Golden v. California Emergency Physicians Med. Group, 896 F.3d 1018 (9th Cir. 2018)

Donald Golden, M.D. is an emergency-room doctor formerly affiliated with the California Emergency Physicians Medical Group (“CEP”), a large consortium of over 1,000 physicians that manages or staffs many emergency rooms in California and other western states. Dr. Golden sued CEP for various claims, including racial discrimination. Prior to trial, the parties settled the case and announced the terms orally in open court. Pursuant to the settlement, Dr. Golden received, among other things, a substantial monetary sum and agreed to waive any and all rights to employment with CEP or any facility that CEP may own or with which it may contract in the future. Dr. Golden later refused to execute the written agreement confirming the settlement and sought to have it set aside. The magistrate judge and the district court disregarded Dr. Golden’s objections and ordered that he be compelled to sign the settlement agreement. Dr. Golden appealed, asserting that the no-employment provision in the settlement agreement was unlawful under Cal. Business & Professions Code § 16600 (which invalidates “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business…”).

The Ninth Circuit previously reversed the judgment of the district court and remanded the case for further proceedings in order to determine “in the first instance whether the no-employment provision constitutes a restraint of a substantial character to Dr. Golden’s medical practice.” On remand, the district court again ordered Dr. Golden to sign the settlement agreement after concluding that the no-employment provision was not an illegal restraint. In this opinion, the Ninth Circuit again reversed the lower court, holding that the no-employment provision substantially restrained Dr. Golden’s lawful profession, trade or business in violation of Section 16600 to the extent it prevents him from working for employers that have contracts with CEP and to the extent it permits CEP to terminate him from existing employment in facilities that are not owned by CEP. However, the provision is enforceable to the extent it bars him from working at facilities that are owned or operated by CEP. Nevertheless, the Court held that “because the parties do not dispute that [the no-employment provision] is material to the settlement agreement, the entire agreement is void.”