a l patie nts ’ idiosyncrasies, sometimes with re spect to pote ntially life -threatening conditions such as dysphagia.-26-

Thus, the loss of even one therapist has a significant adverse impact; the l oss of an entire group suc h as the The rapist Def

endants, c ould be very serious indee d.

Moreove r, in this case , we must consider the State’s significant investment in the specialize d training given to the Thera pist De fendants. The evidenc e was undisputed that the training provided by the St at e wa s provided in orde r to comply with the mandate s of the fe dera l order r egar ding Arlington, and wa s specific ally tailored to teac h the Therapist Def endants the be st practice s in caring fo r the un iqu e patie nt p op ulatio n at A rl ing ton . I f the no n- c omp e te c ov e na nt we ree nf or c e d a ga ins t theTh e ra pis t De fe nd a nts , the State wo uldlos e its inv e stm e nt. Ev e n mo reimp orta nt, the vu lne ra ble Arlington residents would lose the be nefit of the highly spec ialized training.

Columbus does not di spute the impact to the Arlington patients of the disruption of
c on tin uity o f care, o r the va lueof thesp e c ia liz e d tr a ini ng pr ov ide d b y th e State . Rathe r, it emphasize s the other side of the same c oin, that is, that the “specia l relationship” betwe en the Th e ra pis t D e fe nd a nts a nd the Arlin gto n p a tie nts , a ndthe tr a ini ng giv e n to theTh e ra pis t D e fe nd a nts , we repa rt of the ir va lueto C olu mbu s a ndpa rt of Col umb us ’s pr ote c ta

ble bu sin e ss i nte re st.

In a pu re ly c omm e rc ia l se tti ng , w e wo uldc ome c los e r t o a gr e e ing wi th this a na lys is. Inthi s c a se , h ow e ve r, the “ sp e c ia l cus tom e r re la tio ns hip ” is in a med ic a l se tti ng wi th e sp e c ia lly vu lne ra ble patients whose inter ests must be safe guarde d. Moreove r, t he training was provided by the State for thebe ne fi t of

tho se patie nts . T he se c ir c ums ta nc e s c le arl y impli c a te the pu bli c int e re st.

As stated in C&D , “[ t] he qu e sti on be fo re us is wh e the r on ba la nc e the pu bli c ga ine d or l os t
a s a re su lt of

” Col umb us ’s abil ity to p ro te c t it s in ve stm e nt ande nf or c e the no n- c omp e te c ov e na nts against t he Therapist Def

endants in this case

. C&D , 720 F.2d at 1559. While the bene fit of inducing Columbus t o invest resourc es i n t o fi n d ing qualified thera pists to work at Arlington is not inc on se qu e nti a l, i n th is c a se , it is f ar o utw e igh e d b y th e a dv e rs e imp a c t of dis ru pti ng the c on tin uity of ca re f or the Arlington residents and the loss to the State and the Arlington patients of the State’ s invest m ent i n the Ther apist Defe ndants’ spec ialized training. Thus, we find on bala nce that enfor ceme nt of the non-c ompete cove nants would be “ inimical to the public interest.” Udom , 166 S.W.3d at 678.

C ONCL US I ON

As no te d a

bo ve , to make the ult imate de te rm inatio n o f w he the r a re stric ti ve c ov e na nt i s reasonable and enfor cea

ble, the fa ctors to be c onsidered inc lude: “the thre atene d danger to the employer in the a

bsence of the c ovenant;

. . . the economic ha rdship imposed on the employee by the cove nant; and .

. . whether the cove nant is inimi cal to the public inter est.” Udom , 166 S.W.3d at 678. The Udom court e mphasized that “[c ]ovenants n o t t o co mpete that implicate important public policy issues are even mor e strictly construe d.” Id. at 679.

He re , Co lumbu s h a s a

le git imate bu sin e ss i nte re st i n p ro te c tin g it se lf fro m “ op po rtun ist ic disintermediation” by its customer or by a competing employment agenc y such as Liberty. Unde r app ro priate c ir c ums ta nc e s, Col umb us c ou ld p ro te c t th is b us ine ss i nte re st b y u se of no n- c omp e te
c ov e na nts

.-27-

Her e, howe ver, a s found by the trial c ourt, the har dship to the Thera pist De fendants of permitting Colum bus to enforc e the c ovenants ranged fr om “difficult” to “virtually intolerable.” Th is w e igh s h e a vil y a ga ins t e nf or c e me nt of the c ov e na nts

. Mo re ov e r, e nf or c e me nt of the Th e ra

pis t Def endants’ non- competec o v e n an ts w ould result in loss of continuity of care to the fra gile Arlington residents, a nd loss to the St ate a nd the Arlington patients of the va lue of the highly specialized tr a ini ng giv e n to theTh e ra pis t D e fe nd a nts

.
Un de r a ll o f the se c ir c um st ances , w e arec omp e lle d to c on c lud e that th e no n- c omp e te
c ov e na nts in the Th e ra

pis t De fe nd a nts ’ e mpl oy me nt a gr e e me nt wi th Col umb us areno t r e a so na ble and not enf

orce able. In the absenc e of an enfor cea ble non-compe te covenant, we must reve rse the tria l c ou rt ’s fi nd ing that th e Th e ra pis t D e fe nd a nts arelia

ble to C olu mbu s f

or br e a c h o f the ir
e mpl oy me nt a gr e e me nts . W e mus t a lso re ve rs e the tria l c ou rt ’s fi nd ing that L ibe rty is lia ble to Col umb us fo r i nd uc ing theTh e ra pis t De fe nd a nts to b re a c h th e ir e mpl oy me nt a gr e e me nts . T his holding pretermits all other issues raised on appe al.

The de cision of the trial c ourt is reve rsed. Costs on appea l are to be taxed to Ap p ell ee Columbus M edica l Services, LLC, for which exe cution may issue, if nec essary.

________________________________ HOLLY M. K IRBY, JUDGE