Going up against a veterinary giant
I recently received the following request from a veterinarian: "I'm planning on leaving my associate position with a large veterinary corporation to open my own clinic. I'd like you to review my employment contract to make sure that I can't be sued."
I thought to myself, "I'll get right on that—as soon as I locate the Ark of the Covenant and find a body shop that will do a quality repaint on my car for $99.95."
The way he phrased his inquiry made me consider that he might be one of many practicing veterinarians who are unfamiliar with the nuts and bolts of the American legal system. I'd like to clarify for the veterinary community just how civil justice is sought in our system.
Rule No. 1 in the law is that anybody can sue anybody at any time for anything. Period. The only real exception to this rule is that there's no inherent right to sue the government, though legislatures at all levels have voluntarily modified this exception over the years.
Therefore, even the world's greatest lawyer can't offer assurance to a veterinary associate who wants to open his own practice that he won't be sued by his former employer. The big veterinary chain can indeed sue that associate—for breach of a covenant not to compete, for solicitation of employees, for stealing stamps, for setting fire to the kennel room—whatever it likes. The question is not whether a suit can be brought, but rather whether the company (we'll call it GoliathVet), or plaintiff has adequate facts to prove the claim made in the lawsuit and whether the law supports the legal viability of the claim at the time and place it is brought.
Any reader who has served on a jury or is a regular viewer of Judge Judy understands the difference between facts and law as they relate to a lawsuit (or even a criminal case). The law refers to whether the judicial system is in a position to help out the plaintiff. No matter how serious a civil wrong perpetrated by one person on another might be, the justice system can offer a remedy only under certain circumstances.
Let's assume GoliathVet sued the associate (now the defendant), claiming that he pursued and stole two GoliathVet receptionists and opened a practice nearer to his old job than is permitted under the noncompete term in his employment agreement. Remember, GoliathVet can sue anybody for anything; maybe its allegations have merit. But does the company have the law on its side?
GoliathVet is incorporated in Nevada, and the associate works at its Virginia office. But the contract specifies that all disputes will be governed by New York law, where GoliathVet headquarters is located. GoliathVet sues its former associate in Nevada, and a process server serves a copy of the complaint personally on him at his home in Maryland. Depending on circumstances, here's what might happen:
Nevada court dismisses the claim for lack of jurisdiction because it feels that the suit should have been brought in Virginia where the alleged wrong occurred. (Essentially saying, "Sorry, GoliathVet, the law doesn't permit us to help you.")
Undaunted, the company sues again in Virginia and properly serves the former associate with the complaint.But then the Virginia court says, "Sorry, GoliathVet, we can't help you. Your complaint alleges contractual violations, but you haven't made a claim that the associate's acts are a breach under New York law. You may have proof of breach all day long under Virginia law, but your contract says we have to look at the case as New York would. Amend your complaint and serve it again; perhaps we can help under that circumstance."
GoliathVet does. This time, the associate shows up with his brother, who graduated from law school a month earlier. The judge asks if the defendant has any motions to make, and the associate's brother moves to dismiss because there exists a properly executed document signed by all GoliathVet employees that mandates arbitration rather than a lawsuit to resolve contract disputes. Again, GoliathVet is out: not because the associate is innocent of breach, but merely because the law doesn't support the claim.
Now, consider what would happen if there were no arbitration agreement and GoliathVet sued this associate in the proper venue, in the appropriate jurisdiction, within the statute of limitations applicable to contract disputes as interpreted to apply in New York. Now the law has been satisfied and the case can move forward to evaluation of facts. If the facts are persuasive, a verdict in favor of GoliathVet could theoretically be rendered.
The associate's lawyer brother prepares to select a jury but is admonished by the judge because he missed the part of the employment contract specifically waiving trial by jury. Consequently, in this case, the trier of fact will be the judge. Evidence will be presented to her, not a jury, because the associate signed his employment contract without taking notice of the jury waiver. (Some large companies insert such waivers to prevent a jury from being swayed to side with a poor young veterinarian over a big veterinary corporation in instances where the facts are fuzzy. Also, bench trials are faster and cheaper.)
So today the facts will be evaluated by the court. The judge will entertain witnesses and evidence of the associate's alleged breach (e.g., "How far from GoliathVet's office is your new clinic?"). She'll listen to the testimony of the two allegedly "purloined" receptionists to see if they bolted voluntarily from GoliathVet or succumbed to the entreaties and juicy pay rate of the defendant's new practice.
At the conclusion, the judge will establish whether a breach occurred and, if so, what type of financial relief will be provided to GoliathVet. (She'll also decide whether the applicable law considers the noncompete and nonsolicitation clauses fair enough to be enforced.)
GoliathVet says the contract establishes "liquidated damages," a specific sum agreed to by the associate in the event of any breach—this is spelled out in the agreement—for the amount of one full year's worth of the associate's salary. The associate's lawyer rebuts by reminding the judge that prior case law in this jurisdiction mandates that liquidated damages in employment contracts aren't enforceable.
Since the judge is no expert on liquidated damages, she orders both sides to submit briefs (legal research papers citing previous cases and statutes covering a certain topic). Think of it as a mini-trial on the subject of whether such clauses are enforceable.
Finally, the judge concludes the lawsuit by deciding in favor of GoliathVet. Or not. And granting monetary damages. Or not. And calculating those damages by using the contract's liquidated damages clause. Or not.
The upshot? Never forget rule No. 1: Folks can sue anybody for anything at any time. And of course, the corollary is rule No. 2: Attorneys, paid by the hour, love rule No. 1.
Dr. Christopher Allen is president of Associates in Veterinary Law PC, which provides legal and consulting services to veterinarians. Call (607) 754-1510 or e-mail [email protected].