Golden v. Cal. Emergency Physicians Med. Grp.

• Decision Date: 08 April 2015
• Docket Number: No. 12–16514.,12–16514.
• Citation: 782 F.3d 1083
• Parties: Donald GOLDEN, Plaintiff–Appellant, v. CALIFORNIA EMERGENCY PHYSICIANS MEDICAL GROUP; Med America; Mark Alderdice; Robert Buscho, Defendants–Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

782 F.3d 1083

Donald GOLDEN, Plaintiff–Appellant

v.CALIFORNIA EMERGENCY PHYSICIANS MEDICAL GROUP; Med America; Mark Alderdice; Robert Buscho, Defendants–Appellees.

No. 12–16514.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 14, 2014.

Filed April 8, 2015.

Richard Raines, Gagen, McCoy, McMahon and Armstrong, Danville, Cal., argued the cause and filed the briefs for the plaintiff-appellant.

Sarah E. Robertson, Fitzgerald, Abbott & Beardsley LLP, Oakland, Cal., argued the cause for defendants-appellees. Mark Alan Delgado, Fitzgerald, Abbott & Beardsley LLP, Oakland, Cal., filed the brief for defendants-appellees. With him on the brief was Sarah E. Robertson, Fitzgerald, Abbott & Beardsley LLP, Oakland, Cal.

Appeal from the United States District Court for the Northern District of California, Jeffrey S. White, District Judge, Presiding. D.C. No. 3:10–cv–00437–JSW.

Before: ALEX KOZINSKI, DIARMUID F. O'SCANNLAIN, and MARY H. MURGUIA, Circuit Judges.

Opinion by Judge O'SCANNLAIN ; Dissent by Judge KOZINSKI.

OPINION

O'SCANNLAIN, Circuit Judge:

We must decide whether California law prohibits a settlement agreement that may constrain a physician's freedom to practice medicine.

I

A

Donald Golden, M.D., is an emergency-room doctor formerly affiliated with the California Emergency Physicians Medical Group (together with other related defendants sued in this action, collectively, “CEP”), a large consortium of over 1000 physicians that manages or staffs many emergency rooms, inpatient clinics, and other facilities in California and other, mostly Western states. In May 2008, Dr. Golden sued CEP in the California Superior Court of Alameda County, regarding the loss of his staff membership at Seton Coastside Medical Facility; he alleged various state and federal causes of action including racial discrimination. CEP removed the suit to federal court in January 2010 based on original subject-matter jurisdiction under 28 U.S.C. § 1331.

Prior to the scheduled trial date, the parties orally had agreed in open court to settle the case. In return for a substantial monetary amount, Dr. Golden consented to relinquish his current suit, to forego all other possible claims he may have against CEP, and furthermore—most important for this appeal—to waive any and all rights to employment with CEP or at any facility that CEP may own or with which it may contract in the future (the “no-employment provision”). The magistrate judge then presiding expressly confirmed with Dr. Golden that he bound himself thereby, although he did so “extremely reluctantly.” The terms of this agreement were subsequently reduced to writing.

Following the hearing, Dr. Golden refused to execute the written agreement and attempted to have it set aside. Dr. Golden's attorney, who represented him during the settlement negotiations and entered into the resulting agreement on his behalf, moved the court to withdraw as counsel, a motion on which the court never specifically acted. Instead, the district court referred the matter to the magistrate judge to determine whether it may enforce the settlement agreement. The magistrate judge, on June 23, 2011, issued her Report and Recommendation, advising that various provisions of the written agreement, not relevant to this case, be struck and, over Dr. Golden's objections, that he be compelled to sign the amended document. The district court adopted the magistrate judge's recommendation in full.

Dr. Golden nevertheless refused to sign the agreement and filed a notice of appeal, which this Court dismissed for lack of jurisdiction. Golden v. Cal. Emergency Physicians Med. Grp., No. 11–16983 (9th Cir. Jan. 9, 2012). Thereupon Dr. Golden's former counsel moved the district court to intervene and further moved to enforce the settlement agreement. Following several continuances and responsive papers filed by the defendants, former counsel, and Dr. Golden, the district court ultimately granted the motion to intervene, ordered the settlement be enforced, and dismissed the case. Dr. Golden filed a timely notice of appeal.

B

On appeal, Dr. Golden raises only one argument¹ : the no-employment provision of the agreement violates California law as a contract restraining the lawful practice of a profession. See Cal. Bus. & Prof.Code § 16600. Since the no-employment provision constituted a material term, Dr. Golden submits, the entire settlement agreement is consequently void and his lawsuit should be reinstated.

The no-employment provision expresses the parties' agreement “that ... Golden shall not be entitled to work or be reinstated at any CEP-contracted facility or at any facility owned or managed by CEP.” Such provision, however, not only waives any right Dr. Golden otherwise may have to continue or to regain previous or current employment with CEP; it also provides that “if CEP contracts to provide services to, or acquires rights in, a facility that is an emergency room ... at which Golden is employed or rendering services, CEP has the right to and will terminate Golden from any work in the emergency room without any liability whatsoever.” CEP retains a similar right, by virtue of this provision, to terminate Dr. Golden as a hospitalist at any facility that it may acquire or with which it may contract at some future point. The parties nevertheless further agreed to the possibility of a future employment arrangement at an “urgent care facility” but only under very narrow and well-defined circumstances.

Section 16600 of the California Business and Professions Code instructs that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” Courts and commentators appear unanimously to agree that this language regulates non-competition covenants, to whatever extent it also prohibits other professional restraints. Nowhere either in the no-employment provision or in the remainder of the agreement does Dr. Golden arguably surrender any right to practice his profession generally, nor any right to seek employment with CEP's competitors or at facilities in which CEP does not have an ownership interest or with which it does not contract for services. Rather, the no-employment provision solely governs the terms on which CEP agrees to do business with Dr. Golden in the future. Concluding that the no-employment provision did not inhibit Dr. Golden from competing with CEP, the district court determined that section 16600 did not void the settlement agreement.

II

Before we address the merits of Dr. Golden's appeal, we must first satisfy ourselves that we have jurisdiction over the case. Unlike other issues, which the litigants are under an obligation to raise or else we consider waived, the federal courts must independently evaluate whether a particular dispute meets the constitutional “case” or “controversy” requirement of Article III. See, e.g., Plains Commerce Bank v. Long Family Land & Cattle Co., 554 U.S. 316, 324, 128 S.Ct. 2709, 171 L.Ed.2d 457 (2008) (“[W]e bear an independent obligation to assure ourselves that jurisdiction is proper before proceeding to the merits.”); Metro. Wash. Airports Auth. v. Citizens for the Abatement of Aircraft Noise, Inc., 501 U.S. 252, 265 n. 13, 111 S.Ct. 2298, 115 L.Ed.2d 236 (1991) (“[Because ripeness] concerns our jurisdiction under Article III, ... we must consider the question on our own initiative.”).

Dr. Golden contends that section 16600 voids his settlement agreement because, in a future set of circumstances uncertain—perhaps unlikely—ever to materialize, the no-employment provision may impermissibly restrain his professional practice. We must therefore determine whether his prayer for relief would require us to adjudicate a merely hypothetical dispute that is currently unripe for review.

A

“The ripeness doctrine is drawn both from Article III limitations on judicial power and from prudential reasons for refusing to exercise jurisdiction.”Nat'l Park Hospitality Ass'n v. Dep't of Interior, 538 U.S. 803, 808, 123 S.Ct. 2026, 155 L.Ed.2d 1017 (2003) (internal quotation marks omitted). So-called prudential ripeness has a “twofold aspect, requiring us to evaluate both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration.” Abbott Labs. v. Gardner, 387 U.S. 136, 149, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967).

Nevertheless, in previous cases, we have concluded that we do not analyze the prudential component of the ripeness inquiry in private contract litigation. In re Coleman, 560 F.3d 1000, 1006 n. 15 (9th Cir.2009). We held specifically, in Principal Life Insurance Co. v. Robinson, that “the appropriate standard for determining ripeness of private party contract disputes is the traditional ripeness standard, namely, whether there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” 394 F.3d 665, 671 (9th Cir.2005) (internal quotation marks omitted).

Principal reasoned that the prudential-ripeness doctrine, “root[ed] in cases involving administrative agencies,” id. at 670, had developed in order to “prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements over administrative policies, and also to protect the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties,” id. (quoting Cal. Dep't of Educ. v. Bennett, 833 F.2d 827, 833 (9th Cir.1987) (internal quotation marks omitted)). Given the origin and rationale of prudential ripeness, Principal discerned “no legal or logical requirement compelling the extension” of the doctrine “to cases involving only private contracts.” Id.

Although we have not had occasion to apply Principal in an appeal from an order enforcing a settlement agreement, the principle exemplified...