How do Courts Measure Distance in Non-Compete Contracts?
Most non-compete contracts prohibit competitive activity by the ex-employee within a certain number of miles of the employer’s business. The typical language prohibits competitive activity within a 15 to 25 mile radius of the employer’s business. The language, and how courts interpret this restrictive language, can get tricky. For example, some courts have found that a geographical restriction of a 20 mile radius of a city, town, or county cannot be enforced as there is no point from which to “draw” a radius. You may need to go back to your high school geometry for that one.
A recent decision in Ohio (David Ginn, DDS v. Stonecreek Dental Care) further complicates matters on geographical restrictions. In the Ginn case, a dentist sold his dental practice but continued to work at the same office as an employee. As part of the sale, he agreed not to compete for five years and was prohibited from working “within 30 miles” of the practice. The relationship between the parties deteriorated and the dentist went to work for a competing firm. The purchaser dentist filed suit claiming a breach of the non-compete.
The trial court ruled against the departing dentist, noting that although the new practice was more than 30 miles away from the old one when driving, it was less than 30 miles measured by a straight line. An Ohio appellate court affirmed the trial court’s decision on how to track miles. The appellate court held that despite the assertion that “within 30 miles” is subject to differing interpretations, Ohio courts have consistently measured the geographical limits as straight lines or “as the crow flies.”
I think this is a bad decision. It only makes sense if the contractual restrictions were written to prevent “crows” from becoming new patients of the departing dentist. People drive cars or take public transportation to their dentist’s office and the restriction should be measured by the miles driven on the roadway.