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Community Hospital Group4/5/2005
s the legitimate interests of JFK. Those legitimate interests may include: (1) protecting confidential business information, including patient lists; (2) protecting patient and patient referral bases; and (3) protecting investment in the training of a physician. See Di Dio, supra, 20 J. Legal Med. at 458-61. JFK, like every other employer, however, does not have a legitimate business interest in restricting competition.
In this case, the evidence established that JFK made a substantial investment in Dr. More by giving him the opportunity to accumulate knowledge and hone his skills as a neurosurgeon. Indeed, Dr. More acknowledges that it "takes years of education, practical experience and accumulated skills and knowledge, as well as an innate talent, for a doctor to reach level of practice." Further, Dr. More admitted he removed patient and patient referral lists from JFK between the time of his resignation and his eventual departure from JFK. It was also undisputed that many of the patients Dr. More treated after joining NAPA and Somerset were once patients of JFK or were referred to Dr. More from one of JFK's referral sources. Further, in addition to training Dr. More, JFK paid for his attendance at seminars and other events, and paid for his malpractice insurance as well. In short, we agree with the Appellate Division's conclusion that JFK established that it had several legitimate protectable interests in enforcement of the restriction.
Beyond that, three additional factors should be considered in determining whether the restrictive covenant is overbroad: its duration, the geographic limits, and the scope of activities prohibited. Each of those factors must be narrowly tailored to ensure the covenant is no broader than necessary to protect the employer's interests. Karlin, supra, 77 N.J. at 423. Although recognizing that "a longer restriction may be permissible in medical specialties where the number of contacts between the physician and patient are relatively infrequent," the Karlin Court emphasized that "the covenant should not be enforced beyond the period needed for the employer (or any new associate he may have taken on) to demonstrate his effectiveness to the patients." Ibid.
Here, the restrictive covenant was for a period of two years and sought to prevent Dr. More from engaging in the practice of neurosurgery within a thirty-mile radius of JFK. Dr. More was employed by JFK for approximately eight years. On its face two years appears to be a reasonable period for JFK to replace and train a person to assume Dr. More's prior role. Moreover, JFK only sought to prohibit Dr. More from the practice of neurosurgery. That single restriction was not overbroad. We will discuss the thirty-mile radius restriction below in conjunction with the harm to the public prong of the test. Aside from the geographic limitation, we are satisfied that JFK demonstrated that it has legitimate business reasons for enforcing the restrictive covenant.
B.
The second prong requires that the restrictive covenant impose no undue hardship on the employee. That inquiry requires the court to determine the likelihood of the employee finding other work in his or her field, and the burden the restriction places on the employee. See Karlin, supra, 77 N.J. at 423. In applying this part of the test, the reason for the termination of the parties' relationship is also relevant. If the employee terminates the relationship, the court is less likely to find undue hardship as the employee put himself or herself in the position of bringing the restriction into play. On the other hand, where the employer causes the parties to separate, "enforcement of the covenant may cause hardship on the emplo
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