Healthcare Services v. Copeland
| Decision Date | 08 August 2006 |
| Docket Number | No. SC 87083.,SC 87083. |
| Citation | 198 S.W.3d 604 |
| Parties | HEALTHCARE SERVICES OF THE OZARKS, INC., d/b/a Oxford Healthcare, Respondent-Appellant, v. Pearl Walker COPELAND and Luann Helms, Appellants-Respondents. |
| Court | Missouri Supreme Court |
Thomas W. Millington, Springfield, for Appellants-Respondents.
Rick E. Temple, Springfield, for Respondent-Appellant.
Jean Paul Bradshaw, II, R. Kent Sellers, Kansas City, for Amicus Curiae, Missouri Hospital Association.
This is a consolidated appeal from a judgment that denied Healthcare Services of the Ozarks, Inc., d/b/a Oxford Healthcare (Oxford) recovery of damages on breach of contract claims in separate actions brought against former employees Pearl Walker Copeland and LuAnn Helms. The judgment, however, granted Oxford injunctive relief to enforce covenants not to compete executed by Copeland and Helms. The judgment also denied separate counterclaims by Copeland and Helms against Oxford that sought damages for tortious interference with business relationships with their new employer ASA Healthcare, Inc., d/b/a Integrity Home Care (Integrity), and a declaration that the covenants not to compete were unenforceable. The judgment is affirmed in part and reversed in part, and the case is remanded.
The parties stipulated to the following facts. Copeland was hired by Oxford in 1979 and Helms was hired in 1996. Neither Copeland nor Helms had work experience in the home health service industry prior to employment by Oxford, although Helms had previously worked as a nurse. During their employment by Oxford, both had extensive contact with caseworkers with the Missouri Division of Aging (now the Missouri Division of Senior Services), clients, and other Oxford employees. While employed by Oxford, Copeland received her certificate of provider certification training.
Copeland signed a non-compete agreement June 1, 1993, and Helms signed a non-compete agreement September 2, 1997. Each was required to sign the agreement in order to continue their employment with Oxford.
Each agreement provided that for two years following separation from Oxford the respective employee would not "either directly or indirectly on [her] own account or as agent, stockholder, owner, employer, employee or otherwise, engage in a business competitive to that of [Oxford] within a radius of 100 miles from Joplin, Missouri." Each agreement further provided that the employee would not "in any way divert or attempt to divert from [Oxford] any business or employees whatsoever" and that each employee would not "influence any of the customers or employees of [Oxford]" during the two-year period.
On January 21, 2000, Copeland and Helms each submitted a notice of resignation with an effective date of February 21, 2000. At the time of her resignation, Copeland's salary from Oxford was $40,974 per year with an opportunity for bonus. Helms' salary at the time of her resignation was $35,500 per year.
Although the stipulation does not contain an exact date that Copeland and Helms were hired by Integrity, soon after Copeland submitted her notice of resignation, she attended meetings and began working with others, including the Missouri Division of Aging, on behalf of Integrity. On January 31, 2000, Integrity requested a social services block grant from the Missouri Division of Aging to provide the same type of services as Oxford provides in the same counties in which Oxford does business. Integrity's request to the Division of Aging included Copeland's certificate of provider certification training in order to satisfy a regulatory requirement that Integrity have at least one certified manager in order to be awarded the block grant contract it sought. Integrity received a social services block grant from the Missouri Division of Aging on February 4, 2000.
Copeland and Helms attended meetings at the home of Integrity's owner, Greg Horton, in Springfield, Missouri, in late January and February 2000. Copeland set up an office in her home in February 2000, for the purpose of conducting Integrity business. Beginning in February 2000, Helms worked several hours each workday in Copeland's home for Integrity. Copeland allowed meetings called by others to be held in her home on February 10 and 13, 2000, with present and former employees of Oxford to solicit employees for Integrity. A team roster submitted by Integrity to the Missouri Division of Aging listed Copeland and Helms as two of four employees that were actively working on its behalf in its Joplin office as of February 24, 2000.
Beginning in February 2000, some of Oxford's employees resigned to accept employment with Integrity. Some of Oxford's clients served by the resigning employees then requested that the Missouri Division of Aging transfer their services to Integrity, and services for those clients were transferred.
Integrity replaced Copeland's certificate of provider certification training that had been filed with the Missouri Division of Aging with that of another Integrity employee by letter dated July 3, 2000. The letter was received by the Missouri Division of Aging July 7, 2000. All of Copeland's and Helms' activities on behalf of Integrity occurred within 100 miles of Joplin, Missouri.
At the conclusion of the trial, the trial court found the following facts in addition to those stipulated to by the parties. The trial court found that on January 21, 2000, when Copeland and Helms resigned their employment with Oxford, they were aware of their non-compete agreements; that notwithstanding their knowledge of the non-compete agreements, each made a conscious decision to assist with starting Integrity; and that Copeland and Helms consciously agreed to suffer the consequences that would follow.
Oxford's action against Copeland was filed February 16, 2000. Its action against Helms was filed March 10, 2000. The trial court entered temporary restraining orders on February 24, 2000, and March 23, 2000, respectively, enforcing the non-compete agreements that Copeland and Helms had signed. Oxford posted two bonds of $7,500.00 to secure the restraining orders as to both Copeland and Helms.
On March 23, 2000, the trial court consolidated the separate actions against Copeland and Helms, and informally stayed the case at the defendants' request, to allow them to pursue a federal court action against the commissioner of the Internal Revenue Service and against Oxford. The federal court action sought a revocation of Oxford's tax-exempt status, damages under the Sherman Act,1 and a declaration that the non-compete agreements were void. The federal court action was unsuccessful and was dismissed on January 11, 2001.
During the pendency of the federal court action, the trial court extended the temporary restraining orders against Copeland and Helms every 15 days. The restraining orders were continued in effect until April 2, 2001, although it appears that Copeland and Helms thought that the restraining orders were in effect until the non-compete agreements expired. The two-year period covered by the Copeland and Helms non-compete agreements ended February 4, 2002.
After the federal action was dismissed, Copeland and Helms resumed pursuit of their action in the circuit court. In March 2002, by way of amended pleadings, Copeland and Helms each asserted counterclaims against Oxford for tortious interference with a business expectancy and for declaratory judgment to the effect that Oxford, as a not-for-profit public benefit corporation, was not entitled to obtain or enforce any non-disclosure or non-competition agreement that they may have signed.
Trial commenced January 8, 2004. At the time the case was tried, Copeland and Helms were employed by Integrity in Joplin, Missouri. The trial court found that the non-compete agreements were valid and enforceable and that Copeland and Helms each breached their non-compete agreement with Oxford, but that Oxford did not prove it was damaged as a result of the breaches of those agreements. The trial court also found that the restraining orders and injunctive relief that had been issued during the time the actions were pending were justified, had been issued properly and providently, and ordered the cash bonds posted by Oxford, together with interest accrued thereon, returned to Oxford. Finally, the trial court found against Copeland and Helms on both counts of their respective counterclaims against Oxford and assessed costs to Copeland and Helms. Judgment was entered in accordance with the trial court's findings. Copeland and Helms appeal and Oxford cross-appeals.
There are at least four valid and conflicting concerns at issue in the law of non-compete agreements.2 First, the employer needs to be able to engage a highly trained workforce to be competitive and profitable, without fear that the employee will use the employer's business secrets against it or steal the employer's customers after leaving employment.3 See West Group Broadcasting, Ltd. v. Bell, 942 S.W.2d 934, 937 (Mo.App.1997). Second, the employee must be mobile in order to provide for his or her family and to advance his or her career in an ever-changing marketplace. This mobility is dependent upon the ability of the employee to take his or her increasing skills and put them to work from one employer to the next. See id. Third, the law favors the freedom of parties to value their respective interests in negotiated contracts. Willman v. Beheler, 499 S.W.2d 770, 777 (Mo. 1973). And fourth, contracts in restraint of trade are unlawful. See section 416.031.4
Missouri courts balance these concerns by enforcing non-compete agreements in certain limited circumstances.5 Non-compete agreements are typically...
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...of foundational requirements "including relevancy, authentication, the best evidence rule, and hearsay." Healthcare Servs. of the Ozarks, Inc. v. Copeland , 198 S.W.3d 604, 615 (Mo. banc 2006). In particular, the Cities assert that "[a] summary of voluminous records is admissible in evidenc......
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...Missouri Supreme Court rarely entertains non-competition cases. In Health Care Services of the Ozarks, Inc. v. Copeland, 198 S.W.3d 604 (Mo. 2006), the court enforced a non-solicitation of customers and a true non-competition agreement. In Copeland, the employee had not directly challenged ......
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Private Sector Business Records
...for inspection, and (3) summarized material is itself admissible and accurate. 138 Healthcare Services of the Ozarks, Inc. v. Copeland , 198 S.W.3d 604 (Mo., 2006). A summary of voluminous records is admissible in evidence, under the business records exception to the hearsay rule, provided ......
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...covenant’s duration and geographic scope. 33 26. MO. REV. STAT. § 416.141. 27. See, e.g. , Healthcare Servs. of the Ozarks v. Copeland, 198 S.W.3d 604, 609-10 (Mo. 2006) (citing MO. REV. STAT. § 416.031); Woman’s Clinic v. St. John’s Health Sys., 252 F. Supp. 2d 857, 870 (W.D. Mo. 2002) (ev......
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Private sector business records
...for inspection, and (3) summarized material is itself admissible and accurate. 153 Healthcare Services of the Ozarks, Inc. v. Copeland , 198 S.W.3d 604 (Mo., 2006). A summary of voluminous records is admissible in evidence, under the business records exception to the hearsay rule, provided ......
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Private Sector Business Records
...for inspection, and (3) summarized material is itself admissible and accurate. 149 Healthcare Services of the Ozarks, Inc. v. Copeland , 198 S.W.3d 604 (Mo., 2006). A summary of voluminous records is admissible in evidence, under the business records exception to the hearsay rule, provided ......