Oregon Psychiatric Partners v. Henry

When deciding whether a noncompetition agreement is enforceable, Oregon law states that “when an agreement is partly legal and partly illegal, if the legal may be separated from the illegal part, the legal part will be enforced.” Montara Owners Assn. v. La Noue Development, LLC, 357 Or 333, 341, 353 P3d 563 (2015).

Plaintiff appealed a judgment by the trial court which dismissed Plaintiff’s complaint against Defendant with prejudice. Plaintiff assigned error to the trial court’s determination that a noncompetition agreement (“agreement”) was unenforceable, which led to a directed verdict that dismissed Plaintiff’s complaint. On appeal, Plaintiff argued that Defendant transacted business with the patients she met while she worked for Plaintiff and that the court should define the phrase “customers of the employer” broadly so that the agreement would fit within the exclusion provision under ORS 653.295(4)(b). Additionally, Plaintiff argued that even if part of the agreement was not enforceable under the specific statute, that should not void the entire agreement. In response, Defendant argued that the agreement did not distinguish between current and past patients, so ORS 653.295(1) was the applicable statute, not ORS 653.295(4)(b). Additionally, Defendant argued that the patients at issue could not be viewed as “customers” under ORS 653.295(4)(b) so the agreement was unenforceable. When deciding whether to enforce a noncompetition agreement, Oregon law states, “when an agreement is partly legal and partly illegal, if the legal may be separated from the illegal part, the legal part will be enforced.” Montara Owners Assn. v. La Noue Development, LLC, 357 Or 333, 341, 353 P3d 563 (2015).The Oregon Court of Appeals concluded that the trial court erred in determining the agreement was unenforceable and dismissing Plaintiff’s complaint because Plaintiff presented sufficient evidence to show that Defendant treated patients in a manner that could be viewed as “customers” who could have returned to Plaintiff, if Defendant had not “taken” them, and therefore were “customers of the employer” under ORS 653.295(4)(b).

Reversed and remanded.