The Eleventh Circuit recently affirmed the enforcement of a non-competition agreement against a former employee where the plaintiff-company appealed from judgment entered in its favor because it was dissatisfied with the result. See MQ Associates, Inc. v. North Bay Imaging, LLC, 2008 WL 713688 (11th Cir. March 18, 2008).

Plaintiff MQ Associates (“MedQuest”) operates outpatient medical imaging clinics, providing services such as Magnetic Resonance Imaging (MRI), X-rays, and CT Scans. MedQuest employed defendant Bruce Woolum, first as a technician moving up eventually to area manager. In return for his employment and stock options, Woolum agreed to a non-competition agreement, which prevented his solicitation of MedQuest employees and competition with MedQuest within a 25-mile radius of the relevant imaging clinic for 24 months. The non-competition agreement also included an “extension” provision, which provided that “If [Woolum] violates the provisions [stated above], [Woolum] shall continue to be bound by the restrictions set forth [above] and the Non-Compete Period shall continue until the expiration of a cumulative period of twenty four months after the cessation of the violation.” In other words, if Woolum violated the agreement just before it expired, it could result in a total prohibition on competition of nearly four years.

Despite this agreement, Woolum left MedQuest and prepared to open a competing imaging center two miles away. In so doing, he solicited a MedQuest employee to join him at his new venture: North Bay Imaging. In response, MedQuest filed an action requesting, among other things, an injunction against North Bay and Woolum preventing competition and solicitation. The district court granted the injunction as to the non-solicitation provision, including extending its length because, it concluded, the extension clause operated independently based on the particular prohibition challenged. But as North Bay had not opened for business yet, the court reasoned, it was not actually in competition, thus, the non-competition provision could not be enforced against North Bay.

MedQuest appealed, claiming that these conclusions were incorrect because (i) the extension clause applied to both prohibitions and (ii) even if it did not apply to both prohibitions, entering into a venture for the purposes of competing was sufficient to find “indirect competition.”

The appeals court disagreed on both counts and refused to find that the district court had abused its discretion in tailoring the injunctive relief. Most notable from this decision is the difficult place into which MedQuest was placed when its former employee began preparing to compete. It could prohibit him from soliciting its employees, to be sure, but the Court held that “formation and start-up” are insufficient to support finding competition.