Opinion ID: 2510251
Heading Depth: 3
Heading Rank: 3

Heading: Intermountain Eye's protectable business interests.

Text: The district court described Intermountain Eye's protectable business interest as the customer relationships that were developed while Dr. Miller was employed there. Intermountain Eye contends that the court erred in failing to consider other interests that were subject to protection by virtue of the non-compete provision. Before one can decide whether the non-compete provision is overbroad, one must first identify the firm's legitimate business interests. Whether an employer has a protectable business interest is typically a question of law to be determined from all the facts. Eastern Dist. Co., Inc. v. Flynn, 222 Kan. 666, 567 P.2d 1371 (1977). Intermountain Eye asserts four protectable business interests: (1) the fact that the Company has agreed to expend considerable time, energy and expenses in assisting the Physician in developing a viable medical practice; (2) the proprietary and commercially sensitive information to which Dr. Miller had access; (3) referral sources; and (4) patients Dr. Miller inherited and the new patients the firm contends it supplied him.
Generally speaking, non-compete provisions are permissible means to protect employers from their former employees who would use proprietary or other confidential business information to compete against them. See, e.g., Hopper v. All Pet Animal Clinic, Inc., 861 P.2d 531, 540 (Wyo.1993). And medical services firms, particularly those providing specialized care, generally have protectable interests in referral sources. Valley Med. Specialists v. Farber, 194 Ariz. 363, 982 P.2d 1277, 1284 (1999) (citing Medical Specialists, Inc. v. Sleweon, 652 N.E.2d 517, 523 (Ind.Ct.App.1995)); Weber v. Tillman, 259 Kan. 457, 913 P.2d 84, 91 (1996); Ballesteros v. Johnson, 812 S.W.2d 217, 223 (Mo.Ct.App.1991). An employer also has a protectable interest in the customer relationships its former employee established and/or nurtured while employed by the employer and is entitled to protect itself from the risk that a former employee might appropriate customers by taking unfair advantage of the contacts developed while working for the employer. Freiburger, 141 Idaho at 420, 111 P.3d at 105 (quoting W.R. Grace & Co. v. Mouyal, 262 Ga. 464, 422 S.E.2d 529, 531 (1992)). This rule recognizes the general point of non-compete provisions in the first place: to protect employers from the detrimental impact of competition by employees who, but for their employment, would not have had the ability to gain a special influence over clients or customers. Id. So, these asserted interests are protectable.
Whether an employer may justify a non-competition provision based on the time, energy, and money expended in assisting the employee establish a professional practice, however, is less clear. No previous decision of this Court has squarely addressed the issue. At least two other courts have held that a physician-employer's investment in an employee may establish a protectable interest and that a non-compete provision may be a legitimate means to protect the employer's investment in its own business and goodwill. See Weber v. Tillman, 913 P.2d at 92; see also Retina Services, Ltd. v. Garoon, 182 Ill.App.3d 851, 131 Ill.Dec. 276, 538 N.E.2d 651 (1989) (medical practice is a protectable interest). But another case has cautioned that experience and skill gained by the employee during his employment cannot, by itself, justify a non-compete provision in a physician's contractthere must be something about that employment that gives the employee an unfair advantage. See Fields Found., Ltd. v. Christensen, 103 Wis.2d 465, 309 N.W.2d 125 (Ct.App.1981); see also Harlan M. Blake, Employee Agreements Not To Compete, 73 HARV. L.REV. 625, 652 (1960) (suggesting risk of future competition from employee falls to employer despite possible damage, increased by experience gained by employee). The firm may well have a protectable interest in the time, energy, and money it expended in assisting Dr. Miller develop a practice. But, several factors, discussed below but not analyzed by the district court, should inform the decision. Accordingly, this question, too, must be analyzed on remand.