Argued and Submitted, San Francisco, California
February 14, 2014.
As Amended July 22, 2015.
Appeal from the United States District Court for the Northern District of California. D.C. No. 3:10-cv-00437-JSW. Jeffrey S. White, District Judge, Presiding.
The panel reversed the district court's order that a settlement agreement be enforced in an employment discrimination action filed by a physician.
The agreement included a provision that the physician waive his rights to employment with the defendant or at any facility that the defendant may own or with which it may contract in the future.
The panel held that the parties' private party contract dispute regarding whether the no-employment provision voided the settlement agreement was ripe for review under the traditional ripeness standard.
The panel held that the district court abused its discretion in holding that Cal. Bus. & Prof. Code § 16600, which provides that a contract is void if it restrains anyone from engaging in a lawful profession, did not apply solely because the no-employment provision in the settlement agreement did not constitute a covenant not to compete. The panel remanded the case to the district court for further proceedings.
Dissenting, Judge Kozinski wrote that the settlement agreement was not void because the no-employment provision did not limit the physician's current ability to practice his profession.
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.
Before: Alex Kozinski, Diarmuid F. O'Scannlain, and Mary H. Murguia, Circuit Judges.
O'SCANNLAIN, Circuit Judge:
We must decide whether California law prohibits a settlement agreement that may constrain a physician's freedom to practice medicine.
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.
On appeal, Dr. Golden raises only one argument: 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 ...