VCA Animal Hospitals v. Hampel CA4/1
D081424
Cal. Ct. App.Dec 22, 2023Background
- Hampel and her husband sold their veterinary practice to VCA Animal Hospitals, Inc. in 2014, for over $5 million, including a noncompetition agreement.
- Hampel continued to work for VCA as an employee and medical director after the sale.
- In 2022, Hampel left VCA and, together with her husband, opened a veterinary facility next door to the former clinic, reportedly as a veterinary technician training school, but provided veterinary services to the public.
- VCA sued Hampel, alleging violation of the noncompetition agreement, which restricted Hampel from competing within a 20-mile radius for five years after her employment ended.
- The trial court issued a preliminary injunction prohibiting Hampel from practicing or promoting veterinary medicine at the new facility pending resolution of the case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability under § 16601 | Noncompete linked with sale of goodwill, so enforceable | Noncompete tied to end of employment is void under § 16600 | Agreement valid under § 16601 exception due to its tie to sale of goodwill |
| Scope of Injunctive Relief | Sought to prohibit all veterinary services at new practice | Relief was broader than pleadings and overbroad/vague | Injunction within scope, provided ample notice, and not vague/overbroad |
| Type of Injunction (Prohibitive vs Mandatory) | Prohibitory, maintains status quo and prevents ongoing breach | Mandatory, so should be more strictly scrutinized | Prohibitory, not subject to heightened scrutiny |
| Harm Balancing | Would lose benefit of goodwill purchased, irreparable harm | Hampel would be prevented from teaching and had minimal impact on VCA | Harm to VCA outweighs any potential hardship to Hampel |
Key Cases Cited
- Blue Mountain Enterprises, LLC v. Owen, 74 Cal.App.5th 537 (Cal. Ct. App. 2022) (enforceability of noncompetition covenants tied to sale of business under § 16601)
- Hilb, Rogal & Hamilton Ins. Services v. Robb, 33 Cal.App.4th 1812 (Cal. Ct. App. 1995) (noncompete enforceable when signed in connection with the sale of goodwill)
- Alliant Insurance Services, Inc. v. Gaddy, 159 Cal.App.4th 1292 (Cal. Ct. App. 2008) (preliminary injunction upholding noncompete post-sale of shares)
- Fillpoint, LLC v. Maas, 208 Cal.App.4th 1170 (Cal. Ct. App. 2012) (distinguishing separate employment noncompetes from those linked to sale of a business)
- Butt v. State of California, 4 Cal.4th 668 (Cal. 1992) (standards for granting preliminary injunctions)