and Submitted December 4, 2017 San Francisco, California
from the United States District Court for the Northern
District of California Jeffrey S. White, District Judge,
Presiding D.C. No. 4:10-cv-00437-JSW
Matthew Borden (argued) and J. Noah Hagey, Braunhagey &
Borden LLP, San Francisco, California, for
E. Robertson (argued), Jonathan McNeil Wong, and Mark A.
Delgado, Donahue Fitzgerald LLP, Oakland, California, for
Before: Milan D. Smith, Jr., and Sandra S. Ikuta, Circuit
Judges, and John D. Bates, [*] Senior District Judge.
panel reversed the district court's order directing the
plaintiff to sign a settlement agreement in an employment
panel held that the settlement agreement, between a doctor
and his former employer, ran afoul of California law because
a provision of the agreement placed a "restraint of a
substantial character" on the doctor's medical
practice. The panel remanded the case for further
Judge M. Smith wrote that the settlement agreement did not
violate Cal. Prof. & Bus. Code § 16600, and the
district court did not abuse its discretion in granting
defendants' motion to enforce the agreement.
SENIOR DISTRICT JUDGE
now called on to answer the question that we left open when
this case was last before us: whether a provision of a
settlement agreement between Dr. Donald Golden and his former
employer, the California Emergency Physicians Medical Group
("CEP"), places a "restraint of a substantial
character" on Dr. Golden's medical practice. See
Golden v. Cal. Emergency Physicians Med. Grp., 782 F.3d
1083, 1093 (9th Cir. 2015) ("Golden I").
We conclude that it does, and that it therefore runs afoul of
California law. See Cal. Bus. & Prof. Code
Golden graduated from medical school in 1995. He later
completed a fellowship in geriatrics and a residency in
internal medicine, and in 2000 he began working for CEP, a
partnership of nearly 2, 000 physicians who staff emergency
rooms and other medical facilities in California and ten
other states. While at CEP, Dr. Golden worked primarily as an
emergency room physician, although he also worked part-time
in several other facilities, including two family practice
clinics and two occupational medicine clinics.
2007, CEP terminated Dr. Golden's employment, ostensibly
because he lacked board certification. Dr. Golden sued
CEP in Alameda County Superior Court, claiming that he had in
fact been fired because of his race. CEP removed Dr.
Golden's suit to federal court and, following a
settlement conference before a magistrate judge, the parties
orally agreed to settle the case.
the settlement agreement was later reduced to writing,
however, Dr. Golden refused to sign it. He claimed that one
of its provisions, Paragraph 7, was contrary to
California's statutory prohibition on contracts "by
which anyone is restrained from engaging in a lawful
profession, trade, or business of any kind." Cal. Bus.
& Prof. Code § 16600. Paragraph 7 states:
The parties agree that, except as specified in Paragraphs 7a
and b, below, Golden shall not be entitled to work or be
reinstated at any CEP-contracted facility or at any facility
owned or managed by CEP. The parties further agree that if
CEP contracts to provide services to, or acquires rights in,
a facility that is an emergency room as defined and regulated
by California law 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. Similarly, the parties agree that if CEP
contracts to provide services to, or acquires rights in, a
facility at which Golden is employed or rendering services as
a hospitalist, CEP has the right to and will terminate Golden
from any work as a hospitalist without any liability
7a states that if CEP contracts with or acquires rights in
"an urgent care facility that is not an emergency room .
. . and Golden is already working at that urgent care
facility, Golden may be entitled to continue working at that
urgent care facility" so long as he meets certain
criteria. Paragraph 7b goes on to state the terms of Dr.
Golden's continued employment if the conditions in
Paragraph 7a are met.
Dr. Golden's refusal to sign the agreement, his attorney
withdrew, intervened in the proceedings, and moved to enforce
the agreement so that he could collect his fee. The district
court granted the motion and ordered Dr. Golden to sign,
reasoning that because Paragraph 7 would not prevent Dr.
Golden from competing with CEP, it was not a
restraint on his medical practice, and section 16600 did not
apply. Dr. Golden continued to refuse to sign the agreement,
however, and he instead took his first appeal to this Court.
See Golden I, 782 F.3d at 1085.
reversed the district court's order, holding that the
court had misconstrued section 16600. Id. at
1092-93. The statute, we explained, applies not only to
noncompetition agreements but also to any contractual
provision that places a "restraint of a substantial
character" on a person's ability to practice a
profession, trade, or business. Id. at 1092 (quoting
Chamberlain v. Augustine, 156 P. 479, 480 (Cal.
1916)). Thus, the fact that Paragraph 7 did not prohibit Dr.
from competing with CEP was not dispositive; rather, the
question was whether Paragraph 7 substantially restrained Dr.
Golden's practice of medicine, particularly in light of
CEP's large presence in California. Id. at 1089,
1092-93. Because the factual record on that question was not
fully developed, however, we remanded to the district court
to determine in the first instance whether Paragraph 7
"constitutes a restraint of a substantial character to
Dr. Golden's medical practice." Id. at
remand, the district court again ordered Dr. Golden to sign
the settlement agreement, concluding this time that Paragraph
7 was not a restraint of a substantial character. The court
also denied Dr. Golden's request for a jury trial and
ruled that an evidentiary hearing was unnecessary. Dr. Golden
timely filed this appeal, challenging both the district
court's order directing him to sign the agreement and its
decision not to hold an evidentiary hearing.
review a district court's order enforcing a settlement
agreement for abuse of discretion. See Golden I, 782
F.3d at 1089. Like any other contract, however, we review the
validity of a settlement agreement de novo, and a
district court abuses its discretion if it incorrectly
determines that a settlement agreement is enforceable.
See id.; Tompkins v. 23andMe, Inc., 840
F.3d 1016, 1021 (9th Cir. 2016). The district court's
interpretation of state contract law is likewise reviewed
de novo. L.A. Lakers, Inc. v. Fed. Ins.
Co., 869 F.3d 795, 800 (9th Cir. 2017).
contends that the district court's determination that
Paragraph 7 did not impose a "restraint of a substantial
character" on Dr. Golden's medical practice is a
factual finding that we review for clear error. We disagree.
We think the question is better framed as a "mixed
question of law and fact"-one in which "the issue
is whether the facts satisfy the statutory standard."
In re Cherrett, 873 F.3d 1060, 1066 (9th Cir. 2017)
(citation omitted). Thus, while we defer to the district
court's specific factual findings as to the nature and
extent of the parties' respective professional
activities, we review de novo both the district
court's construction of Paragraph 7 and its conclusion
that, in light of the facts found, Paragraph 7 withstands
scrutiny under section 16600.
16600 of the California Business and Professions Code
provides, with certain exceptions not relevant here, 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." In Golden I, we
concluded that section 16600 extends beyond noncompetition
agreements to any "restraint of a substantial
character," citing both the statute's sweeping
language and the California decisions interpreting that
language. See 782 F.3d at 1090-92. Similar
considerations guide our analysis of what qualifies as a
"substantial" restraint under this standard.
See Int'l Bus. Machs. Corp. v. Bajorek, 191 F.3d
1033, 1041 (9th Cir. 1999) ("We are not free to read
California law without deferring to our own precedent on how
to construe it.").
begin, as always, with the statute's text. See
Nat'l Ass'n of Mfrs. v. Dep't of Def., 138
S.Ct. 617, 631 (2018). As we noted in Golden I, 782
F.3d at 1090, section 16600 speaks in categorical terms: it
refers to "every contract by which
anyone is restrained" from practicing a
"profession, trade, or business of any
kind," Cal. Bus. & Prof. Code § 16600 (emphases
added). This language also stands in stark contrast to the
statute's handful of narrow exceptions, which pertain
mostly to the sale or dissolution of businesses. See,
e.g., Cal. Bus. & Prof. Code § 16601 ("Any
person who sells the goodwill of a business . . . may agree
with the buyer to refrain from carrying on a similar business
within a specified geographic area in which the business so
sold . . . has been carried on, so long as the buyer . . .
carries on a like business therein."). As we said in
Golden I, these exceptions demonstrate that the
California legislature knew how to describe specific
restraints in "considerable detail" and that, had
it intended to draw section 16600 more narrowly, it easily
could have done so. 782 F.3d at 1090.
noted in Golden I how broadly California's
courts have read section 16600. See id. at 1091-92.
In Chamberlain v. Augustine, for example, the
California Supreme Court invalidated a provision of a
contract for the sale of stock in the Los Angeles Foundry
Company, which would have required the seller to pay $5, 000
if he worked for or acquired an interest in any other foundry
in California, Oregon, or Washington within three years of
the date of the sale. 156 P. at 479-80. Although the
provision applied in only three states and allowed the seller
"to act as laborer or molder in various foundries,"
the court nonetheless concluded that it imposed a
"restraint of a substantial ...