OREGON PSYCHIATRIC PARTNERS, LLP, an Oregon limited liability partnership, Plaintiff-Appellant,
Kelley HENRY, RN, P.M.H.N.P., Defendant-Respondent.
and Submitted May 16, 2017
County Circuit Court 15CV08506; Lauren S. Holland, Judge.
Randolph Turnbow argued the cause and fled the briefs for
W. Percell argued the cause for respondent. Also on the brief
was John R. Roberts.
DeHoog, Presiding Judge, and Hadlock, Judge, and Lagesen,
Summary: Plaintiff appeals a judgment dismissing with
prejudice its complaint against defendant, a psychiatric
nurse practitioner formerly employed by plaintiff, in which
plaintiff sought to enforce a noncompetition agreement that
it had entered into with defendant. Plaintiff assigns error
to the trial court's grant of defendant's motion for
a directed verdict on the ground that the agreement was
unenforceable under ORS 653.295(1), which provides that
noncompetition agreements "may not be enforced"
unless certain requirements are met. Among other arguments,
plaintiff argues that the court erred because the agreement
is enforceable under ORS 653.295(4)(b), which provides that
the requirements of ORS 653.295(1) do not apply to a
"covenant not to * * * solicit or transact business with
customers of the employer." Held: The trial
court erred, because the agreement was enforceable, at least
in part, as a nonsolicitation or nontransaction agreement
under ORS 653.295(4)(b).
Or.App. 472] DEHOOG, P. J.
Oregon Psychiatric Partners, LLP (OPP), appeals a judgment
dismissing with prejudice OPP's complaint against
defendant, Henry, a psychiatric nurse practitioner formerly
employed by OPP. Plaintiff sought to enforce a noncompetition
agreement that it had entered into with defendant; the trial
court concluded that the agreement was unenforceable, granted
defendant's motion for a directed verdict, and dismissed
the complaint. On appeal, we conclude that, under ORS
653.295(4)(b), the agreement is at least in part enforceable
as a "covenant not to * * * solicit or transact business
with customers of the employer" and that the trial court
therefore erred in dismissing the complaint.Accordingly, we
reverse and remand.
Or.App. 473] We state the facts in the light most favorable
to plaintiff, the nonmoving party. Plaintiff hired defendant in
July 2013 to work as a psychiatric nurse practitioner at
plaintiff's established clinic in Eugene. The parties
signed an employment contract that included the following
"LIMITED NON-COMPETITION. Nurse Practitioner shall not
provide services, directly or indirectly through any person
or entity, to any patients who have received services by
Nurse Practitioner at OPP or any predecessor entity for a
period of two (2) years after termination of Nurse
Practitioner's employment under this agreement within
fifty (50) miles of Eugene, Oregon. Pre-existing patients
established with Nurse Practitioner in her private practice
prior to the date of this contract shall be exempt from this
(Uppercase in original.) The contract also included a
severability clause stating:
"The invalidity of any term or provision of this
agreement shall not affect the validity of any other
provision. If all or any portion of any provision of this
agreement is held to be enforceable for any reason, the
relevant provision or provisions shall be enforced to the
extent permitted by law and so as to most fully accomplish
the parties' objective intent."
fall of 2014, OPP's owner proposed modifying
defendant's pay structure in a manner that would reduce
her per patient income. Defendant rejected that proposal and
told OPP that she would be quitting, effective February 2015.
Defendant also told OPP that she considered the
noncompetition agreement that she had entered to be
unenforceable. [293 Or.App. 474] In accordance with that
belief, defendant opened her own practice in Eugene upon
leaving OPP and continued to treat a number of the patients
that she had first treated while working for OPP.
response, OPP sued to enforce the noncompetition agreement,
seeking injunctive relief and disgorgement of defendant's
earnings "from current or former patients of
[OPP]." As noted, the case proceeded to a bench trial.
In a pretrial motion, plaintiff moved to strike as
insufficiently pleaded defendant's "affirmative
defense" that the parties' agreement was
unenforceable under ORS 653.295; the trial court denied that
motion. Later, at the conclusion of plaintiffs case-in-chief,
defendant moved for a "directed verdict,"
specifically relying on her defense that plaintiff had not
shown that the parties' agreement met certain
requirements of ORS 653.295(1), which, as set out above,
states that a noncompetition agreement is "voidable and
may not be enforced" unless it meets those requirements.
Plaintiff contended that the parties' agreement satisfied
the requirements of a valid noncompetition agreement under
ORS 653.295(1), but also argued that those requirements were
ultimately immaterial because the agreement fit within the
statutory exclusion in ORS 653.295(4)(b), which provides that
subsection (1) "do[es] not apply to * * * [a] covenant
not to solicit employees of the employer or solicit or
transact business with customers of the employer."
trial court granted defendant's motion, ruling that the
agreement did not satisfy the requirements of ORS 653.295(1),
because defendant had not been paid on a "salary
basis." See ORS 653.295(1)(b) (requiring that
the employee be "a person described in ORS
653.020(3)," which, in turn, requires that the employee
earn a salary and be "paid on a salary basis").
When asked by plaintiff to specifically address "the
exception to the statute for prohibitions on dealing with the
employer's customers," the court reiterated its
earlier conclusion that the agreement was a noncompetition
agreement and said that it was "not excluded." The
court subsequently entered a general judgment dismissing
plaintiff's claims with prejudice; plaintiff appeals that
Or.App. 475] On appeal, plaintiff assigns error to the trial
court's denial of its motion to strike and the
court's ruling granting defendant's motion for a
directed verdict. We reject without written discussion
plaintiff's argument that the trial court erred in
failing to strike on pleading grounds defendant's
"affirmative defense" that the parties'
agreement was unenforceable under ORS 653.295, and we discuss
only plaintiff's argument that the parties' agreement
is enforceable under ORS 653.295(4)(b) as a "covenant
not to * * * solicit or transact business with customers of
the employer," or "nonsolicitation
agreement." In support of that argument, plaintiff
asserts that we should construe the phrase "customers of
the employer" broadly, such that the agreement here fits
squarely within the exclusion under ORS 653.295(4)(b).
Alternatively, plaintiff argues that, at least as to the 34
patients that defendant "took" with her from OPP to
her new practice, the agreement is potentially enforceable
under the exclusion. Defendant disputes both points. She
argues that, under ORS 653.295(4)(b), "customers of the
employer" are limited to current customers and
that, because the agreement does not distinguish between
OPP's current and former patients, the requirements of
ORS 653.295(1) apply. Defendant further argues, as a factual
matter, that the patients at issue here cannot be viewed as