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Geocaris v. Surgical Consultants, Ltd. - 100 Wis. 2d 387, 302 N.W.2d 76 (Ct. App. 1981)

Rule:

The employer has the burden of proving the reasonable necessity of the restraints in a restrictive covenant in an employment contract.

Facts:

Defendant Thomas V. Geocaris, a physician and surgeon, was a former employee of plaintiff Surgical Consultants, Ltd. ("Surgical"), which limited its practice to surgical procedures. The employment contract executed by the parties contained a covenant that restricted Geocaris from practicing as a physician in Brown County for nine months following his termination of employment. Sometime after Geocaris left Surgical's employ, Surgical filed a lawsuit against Geocaris in Wisconsin state alleging that Geocaris breached the covenant. The trial court entered a judgment awarding damages to Surgical. Geocaris appealed, arguing that, while the time and territory restrictions of the covenant were reasonable, restricting him from practicing as a physician was not reasonably necessary for the protection of Surgical, whose practice was limited to surgery. 

Issue:

Did Surgical meet its burden of showing that the restraint was reasonably necessary to protect its business?

Answer:

No.

Conclusion:

The appeals court reversed the trial court's judgment. The court ruled that Surgical failed to introduce any evidence showing that Geocaris would compete with Surgical. The appeals court noted that, generally, a restrictive covenant in an employment contract would be enforced on behalf of an employer only if the restraints imposed were reasonably necessary for the employer's protection. The employer had the burden of proving the reasonable necessity of the restraints. According to the appeals court, Surgical proved only that it needed to restrain Geocaris from performing surgery. The appeals court held that Surgical did not offer any proof that Geocaris' practice as a physician, exclusive of surgery, would compete with its surgical practice. The appeals court further held that Surgical did not prove any justifiable need to restrain Geocaris' noncompetitive practice of medicine. The restraint was, therefore, not reasonably necessary.

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