Opinion
No. FBT-CV-1050291046
March 8, 2010
MEMORANDUM OF DECISION
The plaintiff, Fairfield County Bariatrics and Surgical Specialists, P.C. (hereafter referred to as FCB or the plaintiff) is a professional medical corporation having a principal office in Norwalk, Connecticut. The defendant, Timothy Ehrlich, is a licensed physician formerly employed by and a shareholder in FCB. The defendant and the two other physician-shareholders of FCB specialize in bariatrics, especially bariatric surgery. On January 1, 2006, FCB and its three physician-shareholders entered into a contract entitled "Employment Agreement" which, inter alia, permitted FCB to terminate a physician's employment for cause. The agreement also contained a covenant not to compete that was triggered by termination of a physician's employment for any reason. On November 27, 2009, FCB terminated the defendant's employment, asserting that the termination was for cause. The defendant has continued to practice bariatric surgery at St. Vincent's Medical Center in Bridgeport, Connecticut. FCB brings this action to enforce the covenant not to compete. Before the court is the plaintiff's application for a temporary injunction.
"Bariatrics is the branch of medicine that deals with the causes, prevention and treatment of obesity." (Internal quotation marks omitted.) University Hospital Services, Inc. v. Henderson, United States District Court, Civil No. 02-951 (RHK/JMM) (D.Minn. 2002).
The application was tried to the court which finds the following facts. The defendant is a 43-year-old board certified general surgeon. He was born in Summitt, New Jersey and graduated from the Louisiana State University School of Medicine in 1992. Following medical school, he completed a five-year residency program in general surgery at the LSU School of Medicine. He then practiced general and laproscopic surgery in Slidell, La. and Picayune, Miss.
Floch Surgical Associates (FSA), the predecessor professional corporation of FCB, was created in 1999 by Drs. Neil and Craig Floch, two brothers who are board certified general surgeons. FSA's office was in Norwalk, Ct. where the Flochs' father had practiced medicine for many years. In 2002, FSA decided to veer its practice toward bariatric surgery. There was a need for bariatric surgeons and bariatric surgery was, and remains, more lucrative than general surgery, which must compete for patients with a variety of specialties. The Flochs recruited the defendant to be an employee of their practice. Prior to arriving in Connecticut, the defendant completed a course in laproscopic gastric banding. In December 2002, the defendant was granted privileges at Norwalk Hospital, the only hospital FSA served at that time. He subsequently was granted privileges at St. Vincent's Hospital in Bridgeport, Ct.
In or around 2003, Craig Floch and the defendant drafted proposals for bariatric surgery centers at one or more area hospitals. One such proposal was submitted to St. Vincent's Medical Center in Bridgeport (hereafter St. Vincent's). In late 2003, St. Vincent's accepted the proposal. In January 2004, St. Vincent's opened its Bariatric Surgery Center. In 2005, St. Vincent's selected the defendant to be the director of its Bariatric Surgery Center. This was a prestigious appointment not only for the defendant but also for FSA. St. Vincent's entered into a contract with FSA to secure the defendant's services as director. The Flochs supported the St. Vincent's program and the defendant's directorship, which enabled FSA to lease office space within the hospital at a very affordable rate. FSA acquired a near monopoly on bariatric surgery at St. Vincent's.
Norwalk Hospital also accepted FSA's proposal for the creation of a bariatric center at that facility. Dr. Neil Floch became its director.
It is unclear from the evidence whether the Bariatric Center at Norwalk Hospital was established before the Bariatric Center at St. Vincent's Medical Center. The court infers that it was.
Bariatric surgery is almost always an elective procedure and involves one of several methods: gastric bypass surgery, lap band surgery or gastric sleeve. Bariatrics is more of a program than a procedure and involves profound lifestyle changes. Bariatric patients are patients for life. It is not uncommon for patients who have had bariatric surgery to require subsequent surgery to address such complications as gall bladder issues, spleen problems, bowel obstruction, lap band adjustments and post-surgical site infections. These surgeries generate additional revenue for the surgeon.
The bariatric centers at St. Vincent's and Norwalk Hospital are each designated a "Center of Excellence" by the American Society for Metabolic and Bariatric Surgery. So, too, the defendant and the Flochs are themselves designated a Center of Excellence. A principal requirement for such a designation is that the surgeon or hospital conduct least 150 bariatric surgeries per year and that the surgeon be available for emergent care issues on thirty minutes notice. In addition, the physician should devote 50 percent of his time to bariatrics. Center of Excellence designation determines whether Medicare, and some other insurances, will reimburse the hospital for bariatric surgery.
The defendant is the only member of the group who performs bariatric surgery exclusively. This is by choice. Between January 1, 2009 and November 27, 2009, alone, the defendant had performed about 350 bariatric surgeries. The Flochs continue to operate as general surgeons.
Patient seminars are an important phase of St. Vincent's, Norwalk Hospital's and FCB's bariatric programs, both for marketing purposes and potential patient education. Potential patients are often directed to the seminars by media advertising. Seminars were held at the hospital, at FCB's offices or at an area facility such as a hotel. Seminars were scheduled and sponsored by the St. Vincent's or Norwalk Hospital. That is, the hospital paid for the media that attracted patients to the seminar and paid for the seminar itself. Neil Floch, Craig Floch or the defendant would conduct the seminar. Usually, people who attend have generally already resolved to have the surgery. An individual usually chooses the surgeon who conducted the seminar to be the surgeon to perform his or her bariatric surgery. Therefore, the more seminars a physician conducts, the more surgeries he performs.
The seminars sponsored by St. Vincent's were scheduled by Vicky DiNardo, St. Vincent's Bariatric Coordinator. The defendant was Ms. DiNardo's immediate supervisor. St. Vincent's seminars were scheduled without regard to the scheduling of seminars by Norwalk Hospital. As a result, the Flochs rarely conducted a St. Vincent's sponsored seminar. The defendant conducted the great majority of St. Vincent's bariatric seminars. However, he has not participated in a Norwalk Hospital sponsored seminar since 2007. By 2009, St. Vincent's bariatric program had eclipsed Norwalk Hospital's; about 400 bariatric surgeries per year were being performed at St. Vincent's.
On January 1, 2006, FCB was created. Neil Floch, Craig Floch and the defendant each became a one-third shareholders. On January 1, 2006, the defendant and the Flochs signed identical employment agreements with FCB. The agreement was negotiated on the defendant's behalf by Attorney Paul Behling of Withers Bergman, an international law firm with offices in New Haven, Ct. Both Attorney Behling and the defendant read the employment agreement before the defendant signed it.
The agreement provided for a "compensation protocol" that prescribed how each physician would be compensated. In general, half of the total net receipts of the corporation were equally divided among the three shareholders. The remaining half was allocated to the three physicians according to the ratio of their individual contribution to the pool. Craig Floch was allocated an additional $35,000 because of the additional administrative responsibilities he assumed as president of FCB. The employment agreement also provided for the termination of a physician without cause for nine reasons. The agreement provided that for a period of two years following the termination of his employment for any reason the physician could not practice medicine or general surgery within fifteen miles of FCB's Norwalk office nor practice bariatric surgery in any hospital located in Stamford, Norwalk, Greenwich, Danbury or Bridgeport.
In 2006, FCB's principal office was in Norwalk. It also had part-time "satellite" offices, including offices in Waterford, Waterbury, Groton and Stamford. The Waterford office was leased from Dr. Thomas Sena and was used exclusively by the defendant, three Mondays per month.
The defendant attracted research contracts with outside entities. He entered into these contracts on behalf of FCB, although he was designated the principal investigator. The studies involved following patients who had received bariatric surgery. The subjects' surgery was paid for by the sponsor of the research project. The charts for these patients, including their medical histories, were available online to other physicians in the group. These projects brought in over $1 million per year in research monies. The defendant published papers and spoke at professional societies about his work.
In 2008, FCB embarked on a six-month television advertising campaign. Among the three physicians, the defendant had primary responsibility for the campaign. Each physician appeared in two commercials. The commercial directed interested viewers to call one of three "1-800" telephone numbers for a bariatric seminar. The three 1-800 numbers corresponded to one of the three physicians associated with FCB. In mid-2008, the defendant authorized Kevin Bessette, an FCB Patient Advocate and Office Manager, to work with "Marketmentors" to create a call center to handle the influx of telephone calls responding to the television ads. Eventually Bessette and Marketmentors decided, and the defendant agreed, that it was unnecessary to have three numbers and that a single 1-800 number for the call center would suffice. The number selected by Bessette and Marketmentors, however, was the number that had been assigned to the defendant. There is no evidence that the use of the 1-800 number that had been the defendant's would have resulted in him getting all or even most of the seminars. The monthly cost of the call center service was $500. While the defendant had discussed the concept of a call center with Neil Floch, Neil had not approved it nor did he know what the cost of it would be. He protested being left out of the "loop." The following month he and Craig Floch were provided with detailed reports concerning the call center.
When the defendant joined FSA in 2002, the practice was most closely associated with Norwalk Hospital. Although not required for hospital privileges, Norwalk Hospital expected its general surgeons to sign and comply with a "Trauma Call Coverage Agreement." The agreement required the physician to participate in a rotating on-call list. It also required the physician, when a trauma alert was called, to "be present in the Emergency Department . . . in accordance with the most current American College of Surgeons Guidelines for time of response . . . for a Level II Trauma designation," which was within fifteen minutes. In consideration, the physician was paid $1,500 per weekday on-call shift and $2,000 per weekend/holiday on-call shift by Norwalk Hospital. In addition, the physician could bill the patient directly for services.
The defendant had a trauma call coverage agreement with Norwalk Hospital. On April 1, 2008, the defendant received a letter from Kathleen LaVorgna, Trauma Director of Norwalk Hospital advising him that he was:
currently out of compliance with the requirements of the Trauma Service in regards to the following:
Year 2007: attendance at trauma alerts (within 15 min of notification) = 47% Criterion = 80%
1st quarter 2008: attendance at Trauma APCE = 0%
Criterion = 50% of all meetings
1st quarter 2008: attendance at weekly Trauma Rounds = 20%
Criterion = 50% of all meetings
Failure to comply with the attendance requirements will result in forfeit of your stipend. Please make every effort to attend.
The defendant was out of compliance with his Trauma Call Coverage Agreement because he chose to do bariatric surgery exclusively and to tend to his responsibilities as Director of the St. Vincent's Bariatric Surgery Center rather than complying with the agreement. For a period of time, another physician hired by FCB, Dr. Peter Ingraldi, took the defendant's trauma calls.
Although the defendant signed another Trauma Call Agreement with Norwalk Hospital, for the period August 25, 2008 to August 25, 2009, he never came into compliance with that agreement either. In September 2009, he was dropped by Norwalk Hospital in its rotation schedule for trauma call. As of the time of the hearing on FCB's application for a temporary injunction in January 2010, the defendant had not attended trauma call at Norwalk Hospital for over a year. The defendant knew that if he did not perform his Trauma Call Agreement, he would lose, and derivatively FCB would lose, the compensation provided for in that agreement and the ability to directly bill patients serviced on-call.
The defendant claims that there was a verbal agreement with the Flochs that removed his obligation to maintain active hospital privileges at Norwalk Hospital and that excused his failure to perform his Trauma Call Agreement so that he could focus his energies on St. Vincent's Bariatric Surgery Center. The court finds that there was an understanding that the defendant would focus his energies on the St. Vincent's Bariatric Surgery Center, but not to the exclusion of his providing trauma call at Norwalk Hospital.
In 2008, the opening page of FCB's website was modified by its web site designer, Studio 127, to feature the defendant's photograph among a number of rotating images. The image of the defendant identified him as "Director of Bariatric Surgery." The defendant, in fact, was not the director of bariatric surgery for FCB, though he was the director of bariatric surgery for St. Vincent's Hospital. After one of the Flochs objected to the representation it was taken down.
In early 2009, the Flochs agreed that FCB's web site needed to be completely updated and asked the defendant to assume responsibility for this task. The defendant retained Studio 127 for this purpose. Studio 127 submitted a proposal to the defendant and Bessette, together with a price for the new web site design of nearly $10,000. Bessette provided Studio 127 with FCB's Visa credit card number. The price for the new web site was somewhat less expensive than it otherwise would have been because of a relationship the defendant had with the owner of Studio 127 and because FCB's website was to be used by Studio 127 as a template. However, under FCB's bylaws, any single expenditure in excess of $5,000 required unanimous approval by the board of directors. The Flochs had not approved the expenditure nor had the defendant discussed the price or price range of the new web site with them. Moreover, the web site would require monthly maintenance costing over $4,000. Ultimately, Studio 127 was not paid and FCB did not acquire the new web site.
Eventually, FCB's office in St. Vincent's was too small to accommodate the needs of the practice. In 2009, FCB gave up its space in the hospital and leased office space in Fairfield. This would be the office out of which the defendant would primarily work. Although the Floch brothers continued to work out of the Norwalk office, the defendant removed the pictures from the walls of the waiting room in that office, without prior notice to or consent of the Floch brothers. He hung them on the walls of the waiting room of the Fairfield office.
In June 2009, after FCB had moved out of St. Vincent's Medical Center and leased office space in Fairfield, the defendant sent a letter to physicians in the area medical community. The letter was on St. Vincent's letterhead, and indicated that it was the St. Vincent's Bariatric center that was relocating. The letter states as follows:
Dear colleagues:
I want to sincerely thank everyone who has supported the Bariatric Center at St. Vincent's Medical Center since its inception in 2003. As we approach our 1000th case, Vicky DiNardo, RN, Program coordinator, and myself are excited about our future at the Medical Center.
Our new location at 1189 Post Road in the Brick Walk Promenade is in the center of Fairfield. I believe the new office offers patients better access and convenience.
Over the last two years, physician referrals have grown to about 40%, which is well above most programs nationally. However, I know we have a lot more to do to improve communications, education and awareness.
If any practice is interested in education regarding the procedures, complications or follow-up, please contact myself at [website address] Vicky at [St. Vincent's website address].
I thank you for your referrals and welcome any feedback you have.
Regards
s/
Timothy B. Ehrlich, MD, FACS
Director of Metabolic and Bariatric Surgery
St. Vincent's Medical Center
Dr. Craig Floch protested this letter to the defendant in a June 22, 2009 e-mail, writing, "Tim, the letter you sent out from St v is unacceptable and misleading as it refers to the bariatric center being changed to 1189 post rd. This is our private office, not St Vincent's bariatric center.
****
"You continue to misrepresent the group." The defendant never sent out a communication correcting the mis-impression that his letter necessarily created.
In or around May 2009, the defendant and the Flochs met with FCB's account, Josh Teplitzky. During the meeting Teplitzky was asked to mediate issues that had arisen between the defendant and the Flochs. Teplitzky's mediation was not successful.
In July 2009, the defendant began contemplating departure from FCB in the near future. He began working with Studio 127 on a personal blog, as a marketing device. The proposed blog welcomed visitors to "our new office!" referring to a Waterford office. The defendant did not seek to have FCB pay for the blog, which at that time was only conceptual. He paid Studio 127 himself and never established the blog.
In June 2009, Bessette e-mailed FCB's patients who had already had bariatric surgery, advising them that Dr. David Passaretti, a plastic surgeon who specialized in post-op bariatric patients, would be giving free consultations at FCB's Fairfield office on July 8, 2009. On October 16, 2009, Bessette e-mailed Craig Floch to advise him that Dr. Passaretti would be giving free consultations at FCB's Fairfield office on December 2, 2009. Bessette asked Floch if he approved this. Floch e-mailed back that he did not, and that Passaretti could not give free consultations at FCB's office "without a signed lease to pay rent. This is not legal." The defendant admitted in his testimony that he knew that this use by Passaretti of FCB's office was a violation of federal law. However, the defendant testified that he did not authorize Passaretti's use of the office, though he did not stop it. He agreed with Floch that the practice had to stop.
On July 30, 2009, the plaintiff's attorney sent the defendant a letter charging that he had violated his Employment Agreement "in various ways, resulting in [FCB's] contemplation of terminating your employment." The alleged violations included the letter sent out by the defendant indicating that the Bariatric Center had moved to a new location in Fairfield, when in fact it was the FCB's private corporate office that had moved; alleged efforts by the defendant to steer the more lucrative surgical procedures to himself; failure to meet the prescribed call schedule requirements at Norwalk Hospital; the defendant's inaccurate identification of himself as "Director" on FCB's website; allegedly representing to the community that the new Fairfield office was the defendant's own private office, rather than FCB's office and the defendant's bypassing of the corporate management structure in the administration of the Fairfield office. The letter concluded by stating an intention to terminate the defendant's employment and enforce the restrictive covenant in the Employment Agreement in the event the dispute could not be resolved amicably, and by recommending that the defendant's legal representative contact the plaintiff's attorney.
Even before receiving this letter, the defendant had retained an attorney. He intended to leave FCB; only the terms and timing of his departure needed to be negotiated. Between August and October 2009, the defendant and the Flochs, through their respective attorneys, negotiated over the terms of the defendant's departure. The Flochs inquired of Teplitzky as to how much FCB would lose in revenue for the balance of 2009 if the defendant left the group. Teplitzky provided them with a figure.
The amount was not disclosed to the court.
In August 2009, the defendant attended a professional conference in Paris, France, accompanied by his wife. While in France, the defendant provided his wife with a cell phone which he billed to FCB without the consent of the Flochs. As a result, FCB incurred $1,025.08 in roaming charges. The defendant admitted that he did not ask FCB for authorization to get his wife the phone.
"In wireless telecommunications, roaming is a general term that refers to the extending of connectivity service in a location that is different from the home location where the service was registered." Wikipedia.
On August 22, 2009, the defendant e-mailed Dr. Douglas Ross, chairman of St. Vincent's Department of Surgery, informing him that FCB's bookkeeper had advised him that the direct deposits of the stipend for the FCB contract with St. Vincent's had stopped earlier in the year. The defendant said he was waiting for a new contract. The prior contract had expired early in 2009, resulting in FCB not being paid its monthly stipend of over $5,400 for the defendant's services as Medical Director. Ross e-mailed back that he had asked St. Vincent's lawyer to prepare a new contract. On September 11, 2009, John D. Newman, Vice President and General Counsel of St. Vincent's Medical Center, sent the defendant a new contract through which the defendant would continue to be Medical Director of the Bariatric Surgery Program. In the cover letter, Newman asked the defendant to sign the contract and return it to him. However, the contract that Newman sent the defendant mistakenly referred to the other contracting part as FSA rather than FCB. The defendant did not sign the document. He mentioned the mistake to the chief of surgery but did nothing else to correct St. Vincent's mistake.
The defendant's e-mail began, "I just wanted to touch base with you regarding the issue of the stipend due me as Director of Bariatric Surgery." There never was a stipend due the defendant for being director. Rather, the contract was between the group and St. Vincent's Medical Center and the compensation was paid by FCB.
In September 2009, the defendant received an e-mail from an independent research firm, asking if he would participate in providing statistics monthly as to the number of lap bands he had implanted. The firm offered to pay $50 per month for this data. The defendant asked Bessette to handle the matter for him and offered to give him the $50 or to put the money into a "lunch" fund. Bessette told the research firm he would be reporting statistics only for the defendant.
In September or October 2009, the defendant inquired of St. Vincent's as to the procedure by which he could bill as a private provider.
On Thursday, October 1, 2009, the defendant e-mailed Dr. Craig Floch, informing him that he would be away until the following Thursday, that "[a]ll patients from St. Vincent's have been discharged this morning," and that "Becky [McAndrews] will be taking all calls in my absence and will notify the on call Bariatric surgeon if needed. She knows all the patients well and this should be the least burdensome route for you guys. I return after midnight Wed and will notify the service on my arrival in Westchester. I am sorry about the inconvenience my absence will cause."
Dr. Craig Floch e-mailed back on October 2, 2009, chastising the defendant for having calls go through Becky McAndrews rather than directly to the on-call doctor. Dr. Floch stated that "a Physician to Physician Sign out is the most appropriate and that had always been our Policy." Dr. Floch indicated that to have the answering service send calls to a Physician's Assistant where the service was otherwise referring calls directly to an on-call doctor would be confusing for the service and implicated liability issues. He concluded, "Tim, if you have complicated [patients] IT would be wise to Sign Out to one Of The Bariatric partners." The defendant replied by e-mail stating, inter alia, "I . . . had my attorney speak with you because I never got an adequate response about a Bariatric call schedule . . . Please do not email me ever again unless it specifically involves patient care."
On October 22, 2009, he formed his own limited liability company.
In November 2009, the defendant authorized the purchase of a filing cabinet for the Waterford office, at the suggestion of Linda MacDougal, an FCB receptionist. MacDougal met with Craig Floch and told him that one or two cabinets were being purchased for the Waterford office. The defendant saw patients in that office three times a month. The Flochs did not go to Waterford. Historically, no files were kept in that office. Rather, the files were maintained in the Fairfield office. On the Friday before the Monday when the defendant would see patients in Waterford, those files, which were red coded and numbered thirty to sixty, were pulled by one or more FCB employees, including Linda MacDougal. Over the ensuing weekend, the files would be kept in the trunk or in the house of either Erica Pallas, another FCB employee, or Becky McAndrews. On Monday morning Pallas or McAndrews would drive the files to Waterford and later return them to the Fairfield office where they would be re-filed. The defendant approved the purchase of the filing cabinet without consulting with the Flochs. After the purchase of the cabinet, the files for FCB patients were moved to Waterford. There was no evidence as to the cost of the filing cabinet. MacDougal alone maintained the keys to the cabinet. Patient information, however, was also available by computer.
In early-to mid-November 2009, negotiations between the Flochs and the defendant reached an impasse. On November 27, 2009, the plaintiff sent the defendant a letter via e-mail and certified mail terminating him for cause, effective immediately. The letter stated:
The specific facts on which such termination is based include the fact that you permitted an outside plastic surgeon to use the Corporation's medical office space to provide "consults" to his patients without the authorization of other shareholders, among numerous other violations of your Employment Agreement. Permitting other physicians to utilize the Corporation's office without entering into a legally compliant written sublease arrangement is in violation of the Federal Stark and Anti-Kickback laws. The corporation is also aware that you hosted "Botox parties" at the Corporation's Fairfield office without the consent of the other shareholders. Other actions supporting your termination include, among other things, the items identified in the letter sent to you dated July 30, 2009 . . . You have also jeopardized patient care by failing to sign patients out to the physicians on call, but rather signed patients out to physician assistants, and you have historically kept the patients treated under the research contracts secretive, resulting in other physicians in the practice being required to provide emergent care to these patients when you have been away, with little medical history being supplied by you. Most importantly, for some time now, you have conducted your own medical practice at the Fairfield location under the auspices of the Corporation's practice, wherein you have taken the most desirable employees and used the office manager in the Fairfield office to guide the best patients towards your practice for your independent financial benefit under the compensation formula. You were provided the responsibility for marketing and you used that role to self-promote, using only your patients successes, and you misrepresented yourself as the "Director" of Bariatric Surgery for the Corporation. You also wrote letters on the stationary of St. Vincent's Hospital, promoting yourself, but not the other surgeons in the Corporation that also have privileges at that hospital, including the other principals of the Corporation. You have also promoted seminars that conflicted with seminars previously scheduled for other principals of the Corporation, resulting indirect competition with the other principals of the Corporation. You have also ignored demands to equally separate seminars according to volume and location. You have proceeded with significant projects without prior discussion or consent of the other principals, including hiring employees without notifying the other principals. In general, your behavior has been supportive of yourself, but destructive to the growth of the Corporation.
The same day, Dr. Craig Floch found parts of patient files in the shredder box. Neither he nor his brother had authorized the shredding of any part of patient charts. In fact, the defendant and Bessette had previously asked the receptionist at the Fairfield office, Nicole Schreiber, to go through patient charts, to replace the folder if it was falling apart and to dispose of duplicate documents in the shredder box.
Subsequent to the defendant's termination, an information technology worker at St. Vincent's Hospital retrieved a list of the defendant's patients, and some other FCB patients, from the St. Vincent's Hospital's server at the defendant's request. The defendant sent a letter to these patients advising them that he no longer was associated with FCB, that he had a new temporary office in Trumbull, and suggesting they contact FCB to obtain their charts. The letter also told patients to direct their questions to Bessette and provided an e-mail address for Bessette and a telephone number for emergent care issues. Since his termination, the defendant has established an office in Trumbull and in Waterford, and has continued to perform bariatric surgery at St. Vincent's. Neither the Trumbull nor Waterford offices are within the area proscribed by the restrictive covenant. The Waterford office is one hour and ten minutes driving time from the defendant's home.
The defendant's LLC, Ehrlich Bariatric LLC, has six employees, all of whom had been employed by FCB at the time of the defendant's termination: Kevin Bessette, practice manager; Becky McAndrews, Physician's Assistant; Jennifer Grant, insurance coordinator; Eric Pallacs, patient advocate; Nicole Schreiber, receptionist; and Linda MacDougal, part-time receptionist.
Since his termination, the defendant has seen and billed patients at his Trumbull and Waterford offices. He has performed bariatric surgery at St. Vincent's, including four surgeries on the day the hearing commenced on the plaintiff application for a temporary injunction. He will continue to perform bariatric surgery at St. Vincent's unless enjoined not to do so.
On December 4, 2009, FCB brought this action seeking a temporary and permanent injunction, and other relief, against the defendant for his violation of the restrictive covenant in his Employment Agreement and for use of FCB's patient information. Simultaneously, the plaintiff filed an application for a temporary injunction. The application was tried to the court over a period of eight days. The court invited the parties to submit post-trial briefs. The parties initially waived the opportunity to file briefs and instead opted for oral argument.
II
Prior to the commencement of the hearing on the plaintiff's application, the defendant filed an application for a stay pending arbitration. The court denied the application on the record following oral argument and articulates its reasons for doing so now.
"[A]rbitration is a creature of contract . . . It is designed to avoid litigation and secure prompt settlement of disputes . . . [A] person can be compelled to arbitrate a dispute only if, to the extent that, and in the manner which, he has agreed so to do . . . No one can be forced to arbitrate a contract dispute who has not previously agreed to do so . . . Nussbaum v. Kimberly Timbers, Ltd., 271 Conn. 65, 72, 856 A.2d 364 (2004). The issue of whether the parties to a contract have agreed to arbitration is controlled by their intention A. Dubreuil Sons, Inc. v. Lisbon, 215 Conn. 604, 608, 577 A.2d 709 (1990). The parties' intent is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction . . . [T]he intent of the parties is to be ascertained by a fair and reasonable construction of the written words and . . . the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract . . . Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms . . ."
"Although the intention of the parties typically is a question of fact, if their intention is set forth clearly and unambiguously, it is a question of law . . ."
"As with any question of contract interpretation, we begin with the pertinent language of the agreement." State v. Philip Morris, Inc., 279 Conn. 785, 796-98, 905 A.2d 42 (2006), aff'd, 289 Conn. 633, 959 A.2d 997 (2008).
Paragraph 19 of the Employment Agreement provides in relevant part: " Arbitration. Except for the pursuit of equitable remedies by the Corporation with respect to Section 6(c), Section 7, Section 16 and Section 17, and the enforcement of the covenant set forth in Section 17, any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration . . ."
Prior to the commencement of evidence in this proceeding the defendant filed a petition with the American Arbitration Association. He argued to the court that this proceeding should be stayed because an adjudication of the plaintiff's application for a temporary injunction necessarily required the court to rule on various matters that are arbitrable. The defendant also argued that (1) under paragraph 19 of the employment agreement he has a right to obtain a declaration of his rights to practice post-termination by submission to arbitration and (2) he has an action against FCB for terminating him if the termination was not made in good faith, which is arbitrable.
Paragraph 19 contains a very broad arbitration clause. See id., 798-99; LaSalla v. Doctor's Associates, Inc., 278 Conn. 578, 581, 898 A.2d 803 (2006); International Marine Holding, Inc. v. Stauff, 44 Conn.App. 664, 668-69, 691 A.2d 1117 (1997). However, it is not unrestricted. It clearly and unambiguously excepts from those matters arbitrable the pursuit of equitable remedies with respect to paragraph 17, the paragraph which contains the restrictive covenant. See, e.g., In re Nexstar Broadcasting, Inc., Court of Appeals of Texas, Beaumont, Docket No. 09 09 00146 CV (Tex.App.-Beaumont, May 14, 2009). A temporary injunction is an equitable remedy. Heppenstall Co. v. Berkshire Chemical Co., 130 Conn. 485, 488, 35 A.2d 845 (1944); see Willie Gary LLC v. James Jackson LLC, Court of Chancery of Delaware, Docket No. Civ.A. 1781 (Del.Ch. January 10, 2006) ("Injunctions are, of course, a quintessential equitable remedy"). Notably, none of the cases submitted to the court by the defendant in support of his motion for a stay involved arbitration clauses which so clearly excepted matters from arbitration as does paragraph 19.
That the court, in the course of adjudicating the plaintiff's application for a temporary injunction, may be required to address matters which are otherwise arbitrable is no reason to abstain from hearing the application. In an application for a temporary injunction, the court will always be required to determine whether the applicant has established a reasonable probability of success on the merits at a final hearing, which hearing may be before arbitrators. To refuse to entertain an application for a temporary injunction in circumstances such as these would render the provision of the parties' contract excepting applications for equitable relief from the arbitration provision ineffectual. "In giving meaning to the language of a contract, we presume that the parties did not intend to create an absurd result." New England Savings Bank v. FTN Properties Ltd. Partnership, 32 Conn.App. 143, 145-46, 628 A.2d 30 (1993). In addition, the maxim "ut res magis valeat quam pereat" mandates that "writings should be interpreted and applied so that they have effect rather than be destroyed." O'Sullivan v. Bergenty, 214 Conn. 641, 652, 573 A.2d 729 (1990). For these reasons, the defendant's motion for stay was denied as to these proceedings.
In oral argument on his motion for a stay, the defendant expressed a concern that the court's rulings in connection with the plaintiff's application for a temporary injunction would be res judicata and would be used to collaterally estop the defendant from litigating his claims in arbitration. Neither under the Commercial Arbitration Rules of the American Arbitration Association, which has jurisdiction of arbitrable matters under paragraph 19 of the employment agreement, nor under the rules of substantive law is a decision on a temporary injunction res judicata. Stamford v. Kovac, 228 Conn. 95, 99, 634 A.2d 897 (1993); Olcott v. Pendleton, 128 Conn. 292, 296, 22 A.2d 633 (1941); Byars v. Waterbury, Superior Court, complex litigation docket at Waterbury, Docket No. X01 CV99 0152489S (Jul. 21, 2000, Hodgson, J.) ( 27 Conn. L. Rptr. 613).
"That the thing may rather have effect than be destroyed."
III A.
"A temporary injunction is a preliminary order of court, granted at the outset or during the pendency of an action, forbidding the performance of the threatened acts described in the original complaint until the rights of the parties respecting them shall have been finally determined by the court." Deming v. Bradstreet, 85 Conn. 650, 659, 84 A. 116 (1912). "The principal purpose of such an injunction is to preserve the status quo until the rights of the parties can be finally determined after a hearing on the merits." Olcott v. Pendleton, 128 Conn. 292, 295, 22 A.2d 633 (1941). It is well settled, however, that the status quo which a temporary injunction seeks to preserve may be the status quo ante. Gattoni v. Zaccaro, 52 Conn.App. 274, 276, 727 A.2d 706 (1999); see Mele v. High Standard Mfg. Co., 13 Conn.Sup. 47, 50-51 (1944). "In any event, the granting of a temporary injunction in this matter lies within the sound discretion of the court." Covenant Radio Corporation v. Ten Eighty Corporation, 35 Conn.Sup. 1, 3-4, 390 A.2d 949 (1977). "In order for the court to issue a temporary injunction, the applicant must establish (1) a reasonable probability of success on the merits at a final hearing; (2) irreparable injury unless the injunction is granted; and (3) no adequate remedy at law . . . If irreparable injury is demonstrated, the trial court ought to issue the temporary injunction, unless it is clear that the plaintiff will not prevail at the trial on the merits. Olcott v. Pendleton, [ supra, 128 Conn. 295]." Danso v. University of Connecticut, 50 Conn.Sup. 256, 261-62, 919 A.2d 1100 (2007) [ 42 Conn. L. Rptr. 697]. Whether the plaintiff must establish irreparable harm and no adequate remedy at law where it is seeking to enforce a restrictive covenant is addressed infra.
The first issue the court must address is whether the plaintiff has shown a reasonable probability that it is likely to prevail on the merits of its case after a trial on its case-in-chief.
B.
Preliminarily, the defendant argues that his employment was not properly terminated because the shareholders meeting at which the vote was taken to terminate him was not properly noticed, in accordance with the corporation's by-laws.
Paragraph 13(c) of the defendant's employment agreement provides: "The decision to terminate the Physician for cause must be made by the affirmative vote of all of the shareholders of the Corporation except for Physician."
Article II paragraph 4 of the Amended and Restated Bylaws of FCB provides: " Notice of Annual or Special Meeting. A notice setting forth the day, hour and place of each annual or special meeting of shareholders shall be mailed, postage prepaid, to each shareholder of record, at his or her last known post office address as the same appears on the stock records of the Corporation, or the notice shall be left with each such shareholder, or at the shareholder's residence or usual place of business, not less than ten (10) nor more than sixty (60) days before such annual or special meeting. In the case of a special meeting, the notice shall also state the general purpose thereof."
The decision to terminate the defendant was made by Craig and Neil Floch. No notice as required by the bylaws was provided to any of the three shareholders. The defendant claims that this lack of notice renders his termination a nullity.
For a vote of corporate shareholders to be valid as the act of the corporation, the meeting at which it was passed must have been warned in the manner prescribed by the charter or by-laws of the corporation. Stow v. Wyse, 7 Conn. 214, 219 (1828). It was essential that the plaintiff prove that in terminating the defendant, it complied with its bylaws. Hopewell Baptist Church v. Craig, 143 Conn. 593, 598, 124 A.2d 220 (1956).
Article II paragraph 5 of the FCB's Bylaws provides: " Waiver of Notice. Notice of any meeting of shareholders may be waived in writing by any shareholder either before or after the time stated therein and if any shareholder present at a meeting does not protest, prior to or at the commencement of the meeting, the lack of proper notice, such shareholder shall be deemed to have waived notice of such meeting." With respect to the Flochs, the evidence is that they participated in a meeting or telephone conference between themselves and have obviously never objected to a lack of notice. The court finds that the Flochs waived the absence of notice to themselves.
This is the law even in the absence of a bylaw so providing. General Statutes § 33-700(b) states: "A shareholder's attendance at a meeting: (1) waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; (2) waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented." General Statutes § 33-700, although codified in chapter 601 of the General Statutes, governing Business Corporations generally, is made applicable to professional corporations such as the plaintiff; General Statutes § 33-182a(2); by virtue of General Statutes § 33-182i. See Fink v. Golenbock, 238 Conn. 183, 201 n. 16, 680 A.2d 1243 (1996).
As for the lack of notice to the defendant, paragraph 13(c) of the Employment Agreement provides: "The decision to terminate the Physician for cause must be made by the affirmative vote of all of the shareholders of the Corporation except for Physician." This can only be understood as meaning that the physician whose termination is being voted on is not entitled to a vote. Moreover, General Statutes § 33-699(a), applicable to this professional corporation by virtue of General Statutes § 33-182(a)(2), provides: "A corporation shall notify shareholders of the date, time and place of each annual and special shareholders' meeting no fewer than ten nor more than sixty days before the meeting date. Unless sections 33-600 to 33-998, inclusive, or the certificate of incorporation requires otherwise, the corporation is required to give notice only to shareholders entitled to vote at the meeting." (Emphasis added.) Since, under the terms of his employment agreement, the defendant was not entitled to a vote on his termination, he was not entitled to notice of the special shareholders' meeting at which that vote was taken.
C.
The plaintiff's November 27, 2009 letter to the defendant stated that his employment with FCB was being terminated for cause. Terminations for cause are governed by Paragraph 13 of the Employment Agreement. Before addressing the claims of the parties, the court takes note of the rules governing the interpretation of contracts. "Although ordinarily the question of contract interpretation, being a question of the parties' intent, is a question of fact . . . [w]here there is definitive contract language, the determination of what the parties intended by their contractual commitments is a question of law . . ."
Paragraph 13, entitled "Termination by Corporation for Cause," provides:
(a) The Physician's employment may be terminated by the Corporation for cause at any time upon notice from the Corporation to the Physician, which notice shall set forth the specific facts on which such termination is based.
(b) For the purposes of this Agreement, `cause' shall be limited to: (i) revocation, suspension or restriction of the Physician's license to practice medicine in the State of Connecticut, (ii) the withdrawal or suspension of the Physician's license to dispense narcotic drugs, (iii) the failure of the Physician to maintain hospital privileges . . . (iv) a finding by any professional society . . . that the Physician has engaged in professional misconduct or committed a serious violation of the ethical principles applicable to the profession; (v) a conviction of a felony or of any crime involving a breach of medical ethics or moral turpitude; (vi) the withholding of any professional fees or other revenues belonging to the Corporation, or the commission of any act of fraud or dishonesty that materially damages the Corporation; (vii) a material violation of any law relating to the practice of medicine including but not limited to any law relating to Medicare/Medicaid fraud and abuse of prohibitions on physician referrals; (viii) failure to comply with any rehabilitation program . . . (ix) a material breach of this Agreement by the Physician including, but not limited to, a failure to meet the hours of practice requirement, the call schedule requirement or any other failure to perform the material duties of the Physician hereunder.
(c) The decision to terminate the Physician for cause must be made by the affirmative vote of all of the shareholders of the Corporation except for Physician.
(d) The Physician hereby acknowledges that a decision to terminate the Physician's employment for cause may be subjective in nature, and that in exercising its discretion, the Board of Directors must take into account the interests of the patients, the Corporation's medical practice, as well as the interests of the shareholders and the other employees of the Corporation. The Physician agrees that the Physician will not have any causes of action against the Corporation to terminate the Physician for cause provided that the decision to terminate the Physician's employment was made by the Corporation in good faith. In the event that the Physician disagrees with the Corporation's determination, the Physician may submit the matter to arbitration in accordance with Section 19 below. The Physician shall have the burden of proving that such determination was not made in good faith.
"It is the general rule that a contract is to be interpreted according to the intent expressed in its language and not by an intent the court may believe existed in the minds of the parties . . . When the intention conveyed by the terms of an agreement is clear and unambiguous, there is no room for construction . . . [A] court cannot import into [an] agreement a different provision nor can the construction of the agreement be changed to vary the express limitations of its terms . . ."
"The court will not torture words to impart ambiguity where ordinary meaning leaves no room for ambiguity . . . The circumstances surrounding the making of the contract, the purposes which the parties sought to accomplish and their motives cannot prove an intent contrary to the plain meaning of the language used . . . It is axiomatic that a party is entitled to rely upon its written contract as the final integration of its rights and duties . . . Similarly, any ambiguity in a contract must emanate from the language used in the contract rather than from one party's subjective perception of the terms." (Citations omitted; internal quotation marks omitted.) Levine v. Massey, 232 Conn. 272, 277-80, 654 A.2d 737 (1995).
The reasons that constitute cause for termination are expressly "limited" in paragraph 13(b) to nine reasons. The first eight are specific reasons. The ninth is more general, "a material breach of this Agreement by the Physician including, but not limited to, a failure to meet the hours of practice requirement, the call schedule requirement or any other failure to perform the material duties of a Physician hereunder."
At oral argument, the plaintiff suggested that its determination to terminate the defendant's employment could be based on good faith alone. The court disagrees. The contract does not state that termination may be based on FCB's good faith belief that grounds for termination exist or that good faith insulates the plaintiff's termination decision from judicial review. Rather, the contract states that "the [p]hysician will not have any causes of action" where the decision to terminate was made in good faith. The defendant is not here asserting a cause of action against FCB. Rather, it is FCB that has invoked the jurisdiction of the court and seeks relief, and extraordinary relief at that. Good faith is relevant only where the terminated physician seeks to assert a cause of action against FCB. Accordingly, the plaintiff cannot rest on its good faith but must show a reasonable likelihood that it properly terminated the defendant's employment for cause.
The plaintiff also points to the provision in paragraph 13(d) "that a decision to terminate the Physician's employment for cause may be subjective in nature . . ." Carried to its logical conclusion, permitting this clause to trump the rest of the contract would render illusory the provisions of paragraph 13(b) providing that "`cause' shall be limited to" the enumerated items. "The contract must be viewed in its entirety, with each provision read in light of the other provisions . . . and every provision must be given effect if it is possible to do so." United Illuminating Co. v. Wisvest-Connecticut, LLC, 259 Conn. 665, 671, 791 A.2d 546 (2002). "The law of contract interpretation militates against interpreting a contract in a way that renders a provision superfluous." Id., 674. Again, the contract does not say that a decision to terminate for cause is insulated from judicial review if the plaintiff subjectively believed there was cause to terminate. Clearly, a subjective determination lends itself more to certain claims of cause than it does to others. Construing the contract reasonably and as a whole and giving effect to each provision, the court concludes that a subjective determination may inform a decision to terminate based, for example, on a material breach of the Agreement's provision that the physician "avoid all personal acts, habits and usages which might injure in any way . . . the professional or personal reputation of the Corporation," (paragraph 5) but not, for example, a decision to terminate based on the revocation of the physician's license to practice medicine, the withdrawal or suspension of his license to dispense narcotic drugs, his failure maintain hospital privileges, a finding by a professional society that the physician has engaged in professional misconduct or conviction of a felony.
The plaintiff also argues refers the court to Owens v. New Britain General Hospital, 229 Conn. 592, 643 A.2d 233 (1994), which held that courts need only apply a substantial compliance rather than a strict compliance test in assessing whether a hospital has sufficiently complied with its medical staff bylaws in terminating a physician's medical staff privileges. Owens, however, is distinguishable. First, Owens pertained to claims of procedural deficiencies in the termination of a physicians' staff privileges; id., 601 n. 22 (adequate notice of charges, fair opportunity to respond to the charges, deprivation of due process by the cumulative effect of several procedural violations); rather than whether there is cause to terminate under the terms of a written contract. Second, Owens dealt with a hospital terminating medical staff privileges for medical proficiency reasons. The instant case deals with a private medical practice terminating a shareholder-employee for non-medical competence reasons. The important distinction is not between public and private; id., 605 — the hospital in Owens was private, id., 603 — but is grounded in the expertise necessary to make the decision. As the court in Owens stated: "There must . . . be concern . . . for unnecessary judicial interference with those whose duty it is to make the decisions and who have the necessary expertise with which to act. Courts are generally unwilling to substitute their judgment on the merits for the professional judgment of medical and hospital officials with superior qualifications to make such decisions . . . In so specialized and sensitive an activity as governing a hospital, courts are well advised to defer to those with the duty to govern . . . Although a hospital is bound by its bylaws, judicial review of a hospital board's decision to suspend a physician's privileges focuses on the reasonableness of the action taken in relation to the interests of the parties and the public . . ."
"The special nature of the proceedings involved in matters relating to determinations of the professional competence and capability of a physician to practice medicine in a hospital setting [requires] . . . that decisions concerning whether a physician is entitled to staff privileges should be left to the expertise of the hospital's staff and administration. The exercise of their discretion should be subject only to limited judicial surveillance to determine if the hospital substantially complied with its applicable bylaw procedures. This conclusion is consistent with the position held by the majority of the jurisdictions." (Citations omitted; internal quotation marks omitted.) Id., 606-07. Since the instant case does not primarily implicate procedural questions in the defendant's termination nor medical proficiency reasons, Owens is inapposite.
The plaintiff also cites to Rosenfield v. Metals Selling Corp., 229 Conn. 771, 643 A.2d 1253 (1994), in support of its argument that the court should afford deference to its decision to terminate the defendant's employment. In Rosenfield, the court had occasion to recognize and "determine the scope of the business judgment rule in Connecticut." Id., 784-85. Said the court, "[ t]he business judgment rule insulates corporate directors from liability for business decisions within the power of the corporation for which the directors have exercised due care . . . [T]he business judgment doctrine [is] a rule of law that insulates business decisions from most forms of review. Courts recognize that managers have both better information and better incentives than they. The press of market forces . . . will more effectively serve the interests of all participants than will an error-prone judicial process . . . The business judgment rule expresses a sensible policy of judicial noninterference with business decisions made in circumstances free from serious conflicts of interest between management, which makes the decisions, and the corporation's shareholders. Not only do businessmen know more about business than judges do, but competition in the product and labor markets and in the market for corporate control provides sufficient punishment for businessmen who commit more than their share of business mistakes . . . [T]he fact is that liability is rarely imposed upon corporate directors or officers simply for bad judgment and this reluctance to impose liability for unsuccessful business decisions has been doctrinally labeled the business judgment rule . . . Shareholders challenging the wisdom of a business decision taken by management must overcome the business judgment rule. For efficiency reasons, corporate decision makers should be permitted to act decisively and with relative freedom from a judge's or jury's subsequent second questioning. It is desirable to encourage directors and officers to enter new markets, develop new products, innovate, and take other business risks . . ." (Citations omitted; emphasis added; internal quotation marks omitted.) Id., 786-88.
It has been generally held that the doctrine is inapplicable where the issue is whether the corporation, as a party to a contract, has properly complied with the terms of a contract vis-a-vis the other contracting party. See Burdine v. Teleflex Inc., United States District Court, Docket No. 4 07CV064 (N.D.Miss. September 22, 2009); In re Classica Group, United States Bankruptcy Court, Docket No. 04 19875, (Bkrtcy. D.N.J. Sept. 29, 2006) ("Breach of contract is a common law claim and is not the subject of a business judgment rule analysis, which focuses strictly on matters of corporate governance"); Dundy v. Hanover River House, Supreme Court of the State of New York, Docket No. 108394 06 (Sup Ct., NY Co. December 1, 2008) (collecting New York cases); Franklin Capital Assoc. v. Almost Family, 194 S.W.3d 392, 401 (Tenn.App. 2005); Willmschen v. Trinity Lakes Impr. Assn., 362 Ill.App.3d 546, 550, 298 Ill.Dec. 840, 840 N.E.2d 1275 (2005) ("the business judgment rule comes into play where mismanagement is the gravamen of the cause of action"); Whalen v. 50 Sutton Place S. Owners, Inc., 276 App.Div.2d 356, 714 N.Y.S.2d 269 (2000) (business judgment rule not a defense to a breach of contract claim"); Dinicu v. Groff Studios Corp., 257 App.Div.2d 218, 690 N.Y.S.2d 220 (1999). Since the posture of case before the court is not one in which anyone is seeking to impose liability on corporate directors for business decisions, the business judgment rule is inapplicable.
D.
The plaintiff argues that it properly terminated the defendant's employment for cause because the defendant (1) materially breached the contract by (a) not faithfully devoting his entire time, attention and energy to FCB's business, (b) channeled St. Vincent's Bariatric Center's seminars to himself, promoting himself over the other FCB physicians, (c) commissioned the establishment of a personal blog, (d) while in Europe, acquired a cell phone for his wife at FCB's expense on which she incurred over a thousand dollars in roving fees, (e) made preparations to leave the practice in the latter half of 2009, (f) failed to take his share of bariatric weekend call and did not adequately communicate with Dr. Craig Floch, (2) committed a violation of the law relating to the practice of medicine, (3) withheld professional fees or other revenues belonging to FCB, (4) failed to meaningfully maintain hospital privileges, and (5) materially breached the contract by failing to meet the call schedule requirement.
The defendant argues that the plaintiff's claims of good cause for his termination are petty and pretextual. He argues that he devoted his entire time and energy to FCB, working "like a Trojan," increased FCB's revenues so substantially that two more physicians had to be added to the practice, and generated millions of dollars of revenue by the research studies he conducted. The defendant further argues that there is no evidence that he failed to maintain hospital privileges, nor that he in fact diverted money from a research project, that the failure to mention FCB in the letter to the medical community announcing the move from St. Vincent's to Fairfield was an oversight and de minimis, that his inability to take trauma call at Norwalk Hospital was due to the responsibilities assumed by him for the benefit of FCB, including responsibility for web site design, call center, media, research programs as well as his responsibilities as Director of St. Vincent's Bariatric Center and the large number of surgeries he performed there, all of which belie that he was not faithful to the practice. The defendant observes that there is no connection between taking trauma call and maintaining privileges at Norwalk Hospital, nor evidence of pecuniary loss to FCB as a result of his inability to take trauma call. The defendant also observes that the plaintiff's claim that the defendant committed a violation of the law relating to the practice of medicine is unanalyzed and unproven. The court addresses these allegations seriatim.
During the trial the court opined that in seeking to prove that the defendant was properly terminated for cause the plaintiff was limited to the charges in its letter of termination. On reconsideration, that is generally not the law. See Restatement (Second), Contracts § 248 comment b; Restatement (Second), Contracts § 237, comment c, illustration 8; Measday v. Kwik-Kopy Corp., 713 F.2d 118, 126 n. 6 (5th Cir. 1983). Whether the notice requirement in paragraph 13(a) of the Employment Agreement modifies this rule has not been raised by the parties.
The plaintiff alleged in its July 30, 2009 letter that the defendant "procured and executed contracts for research and/or studies in your individual name as opposed to the name of the Corporation" The plaintiff alleges that this constituted a violation of paragraph 4(a) of the contract, which provides, inter alia: "The Physician agrees to serve the Corporation faithfully and to the best of his ability and shall devote his entire time, attention and energy to the business of the Corporation during its regular office hours . . ." "Language must be given its ordinary meaning unless a technical or special meaning is clearly Intended." Trumbull Electric Mfg. Co. v. John Cooke Co., 130 Conn. 12, 16, 31 A.2d 393 (1943). "Faithfully" means "loyally." Webster's Third New International Dictionary. The only evidence is that the defendant was named as a principal researcher on research agreements, which he was. No research contracts were offered in evidence. The court finds that this allegation was not proved.
The plaintiff alleges that the defendant issued a letter as the Director of Metabolic and Bariatric Surgery of St. Vincent's Medical Center, advising the medical community that St. Vincent's Bariatric Center's new location was 1189 Post Road. Specifically, the second paragraph of the letter states: "Our new location at 1189 Post Road in the Brick Walk Promenade is in the center of Fairfield." After referring in the prior paragraph to the "Bariatric Center at St. Vincent's," this sentence is clearly misleading. In fact, the new location was FCB's, not St. Vincent's. However, the misleading reference was not shown to be anything but innocuous. It does not fall within any of the enumerated items that may give rise to termination for cause.
The plaintiff also alleged in its July 30, 2009 letter to the defendant: "[Y]ou are directing the more lucrative surgical procedures to yourself, thereby generating more income to yourself . . . You appear to be engaging in similar preferential treatment in regard to your self-promotion through seminars, rather than promoting the Corporation."
Seminars sponsored by St. Vincent's were scheduled by Vicky DiNardo, who reported to the defendant. The defendant took the lion's share of these seminars. The court infers that there was an understanding between him and DiNardo that he would do so. The defendant is an unabashed self-promoter, possessed of a healthy ego. These qualities are not proscribed by his employment agreement. Intertwined with his self-promotion and egotism are characteristics of initiative and enterprise, qualities the Flochs no doubt recognized when they agreed that he would be one-third owner of FCB. It is also true, however, that the defendant closely identified himself professionally and financially with the St. Vincent's Bariatric Center, of which he was director. He viewed himself, and the St. Vincent's Bariatric Center, as being in competition with others bariatric centers, particularly Norwalk Hospital's. This was an additional irritant in his relationship with the Flochs, whose principal long-time association was with Norwalk Hospital. St. Vincent's and Norwalk Hospital, in fact, do compete for bariatric patients. The defendant referred all of his patients to St. Vincent's. He candidly testified that he was "trying to get as many patients at St. Vincent's. I really could care less about Norwalk Hospital." However, St. Vincent's Bariatric Center was not in competition with FCB. Indeed, as the defendant grew the St. Vincent's Bariatric Center, he also grew FCB's gross income. The court finds that the plaintiff has not proved that the defendant's taking most of the St. Vincent's sponsored bariatric seminars was a material breach of any provision of the employment agreement that could give rise to a termination of the defendant for cause.
The plaintiff claims that the defendant violated paragraph 13(b)(vii) which provides that "a material violation of any law relating to the practice of medicine including but not limited to any law relating to Medicare/Medicaid fraud and abuse or prohibitions on physician referrals" is cause for termination of employment. This claim relates to FCB's permitting Dr. Passaretti to use its offices gratis for plastic surgery consultations. The plaintiff argues that the defendant admitted this violation in his testimony. The defendant protests that this claim was not proven and is unanalyzed. He argues that he did not initiate or encourage Passaretti's visits to FCB's offices, which had originated in its Norwalk office, but was "passive" in the matter.
First, the record reflects that the defendant admitted only that Passaretti's visits to FCB's office, without his having a fair market lease, was a violation of law, not that he, the defendant, violated the law. Second, the court agrees with the defendant that this claim was not adequately raised and analyzed. Prior to final argument, the plaintiff did not identify to the court the statute that the defendant allegedly violated. Before the close of the evidence, the court invited the parties to file written briefs. The parties declined the invitation, opting instead for oral argument. In final argument, the plaintiff stated that the defendant had violated the Stark Law, 42 U.S.C. § 1395nn and the federal anti-kickback statute, 42 U.S.C. § 1320a-7b(b). These are not uncomplicated statutes. They consist of several thousand words each and safe harbor provisions.
For the court to adjudicate this claim with only brief mention of the statutes by the plaintiff, and no meaningful analysis, "risks having the court become an advocate in the nature of the plaintiff's co-counsel. This the court cannot do." Martinez v. Ciufetelli, Superior Court, judicial district of Fairfield, No. CV92 292068 (April 27, 1995).
However, the court observes that there is no evidence that the defendant received any remuneration from the Dr. Passaretti, an essential element of a violation of the federal anti-kickback statute. U.S. v. Gills, United States District Court, Case No. 8:07-CV-2374-T-27TBM. (M.D.Fla. Jan. 25, 2010).
The plaintiff points to post-July 30, 2009 evidence that the defendant was surreptitiously taking steps toward establishing his own practice. The defendant explored establishing his own personal bariatric blog, inquired of St. Vincent's about the procedure by which he could bill as a private provider, and, a month before he was terminated, formed his own limited liability company. The plaintiff argues that these initiatives, which were largely covert, evidence a lack of faithfulness to FCB.
Lack of faithfulness is not an explicit cause for termination under paragraph 13(b) of the Employment Agreement. Therefore, if it is grounds for termination it must fall under paragraph 13(b)(ix) — "a material breach of this Agreement by the Physician including, but not limited to, a failure to meet the hours of practice requirement, the call schedule or any other failure to perform the material duties of the Physician hereunder."
As observed earlier, paragraph 4(a) of the agreement states that "[t]he Physician agrees to serve the Corporation faithfully and to the best of his ability and shall devote his entire time, attention and energy to the business of the Corporation during its regular office hours and at any other time during the week as may from time to time be requested by the Corporation, and shall not . . . either directly or indirectly engage in the practice of medicine except on behalf of the Corporation."
The defendant never started his own blog. Until the day he was terminated, he worked full time for FCB; all of his earnings went to FCB. By July, after the unsuccessful Teplitzky mediation, he recognized that he would be separating from FCB. FCB's July 30 letter to the defendant stated it was also contemplating terminating the defendant's employment. By August, the parties were in negotiations looking toward the plaintiff's separation. The defendant's steps to prepare for becoming a solo practitioner did not evidence a failure to serve FCB faithfully. "`Even before the termination of the agency, [an agent] is entitled to make arrangements to compete, except that he cannot properly use confidential information peculiar to his employer's business and acquired therein. Thus, before the end of his employment, he can properly purchase a rival business and upon termination of employment immediately compete. He is not, however, to solicit customers for such rival business before the end of his employment nor can he properly do other similar acts in direct competition with the employer's business.' 2 Restatement (Second), Agency § 393, comment e (1958). See Parsons Mobile Products, Inc. v. Remmert, 216 Kan. 256, 531 P.2d 428, 432 (1975); B L Corp. v. Thomas Thorngren, Inc., 917 S.W.2d 674, 679 (Tenn.Ct.App. 1995) (noting that a corporate officer may prepare to compete prior to his termination from corporation); accord Bancroft-Whitney Co. v. Glen, 64 Cal.2d 327, 49 Cal. Rptr. 825, 411 P.2d 921, 935 (1966) (mere fact that an officer makes preparations to compete before he resigns his office is not sufficient to constitute breach of duty). See also 2 Restatement (Third), Agency § 8.04 (2006); 19 C.J.S., [Corporations] § 603 [2007]." (Footnotes omitted.) Connors v. Howe Elegant, LLC, Superior Court, judicial district of Ansonia-Milford, Docket No. 4003783 (Jan. 8, 2009) ( 47 Conn. L. Rptr. 107). Therefore, the court holds that the defendant's preliminary steps to establish his own practice between July 2009 — after the failed mediation by Teplitzky, FCB's July 30, 2009 threatening termination and the onset of separation negotiations — and November 2009 do not constitute a failure to serve FCB faithfully.
The plaintiff charges that the defendant hosted "Botox parties" at FCB's Fairfield office. This charge was unproven. The court finds that Botox was promoted in both the Norwalk and Fairfield offices by non-physician employees. There was no evidence that the defendant hosted Botox parties.
The plaintiff claimed in its letter of termination that the defendant "jeopardized patient care by failing to sign patients out to the physicians on call, but rather signed patients out to physician assistants." This relates to the incident of October 1, 2009, where the defendant e-mailed Dr. Craig Floch, informing him that he would be away until the following Thursday, that "[a]ll patients from St. Vincent's have been discharged this morning," and that "Becky [McAndrews] will be taking all calls in my absence and will notify the on call Bariatric surgeon if needed. She knows all the patients well and this should be the least burdensome route for you guys. I return after midnight Wed and will notify the service on my arrival in Westchester. I am sorry about the inconvenience my absence will cause."
Becky McAndrews was the defendant's physician assistant. The plaintiff has failed to adduce evidence that using her to screen calls either jeopardized patient care or violated a preexisting policy as opposed to an informal protocol of FCB.
"Most importantly," FCB claimed in its termination letter to the defendant, "for some time now, you have conducted your own medical practice at the Fairfield location under the auspices of the Corporation's practice, wherein you have taken the most desirable employees and used the office manager in the Fairfield office to guide the best patients towards your practice for your independent financial benefit under the compensation formula."
When the Fairfield office was opened, the defendant was, in effect, assigned to that office by FCB. As president of the corporation, if Dr. Craig Floch wanted to reassign employees to different offices he could have done so. There is no evidence that the defendant conducted his own medical practice at the Fairfield office nor that he used the office manager there to guide the "best" patients towards "his practice." All revenues he generated went to FCB.
The plaintiff argues that the defendant misrepresented himself as director of bariatric surgery on FCB's web site. This relates to the modification of FCB's website in 2008 by its Studio 157. As modified, the introduction of the website featured the defendant's photograph among a number of rotating images. The image of the defendant identified him as "Director of Bariatric Surgery." The defendant, in fact, was not the director of bariatric surgery for FCB, though he was the director of bariatric surgery for St. Vincent's Hospital. After one of the Flochs objected to the representation it was taken down. The defendant claims that he did not authorize these words to be on the web site. The defendant claims that he directed the web site designer to confer with Kevin Bessette. Regardless of whether the defendant authorized the legend on his image as "director of bariatric surgery," the court infers that he saw it and was aware of it. However, this matter does not come within any of the enumerated reasons for termination for cause. It did no damage and, under the test for materiality discussed infra, it clearly is not material.
Next, the plaintiff points to the defendant's acquiring a cell phone for his wife while they were in Europe and incurring roaming charges of $1,025.08 that were charged to FCB, all without the prior approval or knowledge of FCB. This was an act of dishonesty and hence a breach of the duty to serve the corporation faithfully, contained paragraph 4(a) of the Employment agreement. Although the defendant's trip to Europe was work-related, the cell phone calls were not shown to be.
If the contract simply provided that any act of dishonesty provided cause for termination, the court would find such cause on this ground. But whether this dishonesty is deemed to come under paragraph 13(b)(vi) ("the commission of any act of . . . dishonesty that materially damages the Corporation") or 13(b)(ix) (material breach), materiality is a necessary element for discharging the defendant for this reason.
Paragraph 7 of the Employment Agreement states: "During the period of his employment, upon submission of proper documentation, the Physician will be reimbursed for his reasonable and necessary expenses incurred by him pursuant to his employment hereunder. Such expenses include but are not limited to the following . . . professional entertainment and promotional expenses; home office and home telephone billing; educational expenses incurred for the purposes of maintaining or improving the Physician's professional skills . . . and all other items of reasonable and necessary professional expense incurred by the Physician in the interest of the medical practice of the Corporation." The defendant did not claim that the roaming charges incurred while he was in Europe came within this paragraph.
The court first addresses the claim under paragraph 13(b)(vi). "Material" in the context of "material damage" means "being of real importance or great consequence: SUBSTANTIAL." (Capitalization in original.) Webster's Third New Int'l Dictionary (1961) at 1392; see American Heritage Dictionary of the English Language (3d ed. 1992) at 1109 (defining "materially" to mean "[t]o a significant extent or degree; substantially"); Lewandowski v. Finkel, CT Page 6465 129 Conn. 526, 529, 29 A.2d 762 (1942) (stating that "material" is synonymous with "substantial"); accord, Vance v. Union Planters Corporation, 209 F.3d 438, 441 (5th Cir. 2000); State v. Gordon, 219 Kan. 643, 654, 549 P.2d 886 (1976); Matter of University of Minnesota, 566 N.W.2d 98, 107 (Minn. 1997); Presbyterian Church v. Eastern C. Church, 224 Ga. 61, 70, 159 S.E.2d 690 (1968); Pierson v. Hermann, 3 Ohio App.2d 398, 402, 210 N.E.2d 893 (1965); Cook v. Corbett, 251 Or. 263, 271, 446 P.2d 179 (1968). The evidence was that FCB did four to five million dollars in business in 2009. Based on the evidence, the court cannot find that a $1,025.08 cell phone bill materially damaged the corporation.
The court recognizes that there was no evidence of net profits.
The court next addresses this claim under paragraph 13(b)(ix). "In Bernstein v. Nemeyer, 213 Conn. 665, 672, 570 A.2d 164 (1990), our Supreme Court endorsed the use of the multifactor test set forth in the Restatement (Second) of Contracts . . . § 241, when determining whether a breach is material. Section 241 of the Restatement (Second) of Contracts provides: In determining whether a failure to render or to offer performance is material, the following circumstances are significant: (a) the extent to which the injured party will be deprived of the benefit which he reasonably expected; (b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived; (c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture; (d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances; [and] (e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing. Bernstein v. Nemeyer, supra, 672 n. 8; Strouth v. Pools by Murphy Sons, Inc., 79 Conn.App. 55, 60, 829 A.2d 102 (2003). The standards of materiality [are] to be applied in the light of the facts of each case in such a way as to further the purpose of securing for each party his expectation of an exchange of performances. [Section 241] therefore states circumstances, not rules, which are to be considered in determining whether a particular failure is material. 2 Restatement (Second), supra, § 241, comment (a). Strouth v. Pools by Murphy Sons, Inc., supra, 60." (Internal quotation marks omitted.) Shah v. Cover-it, Inc., 86 Conn.App. 71, 76-77, 859 A.2d 959 (2004).
As for "the extent to which the injured party will be deprived of the benefit which he reasonably expected," FCB was at most deprived of $1,025.08. With respect to "the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived," the plaintiff could easily be reimbursed by the defendant. As for "the extent to which the party failing to perform or to offer to perform will suffer forfeiture," the plaintiff terminated the defendant's employment, an extreme forfeiture. With respect to "the likelihood that the party failing to perform or to offer to perform will cure his failure," the court infers that if the defendant did not pay or reimburse FCB he would have no difficulty doing so. Finally, as for "the extent to which the behavior of the party failing to perform . . . comports with standards of good faith and fair dealing," the court finds that the defendant's attempt to foist the roaming charges on FCB was not honest and betrayed a lack of good faith. On the other hand, viewing this incident in the context of the facts of the case, as the Restatement comment counsels, the court is mindful that it was isolated in the sense that there is no other evidence of the defendant using FCB funds for his personal or family use.
The evidence is unclear as to whether FCB actually paid this bill.
The court need not resolve whether this default by the defendant would give rise to cause for his termination because another default clearly does.
Under paragraph 13(b)(ix) of the Employment Agreement, it is cause for termination if there is "a material breach of this Agreement by the physician including, but not limited to, a failure to meet the hours of practice requirement, the call schedule requirement or any other failure to perform the material duties of the Physician hereunder." (Emphasis added.)
The term "the call schedule requirement" is not defined in the agreement and has no fixed meaning. It is ambiguous as to whether it relates to the call schedule of the group with its patients or the call schedule of a particular hospital. "Extrinsic evidence is always admissible, however, to explain an ambiguity appearing in the instrument . . . When the language of a contract is ambiguous, the determination of the parties' intent is a question of fact." Isham v. Isham, 292 Conn. 170, 181, 972 A.2d 228 (2009). However, from the evidence, the court is satisfied that the term "the call schedule requirement" refers to the trauma call schedule of Norwalk Hospital, pursuant to its trauma call agreement with its participating physicians. Interpreting the term "call schedule requirement" in connection with the schedule established by the hospital, rather than by FCB, also accords with the most frequent use of that term in case law. While entering into a trauma call agreement with Norwalk Hospital was not an explicit requirement of maintaining privileges there, it was expected. It was, from the hospital community's perspective, good citizenship. Only one physician was identified at trial as having privileges but not a trauma call agreement with Norwalk Hospital; that physician, the court finds, was the exception, not the rule.
See, e.g., D'Souza-Kamath v. Cloud County Health Cent., United States Court of Appeals, Docket No. 09 3126 (10th Cir. February 2, 2010); Hanna v. Secretary of the Army, 513 F.3d 4, 7 (1st Cir. 2008); Konik v. Champlain Valley Physicians Hosp., 733 F.2d 1007, 1010 (2nd Cir. 1984) (call schedule for emergency room anesthesiologists); Khoury v. Group Health Plan, Inc., United States District Court, Civ. No. 08 973 (D.Minn. Sept. 2, 2009) (call schedule of HMO's cardiology department); Tuli v. Brigham Women's Hospital, Inc., 566 F.Sup.2d 32, 39 n. 10 (D.Mass. 2008); Pierson v. Orlando Regional Healthcare Systems, United States District Court, Docket No. 6 08 cv 466 Orl 28GJK (M.D.Fla. July 13, 2009) (trauma and emergency call schedule of private hospital with private physician); Blackstone v. Massachusetts Mutual Life Insurance Co., United States District Court, Docket No. 4 04CV 134 R (W.D.Ky. January 29, 2007); Gianetti v. Norwalk Hospital, Superior Court, judicial district of Fairfield, Docket No. CV84 02143 40 (Sept. 9, 1999, Gormely, J.) ("on call" schedule for the emergency room), aff'd, 266 Conn. 544, 833 A.2d 891 (2003); Bansal v. Mt. Carmel Health Sys., Inc., Court of Appeals of Ohio, Docket No. 09AP 351 (Ohio App. Dec. 24, 2009) ("call schedule for unassigned emergency room patients"); QHG of Springdale, Inc. v. Archer, Court of Appeals of Arkansas, Docket No. CA 07 1115, 2009 (Ark.App. 692 October 21, 2009) (on-call schedule of hospital employee); Deane v. Mount Sinai Hospital, Supreme Court of the State of New York, Docket No. 114984 07 (Sup Ct., NY Co. August 27, 2009) (hospital's weekend on-call schedule); Farlow v. Harris Meth. Ft. Worth Hospital, 284 S.W.3d 903 (Tex.App. 2009) (on-call schedule of private physician with hospital for emergency room services); D'Souza-Klamath v. Cloud County Health Center, Inc., United States District Court, Case No. 07 4031 KGS (D.Kan. March 31, 2009); Sternberg v. Nanticoke Memorial Hospital, Superior Court of Delaware, Docket No. 07C 10 011 THG (Del.Super. March 18, 2009); Cooper v. Frankford Health Care System, Inc., 960 A.2d 134 (Pa.Super. 2008); Pisharodi v. Six, Court of Appeals of Texas, Docket No. 13 07 019 CV (Tex.App.-Corpus Christi Aug. 7, 2008); Feeney v. Schroeter, Supreme Court of the State of New York, Docket No. 0012073 2005 (Sup.Ct., Suffolk Co. January 10, 2008); Curtsinger v. HCA, Inc., Court of Appeals of Tennessee, Docket No. M2006 00590 COA R3 CV (Tenn.App. April 27, 2007); Shepard v. Beck, 154 P.3d 982, 987 (Wyo. 2007); Orthopedics Sports Medicine, Inc. v. Stover, Court of Appeals of Ohio, Docket No. 2007 Ohio 899 (Ohio App. 3 Dist. March 5, 2007); Brown v. Bailey, 210 S.W.3d 397, 402 (Mo.App. 2006); Muenster Hosp. District v. Carter, 216 S.W.3d 500, 502 (Tex.App. 2007).
Moreover, viewing the contract in its entirety and construing its terms in view of the language used, and the purposes and circumstances of the parties, the court finds that a failure to meet the call schedule requirement is itself a material breach of the agreement. Paragraph 13(b)(ix) provides that a material breach, "including" the failure to meet the call schedule requirement, is cause for termination. Where a contract stipulates that a particular default is a material breach, the court need not engage in further analysis of the matter. See Mining Investment Group v. Roberts, 217 Ariz. 635, 639, 177 P.3d 1207 (App. 2008); Heier's Trucking v. Waupaca County, Court of Appeals of Wisconsin, Docket No. 97 1885 (Wis.App. Sept. 10, 1998). While the word "including" can be ambiguous, insofar as it can be a word of either limitation or enlargement; State v. DeFrancesco, 235 Conn. 426, 435-36, 668 A.2d 348 (1995); at the very least it means that those items listed are part of the component whole. See Webster's Third New International Dictionary.
That a failure to meet the call schedule requirement of Norwalk Hospital was a material breach makes sense in light of the circumstances of the parties at the time they entered into the contract. Gold v. Connecticut Home Therapeutics, Inc., 37 Conn.App. 852, 855, 658 A.2d 596 (1995) (intention as of time contract entered into governs). In 2006, as now, trauma call was a source of immediate revenue and new patients. While the defendant intended to focus exclusively on bariatrics, the Flochs intended to continue as general surgeons at the hospital at which they and their father had long been affiliated. As stated supra, trauma call was a component of good hospital citizenship. Trauma call was also a considerable burden. A physician covering "first call" was required to respond within fifteen minutes of notice of a trauma alert. As a practical matter, this required the physician to remain in, or very close to the hospital while on call. If the defendant refused trauma call, another physician had to cover that call assignment. It is significant that the only other failure specifically included as a material breach is "a failure to meet the hours of practice requirement." Nothing could be a more fundamental breach than not complying with this requirement, i.e., not showing up for work. The parties' evident intention was that a failure to meet the call schedule requirement was as egregious as a failure to meet the hours of practice requirement. Both were material breaches.
Paragraph 4(a) of the Employment Agreement provides in pertinent part: "The Physician . . . shall devote his entire time, attention and energy to the business of the Corporation during its regular office hours and at any other time during the week as may from time to time be requested by the Corporation . . ."
Finally, the court finds that the defendant, in fact, failed to meet the call schedule requirement. As of the time of his termination, he had not tended to trauma call at Norwalk Hospital call for over a year. This was not the result of oversight; the defendant testified that he chose to do bariatric surgery and tend to his duties as director at St. Vincent's Medical Center rather than perform trauma call.
In summary, the evidence established that the defendant is an ambitious, enterprising, self-promoting surgeon, possessed of considerable skill, industry, ego and hubris. Having been largely responsible for the creation of the St. Vincent's Bariatric Center, he closely identified himself professionally with it. He did take the bulk of St. Vincent's bariatric seminars, resulting in his getting a large number of patients, and income. In his hubris, he drafted a misleading communication advising the medical community that St. Vincent's Bariatric Center had relocated to Fairfield when it was FCB's office in St. Vincent's Medical Center that had relocated. He also permitted the FCB website to identify him as "director of bariatric surgery" without the qualifying words "of St. Vincent's Bariatric Center." He coopted pictures on the waiting room wall of FCB's Norwalk office and had them placed on the waiting room walls of FCB's Fairfield office, where he worked.
None of these issues, however, was a violation of one of the explicitly "limited" reasons for a termination for cause in paragraph 13(b) of the Employment Agreement. None was a material breach of that Agreement. Nor was there a failure to "faithfully" serve FCB. That adverb cannot be so magnified as to render the defendant's various acts of self-promotion and hubris cause of termination when every dollar he earned was paid to FCB. "It is axiomatic that a party is entitled to rely upon its written contract as the final integration of its rights and duties." Zullo v. Smith, 179 Conn. 596, 601, 427 A.2d 409 (1983). The court agrees with the defendant insofar as several of the grounds relied on by the plaintiff for termination were pretextual, ascribable to events in 2009 when the parties' relationship was rapidly deteriorating and when the plaintiff was trolling for grounds to terminate a difficult business partner that fit the limited reasons available in the contract.
What the defendant could not do was to ignore his obligation to meet the Norwalk Hospital trauma call schedule, which was clearly a ground for termination. The court finds that the plaintiff has proved that it is likely to prevail at the trial of its case-in-chief on the ground that the defendant's employment was properly terminated for cause, specifically, for failure to meet the call schedule requirement.
IV
The plaintiff seeks to enforce a restrictive covenant in the nature of a covenant not to compete. The covenant, which is contained in paragraph 17 of the Employment Agreement, provides in relevant part: "The Physician agrees that, for a period of two (2) years following the termination of his employment with the Corporation for any reason (the "Restrictive Period"), the Physician shall not engage in the practice of medicine or general surgery within a fifteen (15) mile radius of the Corporation's Norwalk, Connecticut office, nor practice Bariatric Surgery in any hospital located in the City or Town of Stamford, Norwalk, Greenwich, Danbury or Bridgeport (the "Restricted Area")."
It is important to recognize what is at issue and what is not. There is no question that the defendant has complied with that part of the covenant that provides that he "shall not engage in the practice of medicine or general surgery within a fifteen (15) mile radius of . . . [FCB's] Norwalk . . . office . . ." He has done so by establishing an office in Trumbull, fifteen miles from FCB's Norwalk office, and not practicing medicine or surgery at Norwalk Hospital, restrictions of which he has not complained. Also, while paragraph 16 of the contract contains a provision against the defendant making use of patient information, the plaintiff acquired the information concerning his patients — presumably patients on whom he had performed bariatric surgery — from St. Vincent's after his termination. At trial, the plaintiff did not press for the enforcement of this provision with respect to patients on whom the defendant had performed bariatric surgery.
It is the second portion of the restrictive covenant prescribed in paragraph 17 that is at issue, that for two years, the defendant shall not "practice Bariatric Surgery in any hospital located in the City of Town of Stamford, Norwalk, Greenwich, Danbury or Bridgeport."
Preliminarily, the court notes that the parties are at issue over what is meant by "Bariatric Surgery." The defendant, in an obvious attempt to set up the covenant as overly broad, contends that "Bariatric Surgery" includes not only the original surgery, i.e. the gastric bypass or lap band surgery, but also any subsequent surgeries to address the several complications which may befall a person who has had bariatric surgery. The plaintiff argues that Bariatric Surgery means only the original, gastric surgery. The term is ambiguous; the court has considered the overall testimony of the defendant and Dr. Floch. Based on that evidence, the court agrees with the plaintiff. See also Kinnard v. Kinnard, 43 P.3d 150, 152 n. 1 (Alaska 2002) ("Bariatric surgery is a major surgery which reduces the size of the stomach and reroutes parts of the digestive system"); Rogers v. Columbia/HCA of Cent. Louisiana, 961 F.Sup. 960, 962 n. 1, aff'd, 140 F.3d 1038 (5th Cir. 1998); 1-B Attorneys' Dictionary of Medicine 621 (2005) (This is "[s]urgery dealing with the management of obesity, [such] as a gastric bypass operation").
Paragraph 17 of the Employment Agreement, however, contains a so-called "blue pencil" provision as follows: "If, notwithstanding the foregoing, a court shall determine that the restrictive covenant set forth above is unreasonable as to either geographic scope or duration, then the covenant shall be modified as to its scope, duration, or both scope and duration, or in any other respects, to the extent necessary to render such restrictive covenant reasonable."
The court notes that the initial letters in the words "Bariatric Surgery" in paragraph 17 are capitalized. The court may consider this in divining the meaning intended by the parties. Farrel v. Deuble, 175 Ohio App.3d 646, 651, 888 N.E.2d 514, appeal dismissed, 119 Ohio St.3d 1445, 893 N.E.2d 516 (Ohio 2008). Initial capitals may connote emphasis. There is also authority that they connote a stricter, more formal meaning. Burt v. District of Columbia, 525 A.2d 616, 619 (D.C. 1987); Eagle Snacks, Inc. v. Nabisco Brands, Inc., 625 F.Sup. 571, 582 (D.N.J. 1985). The court, however, does not find the use of capitals sufficiently illuminating to afford them significant weight.
"By definition, covenants by employees not to compete with their employers after termination of their employment restrain trade in a free market . . . Consequently, these covenants may be against public policy, and, thus, are enforceable only if their imposed restraint is reasonable, an assessment that depends upon the competing needs of the parties as well as the needs of the public. These needs include: (1) the employer's need to protect legitimate business interests, such as trade secrets and customer lists; (2) the employee's need to earn a living; and (3) the public's need to secure the employee's presence in the labor pool." Deming v. Nationwide Mutual Ins. Co., 279 Conn. 745, 761, 905 A.2d 623 (2006). "To meet this test successfully, the restraint must be limited in its operation with respect to time and place and afford no more than a fair and just protection to the interests of the party in whose favor it is to operate, without unduly interfering with the public interest." Mattis v. Lally, 138 Conn. 51, 54, 82 A.2d 155 (1951). Neither party has addressed which party has the burden of proof with respect to the burden of the covenant. This failure may be ascribed to the insistence of the parties not to file written briefs but, rather, to rely on oral argument, and to the court's indulgence of the parties' preference. Unremarkably, the allocation of the burden of proof is all-important.
In the legal profession, however, different rules applies. Rule 5.6 of the Rules of Professional Conduct, adopted by the judges of the Superior Court; Bhatia v. Debek, 287 Conn. 397, 420 n. 8, 948 A.2d 1009 (2008); states: "A lawyer shall not participate in offering or making: (1) A partnership, shareholders, operating, employment, or other similar type of agreement that restricts the right of a lawyer to practice after the termination of the relationship, except an agreement concerning benefits upon retirement; or (2) An agreement in which a restriction on the lawyer's right to practice is part of the settlement of a client controversy." The irony that, generally, covenants not to compete are prohibited in the legal professional but permitted, and widely used, in the medical profession has often been observed.
"In 1982, the Federal Trade Commission . . . issued a final order compelling the American Medical Association (AMA) to cease and desist from declaring, among other things, that restrictive covenants in physician contracts were unethical. The AMA obeyed the order but has since declared restrictive covenants to be contrary to public policy." "The Legal Implications of Noncompetition Agreements in Physician Contracts," 20 J. Legal Med. 457 (1999).
"The general burden of proof rests upon the plaintiff in civil action." Silva v. Hartford, 141 Conn. 126, 128, CT Page 6471 104 A.2d 210 (1954). However, the rule is otherwise where a party seeks to enforce a covenant not to compete.
In Milaneseo v. Calvanese, 92 Conn. 641, 103 A. 841 (1918), the defendant sold his business to the plaintiff and agreed that, for three years, he would not directly or indirectly compete with the plaintiff. The plaintiff brought an action seeking an injunction to restrain the defendant from violating this agreement. The trial court sustained a demurrer to the defendant's answer and rendered judgment for the plaintiff. On appeal, the Supreme Court affirmed, stating: "In this case the burden was upon the defendant, in order to avoid the obligations of the contract, to set up in his answer some facts or circumstances whereby the contract became unlawful. The answer fails to allege any such facts." Id., 642. The holding is significant because then, as now, the burden of proving an affirmative defense was on the defendant. Mercer Electric Mfg. Co. v. Connecticut Electric Mfg. Co., 87 Conn. 691, 697, 89 A. 909 (1914). If the defendant had the burden of alleging facts or circumstances that made the contract unlawful, he therefore had the burden of proof on that issue.
The rules of practice then in effect conflated what today are Practice Book § 10-46 and Practice Book § 10-50. Specifically, Practice Book (1908) § 609, which was then in effect, provided as follows: "Answer; general and special denial. The defendant in his answer shall specially deny such allegations of the complaint as he intends to controvert, admitting the truth of the other allegations, unless he intends, in good faith, to controvert all the allegations . . . He may also, in his answer, state special matters of defense, and shall not give in evidence matter in avoidance, or of defense, consistent with the truth of the material allegations of the complaint, unless in his answer he states such matter specially. Under a general denial the plaintiff shall be bound to prove the material facts alleged in the complaint. If the defendant intends to controvert the right of the plaintiff to sue as executor, or as trustee, or in any other representative capacity, or as a corporation, or to controvert the execution or delivery of any written instrument or recognizance sued upon, he shall deny the same in his answer specifically."
In Mattis v. Lally, supra, 138 Conn. 51, the defendant sold his barber shop, "together with all good will" and covenanted not to engage in barbering within a certain radius. He then violated the covenant. The plaintiff brought an action for an injunction and prevailed in the trial court. The defendant appealed. The Supreme Court observed that the test of the validity of a covenant is the reasonableness of the restraint it imposes and that "[t]o meet this test successfully, the restraint must be limited in its operation with respect to time and place and afford no more than a fair and just protection to the interests of the party in whose favor it is to operate, without unduly interfering with the public interest." Id., 54. Importantly, the court also observed: "There is no finding that the barber shop before the sale to the plaintiff attracted customers from the entire area covered by the restriction except as that fact is implicit in the court's finding that the plaintiff's business required the protection accorded to it. If the fact was otherwise, the burden was upon the defendant to establish it." (Emphasis added.) Id., 55.
Finally, in Scott v. General Iron Welding Co., 171 Conn. 132, 368 A.2d 111 (1976), the plaintiff brought a declaratory judgment action to determine the validity of a covenant he had entered into not to compete with his former employer. The trial court declared the covenant valid. On appeal the plaintiff claimed that the court erred in "requiring him to bear the burden of proof of his claim that the restriction was unreasonable as to area." Id., 139. The Supreme Court disagreed: "It is the well-established rule that [t]he mere fact that a party sees fit to institute an action for a declaratory judgment in no way operates to alter or shift the ordinary rules as to the burden of proof by choosing the procedure of such an action . . . Therefore, we find that the trial court did not err in requiring the plaintiff to bear the burden of proof." Id., 139.
Accordingly, as I have previously held, the party challenging the enforceability of a covenant not to compete has the burden of proving that the covenant is not enforceable. Riordan v. Barbosa, Superior Court, judicial district of New Haven, Docket No. 395945 (March 1, 1999, Levin, J.) ( 24 Conn. L. Rptr. 227). So, too, have held other Superior Court judges who have addressed the issue. See Booth Waltz Enterprises v. Pierson, Superior Court, judicial district of Windham, Docket No. CV 09 4008249S (July 8, 2009, Riley, J.); CUNA Mutual Life Ins. Co. v. Butler, Superior Court, judicial district of Middlesex, Docket No. CV 07 5002153 (June 21, 2007, Aurigemma, J.); Tymetrix, Inc. v. Szymonik, Superior Court, judicial district of Hartford, Docket No. CV 06 4019412S (Dec. 28, 2006, Tanzer, J.); Braman Chemical Enterprises v. Barnes, Superior Court, judicial district of New Haven, No. CV-06-4020633 S (Dec. 12, 2006, Silbert, J.) [ 42 Conn. L. Rptr. 547]; Access America v. Mazzotta, Superior Court, judicial district of Middletown, Docket No. CV 05 4003389 (Sept. 14, 2005, Silbert, J.) ( 40 Conn L. Rptr. 12); Century 21 Access America v. Lisboa, Superior Court, judicial district of Ansonia-Milford, Docket No. CV 03 081901 (July 22, 2003, Ronan, J.) ( 35 Conn. L. Rptr. 272); Merryfield Animal Hospital v. Mackay, Superior Court, judicial district of New Haven, Docket No. CV 02 0464586S (July 31, 2002, Hadden, J.T.R.) ( 32 Conn. L. Rptr. 652); Musto v. Opticare Eye Health Centers, Superior Court, complex litigation docket at Waterbury, Docket No. X02 CV 99 00155663S (Aug. 9, 2000, Hodgson, J.); Gartner Group, Inc. v. Mewes, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV91 0118332 (Jan. 3, 1992, Mottolese, J.) ( 7 C.S.C.R. 275; 5 Conn. L. Rptr. 411).
The court turns to the criteria for determining whether the covenant to compete is reasonable.
A.
CT Page 6473
FCB's Legitimate Business Interests
Before addressing whether the covenant not to compete reasonably protected FCB's legitimate business interests, the court observes that by prohibiting only the plaintiff's performing "Bariatric Surgery," the covenant permits the defendant to continue to care for patients who already have had bariatric surgery, whom he characterized as "patients for life." It is future patients who are at issue.The plaintiff offers a different business interest justification for the covenant's prohibition against the defendant's practicing Bariatric Surgery at hospitals in the Restricted Area other than St. Vincent's than it does with respect to that single facility.
1.
With respect to hospitals other than St. Vincent's, the plaintiff argues that if the defendant, who most recently performed 350 Bariatric Surgeries in 2009, were permitted to practice at these Fairfield County hospitals, he could dilute the number of Bariatric Surgeries performed at Norwalk Hospital and St. Vincent's. This, in turn, could jeopardize those facilities' Center of Excellence status. There was evidence that whether a hospital is a Center of Excellence affects whether certain insurers will reimburse the cost of the hospital's services incident to the bariatric surgery. This, presumably, could affect whether a patient will have the Bariatric Surgery at Norwalk Hospital and therefore whether the patient would use FCB since it practices only at Norwalk Hospital and St. Vincent's.
Notwithstanding the Rube Goldberg quality of this argument, the court finds that it is supported by the evidence. While the plaintiff does not have a direct property interest in Norwalk Hospital, it does have a business interest, albeit indirect, in the continued status of that hospital as a Center of Excellence. Loss of that status would have a significant affect on the plaintiff's bariatric practice. "The fact that an employer seeks to protect his interest in potential new customers in a reasonably limited market area . . . does not render the covenant unreasonable." Robert S. Weiss Associates, Inc. v. Wiederlight, 208 Conn. 525, 533, 546 A.2d 216 (1988). This, however, does not answer of whether this particular covenant not to compete reasonably protects the plaintiff's legitimate business interest.
There is relatively little appellate case law in Connecticut of recent vintage on the issue of covenants not to compete. A brief review of Connecticut appellate case law in this area, however, is in order. In Robert S. Weiss Associates, Inc. v. Wiederlight, supra, 208 Conn. 525, the court upheld a covenant against a former employee of the plaintiff insurance agency from engaging in the commercial insurance business within Stamford and a fifteen-mile radius for two years. The court found that "[t]he fact that an employer seeks to protect his interest in potential new customers in a reasonably limited market area as well as his existing customers at the time the employee leaves does not render the covenant unreasonable." Id., 533. It further found that "[t]he trial court's conclusion that the covenant was reasonable was consistent with evidence that the plaintiff sought to protect information regarding current and potential customers in the Stamford area." Id. Here, there is no such evidence.
In Scott v. General Iron Welding Co., supra, 171 Conn. 132, the court upheld a five-year statewide restriction against the employee, a former chief engineer of the defendant, which was in the business of fabricating and welding metals, from participating in the management of a company in a similar business. In Scott, "[t]he plaintiff's knowledge of the defendant's customer list was a potential threat to the defendant's business, and the defendant was entitled to protect that and other confidential information for a reasonable period of time." Id., 140. Here, there is no customer list; the focus is solely on future patients.
In Mattis v. Lally, supra, 138 Conn. 51, the defendant sold his barber shop, "together with all good will" and covenanted not to engage in barbering within a certain radius. He then broke the covenant. The court held that the defendant was impairing the good will he had sold. "The plaintiff bought all the equipment in the defendant's shop `together with all good will.' Good will in the sense here used means an established business at a given place with the patronage that attaches to the name and the location. It is the probability that old customers will resort to the old place . . . Having paid for `good will,' the plaintiff was entitled to have reasonable limitations placed upon the activities of the defendant to protect his purchase." Id., 54; see also Cook v. Johnson, 47 Conn. 175 (1879) (upholding a permanent restriction on a dentist's ability to practice within a ten-mile radius of the person to whom he sold his business). Here, of course, there was no sale of a business.
Conversely, in Domurat v. Mazzaccoli, 138 Conn. 327, 84 A.2d 271 (1951), the defendant's father sold his barber shop, where the defendant was employed as a barber, to the plaintiffs. At the plaintiff's insistence (and promise to hire the defendant), the defendant signed an agreement not to work as a barber within a five-mile radius of the shop. After the sale, the defendant cut two heads of hair within the five-mile radius. The court invalidated the covenant not to compete, stating "there is nothing in the finding which compels the conclusion that the defendant's covenant was reasonably necessary for the protection of the plaintiffs in their enjoyment of the good will of the business purchased by them." Id., 331.
In Torrington Creamery, Inc. v. Davenport, 126 Conn. 515, 12 A.2d 780 (1940), the defendant, the Torrington branch manager of a milk distribution company, covenanted not to compete with the plaintiff in the area covered by the covenant for two years after the termination of his employment. The defendant breached the covenant. The court upheld the covenant, holding that "[t]he defendant, by reason of his employment by the Torrington branch of the company, was in a position to become acquainted with and to know the customers of the company in that area and their requirements, and was in an especially favorable position to compete with the company in that area in case his connection with the company terminated and he desired to engage in the same line of business." Id., 519; accord, New Haven Tobacco Co. v. Perrelli, 18 Conn.App. 531, 533-34, 559 A.2d 715, cert. denied, 212 Conn. 809, 564 A.2d 1073 (1989), upholding a covenant preventing the defendant from transacting business with customers of the plaintiff for a period of two years after leaving the plaintiff's employ.
In May v. Young, 125 Conn. 1, 2 A.2d 385 (1938), the defendant was employed by the plaintiff, an industrial engineering firm. "Confidential data, records and information possessed by the plaintiff were made available to the defendant and used by him in the course of his employment." Id., 3. The defendant covenanted not to enter into the employ of a client of the plaintiff for two years after the termination of his employment. The court upheld the covenant. "When the character of the business and the nature of the employment are such that the employer requires protection for his established business against competitive activities by one who has become familiar with it through employment therein, restrictions are valid when they appear to be reasonably necessary for the fair protection of the employer's business or rights, and do not unreasonably restrict the rights of the employee, due regard being had to the subject-matter of the contract and the circumstances and conditions under which it is to be performed. Especially if the employment involves the imparting of trade secrets, methods or systems and contacts and associations with clients or customers it is appropriate to restrain the use, when the service is ended, of the knowledge and acquaintance, so acquired, to injure or appropriate the business which the party was employed to maintain and enlarge." Id., 6-7.
In Roessler v. Burwell, 119 Conn. 289, 176 A. 126 (1934), the court upheld a restrictive covenant against the salesman of a company in the business of manufacturing delicatessen products from soliciting business from the company's customers for a year after the termination of his employment. The court stated: "The limitation of the solicitation to such customers was one well calculated to afford to the plaintiff a reasonable protection in his business against deprivation of customers with whom the defendant had very likely established friendly relations, and whom he could approach upon the definite basis of affording them as good or better service than the plaintiff had done in the past." Id., 295.
In Samuel Stores, Inc. v. Abrams, 94 Conn. 248, 108 A. 541 (1918), the plaintiff, a clothing store chain, employed the defendant as a manager in one of its branch stores under a written contract containing a covenant that the defendant would not work for a competing business nor himself compete with the plaintiff for five years after the termination of his employment, he then violated the covenant and the plaintiff sued for an injunction. While indicating that "a restrictive agreement providing that the defendant while connected with a competing business should not solicit trade from persons who were customers of the plaintiff at the branch store where the defendant was employed during his employment, might fairly be claimed to be such a restriction as is reasonably necessary for the fair protection of the plaintiff's business;" id., 255; the court invalidated the covenant not to compete as overbroad. Observing that the defendant did not possess any trade secrets, the court held that the "restriction, binding for that [five year] period and relating to every city in which the plaintiff has established a branch store, is not reasonably necessary for the fair protection of the plaintiff's business. It covers a number of cities in which the defendant, from his employment in one city, could have had no acquaintance with the local customers." Id., 255. "The agreement," said the court, "primarily aims to restrict competition." Id., 254. No issue of severability of the covenant was raised in the case.
Similar to Samuel Stores is Beit v. Beit, 135 Conn. 195, 63 A.2d 161 (1948), rearg. denied, 135 Conn. 413, 65 A.2d 171 (1949), in which three brothers and their wives owned three grocery stores, two larger stores in Norwich and New London and a third store in Norwich where only meat was sold. Id., 135 Conn. 196. "No wholesale business was done by the partnership, but large sales were made to some hotels and restaurants at a discount. The customers of the stores were almost exclusively residents of New London and the towns contiguous thereto and of Mystic and Norwich and the towns contiguous thereto. The partnership had no special brands or exclusive rights to sell products. It carried the same general line of merchandise as did other competitive stores of a like nature, of which there were a number within New London county but outside the area served by the stores of the parties." Id., 196-97. The plaintiffs (one of the three brothers and his wife) sold their interest in the business to Seymour Beit, the son of another brother. The instrument of sale contained a covenant prohibiting the plaintiffs from reentering the grocery business in New London County for thirty (30) years. The named plaintiff entered into negotiations to purchase a grocery store in East Lyme, a town in New London County but not contiguous with either Norwich or New London. He brought a declaratory judgment action to test the validity of the covenant. The court invalidated the covenant as "a restraint of trade which was greater than was necessary for the protection of the business of the defendant, which imposed an unnecessary hardship upon the plaintiffs and which was unreasonable." Id., 202.
In Styles v. Lyon, 87 Conn. 23, 27, 86 A. 564 (1913), the defendant, a surgeon, agreed for a stipulated consideration to take charge of the practice of the plaintiff, also a surgeon, in New Britain. He covenanted not to open an office in New Britain after the termination of his employment. The defendant later broke the agreement. The court upheld the covenant not to compete, stating: "Without the aid of the restriction the defendant, having won the confidence of the plaintiff's patients, might break his contract, and take away from the plaintiff the very patients whose confidence he had gained while in the plaintiff's employ. There was no effective way by which the plaintiff could protect himself in his livelihood, except by preventing the defendant from wrecking his practice." Id., 28. Styles was concerned with the alienation of existing patients, to which the covenant at issue is not directed.
Styles has not been cited by a Connecticut appellate court for this proposition in nearly sixty years, perhaps because the covenant there was not limited with respect to time.
In every case in which the court upheld a covenant not to compete, the party whom the covenant benefitted was seeking to protect against something other than mere competition — the use of his customer lists, information concerning potential customers in a limited area the employee had acquired, the impairment of good will he had purchased, confidential data or trade secrets, or some other advantage the employee had acquired while in his employ which would make his immediate competition unfair. See also Columbus Medical Services LLC v. Thomas, Court of Appeals of Tennessee, Docket No. W2008 00345 COA R3 CV (Tenn.Ct.App. August 13, 2009); Lifetec Inc. v. Edwards, 377 Ill.App.3d 260, 269, 880 N.E.2d 188 (2007).
The plaintiff's argument that permitting the plaintiff to perform bariatric surgery in Fairfield County would dilute the number of bariatric surgeries necessary for Norwalk Hospital and St. Vincent's to maintain their Center of Excellence status, and consequently damage the number of bariatric surgeries performed by the plaintiff, is an argument that "primarily aims to restrict competition." Samuel Stores, Inc. v. Abrams, supra, 94 Conn. 254. That is, the plaintiff does not argue that the defendant would accomplish this end because he possesses trade secrets, customer or potential customer lists, or contacts at these facilities that would enable him to obtain a special advantage, or because he has special techniques he would not have acquired had he practiced with another group, or anything else that would result in his competition in the bariatric surgery market unfair. Any bariatric surgeon with the enterprise and ambition of the plaintiff could acquire privileges at one of these hospitals and, in the plaintiff's words, dilute the number of bariatric cases Norwalk Hospital performs. Such is the bane of free enterprise competition. The plaintiff's argument also fails to provide a rationale for barring the defendant from performing bariatric surgery at Norwalk Hospital.
However, as observed supra, it is not the plaintiff's burden to prove that the covenant is reasonable; it is the defendant's burden to show that it is unreasonable. For the following reasons, the court finds that the defendant has not sustained his burden.
First, as an employee of the plaintiff, the defendant has benefitted from a substantial advertising campaign. The name and expertise of the defendant, individually and as a member of FCB, has received wide publicity. When the plaintiff now holds himself out as a bariatric surgeon, he will benefit from the advertising campaign paid for by the plaintiff.
Second, the plaintiff will benefit from the good will in the medical community resulting from being affiliated with the plaintiff. FCB has been the largest provider of bariatric surgery in Fairfield County. Although admittedly the plaintiff is largely responsible for making his own reputation, he clearly benefitted — and will continue to benefit — from his association with FCB.
Third, the defendant concedes in the Employment Agreement that the covenant is reasonable. Paragraph 17 states: "The Physician acknowledges: (1) that the provisions of this Section 17 are reasonable; (ii) that identical provisions are contained in the employment agreement of each physician who is a shareholder of the Corporation; (iii) that these provisions are necessary for the protection of the Corporation and its shareholders; (iv) that the Physician is as likely to benefit from these provisions as to be effected [sic] by them; (v) that the Physician would seek to have the Corporation enforce these provisions against other shareholder-employees in the event of their breach; and (vi) that the covenant is reasonable, is not an undue burden on the Physician, and would not prevent the Physician from engaging in the practice of medicine in the Restricted Area."
While these acknowledgments are not binding on the court, which must determine whether the covenant is reasonable as a matter of law, there is no good reason why these acknowledgments by a physician who has had the benefit of competent counsel in reviewing and negotiating the contract, ought not to be considered by the court. "There is a strong public policy in Connecticut favoring freedom of contract: `It is established well beyond the need for citation that parties are free to contract for whatever terms on which they may agree. This freedom includes the right to contract for the assumption of known or unknown hazards and risks that may arise as a consequence of the execution of the contract. Accordingly, in private disputes, a court must enforce the contract as drafted by the parties and may not relieve a contracting party from anticipated or actual difficulties undertaken pursuant to the contract, unless the contract is voidable on grounds such as mistake, fraud or unconscionability . . .' Holly Hill Holdings v. Lowman, 226 Conn. 748, 755-56, 628 A.2d 1298 (1993); see 1 Restatement (Second), Contracts §§ 154, 159 (1981); 2 Restatement (Second), Contracts § 208 (1981)." (Emphasis in original) Schwartz v. Family Dental Group, P.C., 106 Conn.App. 765, 772-73, 943 A.2d 1122, cert. denied, 288 Conn. 911, 954 A.2d 184 (2008).
"Parties . . . may not agree to an issue that is a matter of law, as opposed to a stipulation of facts." New Haven Savings Bank v. LaPlace, 66 Conn.App. 1, 14, 783 A.2d 1174, cert. denied, 258 Conn. 942, 786 A.2d 426 (2001). Once the material facts have been found, the question of whether a covenant not to compete is reasonable is a question of law for the court. Hare v. McClellan, 234 Conn. 581, 589, 662 A.2d 1242 (1995).
"If a contract violates public policy, this [too] would be a ground to not enforce the contract." Schwartz v. Family Dental Group, P.C., supra, 106 Conn.App. 773.
Fourth, and most importantly, this is not merely a covenant given by an employee to an employer. Rather, it is covenant exchanged between three equal shareholders of a medical professional corporation. Such covenants are widely used and are generally upheld. See Annot., "Validity and Construction of Contractual Restrictions on Right of Medical Practitioner to Practice, Incident to Partnership Agreement," 63 ALR3d 970 (1975).
The court's decision is informed by the statement of the court in Samuel Stores, Inc. v. Abrams, supra, 94 Conn. 252-53: "The cases in relation to restraints of trade soon disclose two leading classes of contracts: contracts between the vendor and vendee of a business and its good will, and contracts between an employer and an employee. Under the law, restrictive stipulations in agreements between employer and employee are not viewed with the same indulgence as such stipulations between a vendor and vendee of a business and its good will. In the latter case the restrictions add to the value of what the vendor wishes to sell and also add to the value of what the vendee purchases. In such cases, also, the parties are presumably more nearly on a parity in ability to negotiate than is the case in the negotiation of agreements between employer and employee. In a restrictive covenant between a vendor of a business and the vendee, a large scope for freedom of contract and a correspondingly large restraint of trade is allowable." (Internal quotation marks omitted.) The covenant here partakes more of a stipulation between a vendor and vendee than between an employer and employee. Considering that all three equal shareholders signed the same employment agreement exchanging the same restricting covenant, there was more involved here than mere employment.
The court finds Rash v. Toccoa Clinic Medical Association, 253 Ga. 322, 320 S.E.2d 170 (1984), informative. In Rash, the plaintiff was a partner in an OBGYN practice in which all the partners' partnership agreements contained a restrictive covenant against practicing surgery or medicine within 25 miles of the City of Toccoa, Georgia, for three years if the partner left the partnership for any reason. The covenant further stated: "All partners further agree that this restrictive covenant is a material part of these Articles of Partnership and is reasonable as to time and place . . ." Id., 252 Ga. 323. The plaintiff voluntarily left the practice and expressed his intention to practice within the restricted area. The partnership obtained an injunction. On the plaintiff's appeal, the Georgia Supreme Court upheld the injunction, stating:
We are dealing here not with an employment contract but with a partnership agreement. Although it does not appear that the appellate courts of this state have had occasion to clearly distinguish between the two types of agreements, there are obvious differences. In a partnership agreement such as the one here, as opposed to an employment agreement, the consideration flows equally among the contracting parties. For example, when an employee agrees to subject himself to possible future restrictions, he does so in exchange for the opportunity to have the job. He really gets nothing other than the opportunity to work in exchange for giving up this aspect of his freedom. On the other hand, here a partner has not only restricted himself, but he has also exacted from each of the other contracting parties a like restriction. When Dr. Rash signed this partnership agreement . . . other physicians made the same concession and gave the same assurance to him as he was giving them . . .
The next distinction between employment agreements and partnership agreements is that it is generally true in the employer/employee relationship that the employee goes into a transaction such as this at a great bargaining disadvantage. Such would not be expected to be the case in a professional partnership arrangement, and it certainly was not the case here . . .
Since the employee who agrees to the covenant may have done so from an inferior bargaining position, and since the covenant may seriously impair his ability to earn a living, the courts have traditionally given greater scrutiny to restrictive covenants within employment contracts, as opposed to such covenants contained in business sales agreements. In the present case, however, neither unequal bargaining status nor impaired ability to earn a living is present. Seen in this context, the covenant does not appear to be unreasonable . . .
Rash v. Toccoa Clinic Medical Association, supra, 253 Ga. 325-26.
Similarly, here, in consideration for his covenant not to compete, the defendant received, among other benefits, the covenants of Neil Floch and Craig Floch not to compete if their employment was terminated. There is no evidence nor claim that the defendant entered into the Employment Agreement from an inferior bargaining position. To the contrary, the court infers that in January 2006, his services and participation in FCB were much coveted by the Flochs. For these reasons the court finds the covenant reasonable.
2.
The plaintiff advances a different rationale for the prohibition against the defendant performing Bariatric Surgery at St. Vincent's. The plaintiff argues that the defendant should not be permitted to benefit from a program that was built by the plaintiff "from the ground up." In and of itself, that is not a legitimate business interest that the plaintiff may protect. FCB has no proprietary interest in St. Vincent's. However, there is much more. The defendant had no ties with St. Vincent's, nor indeed with Connecticut, until FSA brought him to Norwalk in 2002. It was under FSA's auspices that the defendant, expending considerable time and energy as an employee, was able to embark on his endeavor to create a Bariatric Center at St. Vincent's and become its director. He held the position of director at the time FCB was created until shortly after his employment with FCB was terminated. The defendant derived considerable good will as a result of his association with St. Vincent's Bariatric Center. The court infers that as a founder of the Center and its long-time director, the defendant had a good deal to do with the hiring of its staff. As director of St. Vincent's Bariatric Center, he had a close working relationship with Vicky DiNardo who scheduled the bariatric seminars sponsored by St. Vincent's. The defendant was assigned most of these seminars, notwithstanding Craig Floch's desire for a larger share. The plaintiff has a legitimate business interest in participating in the St. Vincent's seminars and acquiring its share of the bariatric patients derived therefrom. It would be difficult for the plaintiff to achieve this if the defendant were still a presence, and no doubt a significant player, at the St. Vincent's Bariatric Center. The defendant's covenant not to compete is a reasonable device to protect the plaintiff's legitimate business interests with respect to acquiring future patients from seminars sponsored by St. Vincent's.
The defendant contends that a medical covenant not to compete may not be "hospital based," as it effectively is here. He cites two New York cases, Muller v. N.Y. Heart Center, 238 A.D.2d 776, 656 N.Y.S.2d 464 (1997), and Weintraub v. Schwartz, 131 A.D.2d 663, 516 N.Y.S.2d 946 (1987), in support of this contention. In Muller, the court stated that "[t]he narrow issue presented is whether plaintiff [a cardiologist] is precluded from practicing in Syracuse area hospitals, a limitation that he contends prevents him from providing proper care to the patients he serves in his practice in the geographic area covering the Village of Hamilton and City of Oneida in Madison County, his immediate resumption of which was contemplated by both parties and specifically allowed by the agreement." Muller v. N.Y. Heart Center, supra, 238 A.D.2d 776. The court held that "the restrictive covenant should not be enforced, insofar as it prohibits plaintiff from attending to his Hamilton/Oneida area patients when they have been referred to Syracuse hospitals . . ." Id., 777.
In Weintraub, the defendant was a neurologist who entered into a two-year employment contract with a neurology group. The contract contained a covenant that upon termination of his employment the defendant would not practice neurology within a five-mile radius of any hospital at which he had worked for his employer. Weintraub v. Schwartz, supra, 131 A.D.2d 663-64. The court held that the covenant was unreasonable and overbroad.
The practical effect of this portion of the covenant would be to preclude the defendant from practicing at or near the majority of hospitals in Westchester and Putnam Counties. Moreover, the defendant would be effectively barred from having professional contact with physicians in those area hospitals which generally produce referrals of patients . . . [T]hese referrals are presumably based upon a physician's professional judgment and evaluation of the defendant's ability rather than on the basis of the defendant's prior affiliation with the plaintiffs. Aside from the unreasonable scope of this portion of the restrictive covenant, there is also an absence of evidence in the record to indicate that the plaintiffs' legitimate business concerns are implicated by the defendant's alleged breach of the restrictive covenant . . .
Id., 665.
The court finds these cases distinguishable. Muller is clearly inapposite since that case involved a total ban on practicing within a restricted area, thereby preventing the physician from caring for his existing patients at area hospitals. That is not the case here. Weintraub is also distinguishable. Here, the plaintiff is a board certified general surgeon. The court does not credit his claims that he has become too rusty to perform the many aspects of general surgery for which he has privileges at St. Vincent's Hospital. During the very trial of this case, the defendant was notified that he had passed his boards for re-certification as a general surgeon. Thus, the defendant may practice medicine throughout most of Fairfield County, save the 15-mile radius around FCB's Norwalk office, may care for his existing patients at anywhere he has hospital privileges, except Norwalk Hospital, and may perform any surgery except bariatric surgery at any hospital where he has privileges, except Norwalk Hospital. Notably, the defendant may perform general surgery at his bailiwick, St. Vincent's. Unlike in Weintraub, the defendant will not be deprived from having professional contact with physicians in any hospitals, except Norwalk Hospital, which may produce referrals of patients. Moreover, unlike the physicians in Muller and Weintraub, the defendant is not a mere employee but a one-third owner of FCB.
For the foregoing reasons, the court holds that the defendant has not proven that the plaintiff lacks a legitimate business interest in preventing the defendant from performing bariatric surgery at the hospitals in the Restricted Area.
The term of the covenant is two years and, under the circumstances, the court finds that "[s]uch a two year restriction is clearly reasonable. See Robert S. Weiss Associates, Inc. v. Wiederlight, supra (two year restriction upheld); Scott v. General Iron Welding Co., supra (five year restriction upheld); May v. Young, supra (two year restriction upheld)." New Haven Tobacco Co. v. Perrelli, supra, 18 Conn.App. 538; see also Mattis v. Lally, supra, 138 Conn. 51 (five years upheld); Wells v. O'Connell, 23 Conn.Sup. 335, 339, 183 A.2d 287 (1962) (two years), and cases collected therein.
B. Employee's Need to Earn A Living
The defendant may practice medicine at his Trumbull and Waterford offices. He may perform any surgery, except bariatric surgery, on anyone at any hospital at which he has privileges, except Norwalk Hospital, and may perform bariatric surgery outside of the Restricted Area. The court observes that while the Restricted Area, within which the defendant may not perform bariatric surgery, is largely defined by Fairfield County hospitals, county lines were not shown to have any medical significance. As the evidence showed, there are hospitals outside of Fairfield County — Milford Hospital, Griffin Hospital, Yale-New Haven Hospital, the Hospital of St. Raphael — some of which are in reasonably close proximity to the defendant's Trumbull office and Westport home. While there was no evidence that these facilities were Centers of Excellence, there was evidence that bariatric surgery was performed at hospitals that were not Centers of Excellence. Notably, Dr. Randall Zuckerman of the Hospital of St. Raphael in New Haven has encouraged the defendant to apply for privileges at that facility where the defendant could perform bariatric surgery.
While the defendant's income will undoubtedly be temporarily reduced by operation of the covenant, there is no requirement that the operation of a covenant not to compete must maintain a defendant's income at present levels in order to be found reasonable. The court finds that the defendant has not proven that the operation of the covenant will damage his ability to earn a living so substantially as to invalidate the covenant.
C. Public's Need to Secure the Defendant's Services
With respect to the public's need to secure the defendant's services, the court is sensitive to two salient facts.
First, bariatric surgery is not functionally equivalent to barbering or sales, the types of cases which have typically given rise to Connecticut case law in the area of restrictive covenants. The practice of medicine is different. "The physician-patient relationship is unique in our society. Physicians held safeguard one of the most important of human needs — health and well being." S. Malloy, "Physician Restrictive Covenants: The Neglect of Incumbent Patient Interests," 41 Wake Forest L. Rev. 189 (2006). The practice of surgery is also vastly different than it was nearly 100 years ago in the time of Styles v. Lyon, supra, 87 Conn. 27, let alone in the Victorian era case of Cook v. Johnson, supra, 47 Conn. 175. Medicine can do more to preserve health and prolong life and people expect much more of their medical providers than they did generations ago.
Second, the defendant is obviously highly experienced and very skilled. The number of bariatric surgeries he performed during the first eleven months of 2009 is remarkable. Both the medical and lay communities recognize a rough correlation between experience and skill. Enforcement of the covenant not to compete will presumably interfere with the public's need to secure the defendant's services. At the time of the hearing, the only hospitals at which the defendant had surgical privileges were St. Vincent's and Norwalk Hospital. However, the court finds that enforcement of the covenant need not substantially interfere with the public's need to secure the defendant's services. The principal objections to medical covenants not to compete is that they interfere with continuity of care and patient choice, neither of which are substantially impaired by the injunction the court orders. The defendant may continue to care for his existing patients at any hospital at which he has or acquires privileges, except Norwalk Hospital. People who wish to retain the defendant to perform bariatric surgery may have that surgery performed at any of the several hospitals that are just outside the Restricted Area but which are generally within thirty to forty minutes driving time from the defendant's home or office. The court finds that the operation of the covenant need not impair the public's need to secure the defendant's services so substantially as to require the invalidation of the covenant.
Accordingly, the court finds that the covenant not to compete is reasonable and valid in its entirety.
V
The final issue is whether the remedy sought by the plaintiff, a temporary injunction, is appropriate. "Generally, a party seeking injunctive relief has the burden of alleging and proving irreparable harm and lack of an adequate remedy at law." Simsbury-Avon Preservation Society, LLC v. Metacon Gun Club, Inc., Superior Court, complex litigation docket at Waterbury, Docket No. X01 CV 04 4003593S (Sept. 16, 2005, Sheedy, J.). "The term `irreparable' `connotes the inability to make good, to repair, to retrieve or to atone for.'" State v. Parker, 194 Conn. 650, 664, 485 A.2d 139 (1984), superseded by statute on other grounds; see State v. Fanning, 98 Conn.App. 111, 112 n. 1, 908 A.2d 573 (2006), cert. denied, 281 Conn. 904, 916 A.2d 46 (2007). An irreparable injury is an injury that is of such a nature that it cannot be adequately compensated in damages, or cannot be measured by any pecuniary standard. Connecticut Assn., Clinical Laboratories v. Conn. Blue Cross, Inc., 31 Conn.Sup. 110, 113, 324 A.2d 288 (1973). "Whether damages are to be viewed by a court of equity as `irreparable' or not depends more upon the nature of the right which is injuriously affected than upon the pecuniary measure of the loss suffered." Robertson v. Lewie, 77 Conn. 345, 346, 59 A. 409 (1904).
The court notes that while paragraph 16(b) of the Employment Agreement mandates injunctive relief for violation of the provisions of patient confidentiality, paragraph 19 simply contemplates the "pursuit of equitable remedies" for violation of the restrictive covenant. In May v. Young, supra, 125 Conn. 8, 10, a contractual provision entitling the employer to an injunction if the defendant employee violated his covenant not to compete was given effect by the court without discussion.
"`[W]hen parties to the same contract use such different language to address parallel issues . . . it is reasonable to infer that they intend this language to mean different things.' Taracorp, Inc. v. NL Industries, Inc., 73 F.3d 738, 744 (7th Cir. 1996)." Fusco v. Allstate Insurance Co., Superior Court, judicial district of Fairfield, No. 377108 (April 13, 2004) ( 37 CLR 67). Therefore, it may be argued that the parties intended that proof of irreparable harm and lack of adequate remedy at law were not required for an injunction against the use of patient information in violation of paragraph 16 but remained a requirement for an injunction against the violation of the covenant not to compete. This, however, is not the only explanation for the different language used, no extrinsic evidence of the parties' intent was offered, and like other issues raised by the plaintiff's application, it has not been briefed by the parties.
In Connecticut, appellate case law is not entirely clear, and trial court decisions are divided, as to whether these requirements are excused when temporary injunctive relief is sought based on the violation of a covenant not to compete. The legal theory that irreparable harm need not be shown "originally sprung from Mattis v. Lally, 138 Conn. 51, 82 A.2d 155 (1951) where our Supreme Court considered the propriety of an injunction against the defendant who sold his barber shop to the plaintiff and simultaneously agreed that he would not engage in the barbering business for five years within a specified geographical area. The defendant subsequently set up a barber shop not more than 300 yards from his old location now owned and operated by the plaintiff. The court answered the defendant's arguments that the plaintiff did not prove irreparable damage and no adequate remedy at law by stating: `[i]rreparable harm would inevitably result from a violation of the defendant's promises.' Id., 56, citing 6 Page, Contracts (2d Ed.) § 3386." POP Radio v. News America Marketing In-Store, 49 Conn.Sup. 566, 575, 898 A.2d 863 (2005) [ 40 Conn. L. Rptr. 332].
Since Mattis cited Page on Contracts as the sole authority for its statement that "[i]rreparable harm would inevitably result from a violation of the defendant's promises," the court notes that the text of that bygone treatise provides:
The use of the injunction in enforcing negative covenants, with reference to the use of real property, may be explained on the theory that such negative covenant passes an interest of some sort in realty, which is to be protected by injunction, as other property rights are protected. The use of injunction as a means of enforcing negative covenants is not, however, limited to covenants with reference to the use of realty. A covenant not to compete in a certain business, trade, or profession, which is entered into as a part of a contract, for the sale of good will, and which is not void, as being in unreasonable restraint of trade, may be enforced by injunction. The use of injunction in cases of this sort, is justified by the inadequacy of the remedy at law. It is perfectly possible that the good will of a business may be ruined by competition of the former owner of the business, in violation of his agreement not to compete, and the unfortunate purchaser of such good will may be unable to prove the existence of any actual damage as a result of such breach of contract. The fact that only nominal damages can be shown does not prevent the court from granting an injunction in cases of this sort; and, indeed, the fact that only nominal damages can be recovered is one of the reasons for granting injunction.
Injunction has been given to the prevent breach of a covenant by a physician, or a dentist, or an insurance broker, or a manufacturer, or a plumber, or a dressmaker, or a barber, or one who operates a gin, not to engage in the practice of his profession, business or trade. If A sells his business to B, and agrees not to go into or to conduct such business directly or indirectly within the county for a period of ten years, A's conduct in working by the day for the owner of a building at such business is a breach of such contract, and B is entitled to an injunction.
A covenant not to compete, which is a part of a contract of partnership may be enforced by injunction. The fact that the partner who seeks relief has so large a business that he cannot attend to it all in person, does not prevent him from having such good will protected by injunction.
6 Page, Contracts (2d Ed.) § 3386.
Having reviewed the several scholarly trial court opinions wrestling with this issue, I agree that "Connecticut law supports a distinctly moderated level of proof required to establish the elements of irreparable harm and lack of an adequate remedy at law necessary for the issuance of a temporary injunction where the circumstances involve an alleged breach of a noncompetition agreement." POP Radio v. News America Marketing In-Store, supra, 49 Conn.Sup. 577. Specifically, this court holds that irreparable harm and lack of adequate remedy at law are rebuttably presumed where a covenant not to compete which has found to impose only a reasonable restraint has been violated. This accords with the rule in several other jurisdictions that have considered the question. See Moore Business Forms, Inc. v. Wilson, 953 F.Sup. 1056, 1062 (N.D. Iowa 1996) (collecting cases in other jurisdictions where there is a presumption of irreparable harm); Ormco Corp. v. Johns, 869 So.2d 1109, 1117 (Ala. 2003); Phoenix Orthopaedic Surgeons v. Peairs, 164 Ariz. 54, 59, 790 P.2d 752, 757 (Ariz.App. 1989), overruled on other grounds by Valley Medical Specialists v. Farber, 194 Ariz. 363, 982 P.2d 1277 (1999); A. B. Dick Co. v. American Pro-Tech, 159 Ill.App.3d 786, 784, 514 N.E.2d 45, 49 (1987); Ditus v. Beahm, 123 Colo. 550, 232 P.2d 184 (1951).
Here, moreover, there has been proof of irreparable harm and lack of an adequate remedy at law. Notably, "[t]he proper measure of damages for breach of a covenant not to compete is the nonbreaching party's losses rather than the breaching party's gains." Robert S. Weiss Associates, Inc. v. Wiederlight, supra, 208 Conn. 542. Given the defendant's unique status at St. Vincent's Bariatric Center, where he performed 350 bariatric surgeries in the first eleven months of 2009, the court infers that the defendant would likely continue to perform an unusually large number of bariatric surgeries at St. Vincent's if not enjoined. How many of these patients would otherwise seek the services of FCB cannot be determined. Moreover, bariatric patients are patients for life and often develop complications requiring surgery long after their bariatric surgery, generating additional revenue for the surgeon. How many patients will require additional surgeries, and how many surgeries they will require, also cannot be determined. Thus, the "plaintiff's actual injury is not susceptible of determination to its entire extent but is estimable largely by conjecture and prediction." (Citations omitted; internal quotation marks omitted.) Sagarino v. SCI Connecticut Funeral Services, Inc., Superior Court, judicial district of New Britain, Docket No. 499737 (May 22, 2000, Aurigemma, J.) ( 27 Conn. L. Rptr. 281, 283), quoting Gartner Group, Inc. v. Mewes, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. 118332 (January 3, 1992, Mottolese, J.) ( 7 C.S.C.R. 275, 5 Conn. L. Rptr. 411); see also Century 21 Access America v. Lisboa, Superior Court, judicial district of Ansonia-Milford, Docket No. CV 03 081901 (July 22, 2003, Ronan, J.) ( 35 Conn. L. Rptr. 272); Musto v. Opticare Eye Health Centers, Superior Court, complex litigation docket at Waterbury, Docket No. 155663 (August 9, 2000, Hodgson, J.).
This case differs substantially from Opticare, P.C. v. Zimmerman, Superior Court, complex litigation docket at Waterbury, Docket No. UMY CV 07 5003365 (March 27, 2008, Eveleigh, J.), where the court, having "the benefit of observing the effect of the defendant's departure on the plaintiffs, some 16 months after the fact," found that irreparable harm had not been established and denied the plaintiffs' application for a temporary injunction. Notably, in Opticare, P.C. v. Zimmerman, Judge Eveleigh observed: "While it may be necessary for a court to employ the presumption created in Mattis when faced with a request for temporary injunction when a person has just left his employ, certainly that presumption should be rebuttable and some proof of irreparable harm should be displayed where a long period of time has elapsed since the departure. When a person has just left the employ it may be difficult to establish irreparable harm." Here, the court is presented with the plaintiff's application for a temporary injunction in the wake of the defendant's termination and violation of the restrictive covenant.
The defendant claimed that Teplitzky's ability to estimate in mid-2009 what FCB's lost revenues would be for the balance of the year shows that there is no irreparable harm. The court disagrees. Teplitzky did not purport to estimate the value of the covenant. As has been observed, bariatric patients are "patients for life" who frequently require additional surgery. Teplitzky did not purport to estimate what the lost revenue to FCB would be over that very long term.
Finally, the court must determine whether that the balancing of equities favors granting the injunction. Waterbury Teachers Assn. v. Freedom of Information Commission, 230 Conn. 441, 446, 645 A.2d 978 (1994). The covenant not to compete in the Employment Agreement is modest. It does not prevent the defendant, a board certified general surgeon, from practicing medicine anywhere, except in and around the city of Norwalk, where he has not practiced for well over a year. The defendant may continue to treat his existing patients and perform general surgery on his existing or new patients at any hospital at which he has or acquires privileges except Norwalk Hospital. The covenant does prohibit the defendant from performing bariatric surgery at Fairfield County hospitals defined as the Restricted Area. However, well within a reasonable distance from the defendant's Westport home and his Trumbull office, the defendant may perform bariatric surgery at nearby hospitals outside of the Restricted Area at which he is granted surgical privileges. It is true that the defendant's residence in Westport, where he lives with his wife and three children, may restrict his ability to respond to emergency calls from the hospital within the thirty-minute time period prescribed by the American Society for Metabolic and Bariatric Surgery, but the evidence was that this time period applied only to hospitals that were designated Centers of Excellence. Moreover, the court is not satisfied that the defendant's home and office are outside the thirty-minute window for all New Haven County hospitals, such as Milford Hospital and Griffin Hospital.
The covenant provides FCB with a reasonable benefit. The restriction, which is of brief duration, helps FCB to minimize the advantage the defendant has reaped from FCB's advertising campaign and the good will he benefitted from as a member of FCB. The injunction that issues will enable FCB to have greater access to the St. Vincent's Bariatric Center and an opportunity to conduct its share of bariatric seminars sponsored by St. Vincent's. If, however, the defendant readily acquires surgical privileges elsewhere, as the court is confident a surgeon of his caliber will be, the injunction will not so substantially reduce FCB's competition for bariatric surgery as to be invalid.
Finally, it is not to be overlooked that the covenant that the court enforces is nothing more than what all three shareholders of FCB consented to.
The court finds that the equities militate in favor of issuing a temporary injunction.
The court orders that the defendant is temporarily enjoined from engaging in the practice of medicine or general surgery within a fifteen (15) mile radius of FCB's Norwalk, Connecticut office and is further enjoined from practicing Bariatric Surgery, as defined herein, in any hospital located in the city or town of Stamford, Norwalk, Greenwich, Danbury or Bridgeport. The defendant is also enjoined from soliciting patients of FCB on whom he did not perform bariatric surgery. As previously ordered when the court issued an injunction with respect to the defendant's performing bariatric surgery at St. Vincent's, the plaintiff, pursuant to General Statutes § 52-472, shall give the defendant bond, with corporate surety, in the amount of $200,000 to answer all damages in case the plaintiff fails to prosecute this action to effect.
The court recognizes that the covenant not to compete here may be an ineffectual tool to prevent the defendant from competing with FCB for new bariatric patients in Fairfield County. Nothing in the covenant not to compete prevents the defendant from engaging in advertising targeting Fairfield County patients. Nothing in the covenant prevents the defendant from taking on new patients residing in Fairfield County. Nothing in the covenant prevents the defendant from performing bariatric surgery on new patients who reside in Fairfield County. Thus, outside of the covenant not to perform bariatric surgery at St. Vincent's, the covenant may be little more than a covenant to visit a measure of inconvenience on the defendant and new Fairfield County patients he may acquire during the restrictive period by compelling them to travel a few miles east across the county line to Milford, Derby or New Haven. Perhaps that is the best that the parties could negotiate to achieve their goals. In light of the legal protection afforded patient identity by HIPAA, related federal administrative regulations and by state law, a two-year restriction against performing bariatric surgery on patients residing in Fairfield County, while easily ordered, could be difficult to enforce.