Business Law Simulation Exercise for Managers #1: Restrictive Covenants in Contracts Overview

Business Law Simulation Exercise for Managers #1: Restrictive Covenants in Contracts

Overview

Business law instructors use a wide variety of simulations each with the objective of having students engage in a sequential decision-making exercise involving a legal issue that is typically covered in Legal Environment of Business/Business Law courses..

The simulations are specifically crafted to be: 1) flexible enough to use in a variety of classroom settings; 2) geared towards business students who are working towards a tenable solution to a legal problem as an alternative to relying on a judicial forum to resolve the dispute; 3) directly related to one or more topics covered in the textbook.

Each simulation contains two parts. After an overview of the simulation process and learning objectives for the student, Part 1 presents a hypothetical fact pattern describing events leading up to a legal dispute. Part 2 is a set of two hypothetical case summaries that give students brief facts, legal points, and short excerpts from the opinion. While these cases are hypothetical, they are based on actual cases from appellate courts in various states and represent a majority view.

Advocate Memorandum

Students are assigned first information in Text regarding the enforceability of noncompete covenants and article on enforceability of noncompete covenants under the writing assignment tab. Then study the Stipulated Facts and the Longville cases.

Students are assigned to compose a minimum of 1500 word memorandum that advocates a particular party’s view (the student can decide which side to defend but you MUST TAKE ONE SIDE AND DEFEND IT CONSISTENTLY) on the issue of the enforceability of the restrictive covenant.

Students outline each legal issue applicable to enforceability of the covenant and support their arguments using citations to legal points and excerpts of the Longville case law. Students are assigned to conclude the document by suggesting any potential non-judicial solution that may mutually benefit the parties. There are other issues, See the rubric on what is being graded, only focus on the enforceability of the covenant,

Business Law Simulation Exercise for Managers: Contracts

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(Writing Exercise: Advocate Memorandum

Introduction:. It does not have to be in memo form. It can be a paper written to support taking a case, it could be a paper written to persuade me that one side or the other would be the winner in a court case. It could be your closing argument to a jury. Be creative. Whatever form you choose it must be a persuasive essay or at least have the requirements of a persuasive essay. If you forgot how to write one, review the articles I have posted under writing tips or contact the Writing Center,

Assignment:

Study the Stipulated Facts and Longville case law in the Simulation Exercise.

YOU MUST ADVOCATE (DEFEND) either NA or Blackwell.

You are only to focus on enforceability of the covenant and not on the issues in the fact pattern that could arise regarding proper formation and performance of contract

Your memorandum should contain: 1) a brief summary of relevant facts of the dispute; 2) an explanation of each legal issue in the analysis with an application of legal rules or doctrines governing the dispute; 3) a list of all remedies that your side is entitled to; 4) a tenable solution to resolve the dispute in a non-judicial forum. Your memorandum should articulate arguments that support your side of the case by citing directly from the Longville cases points of law and opinion excerpts (use a simple parenthetical citation format with the first name of case and point/excerpt number such as Wellspan at Point 2, or Regional at Excerpt b1”)..

You must also use two update sources (published no earlier than 1-1-2020).They need to be used as part of your paper. I suggest using lexology.com which stores commentary written by law firms on current cases that pertain to business. They should be more than just a definition. Wikipedia is not a reliable source.

Be sure to explain why you cited a particular point. Start with your strongest argument and give an analysis as to the likelihood of success of each theory.

In determining a tenable solution, carefully consider the objectives of each party (e.g., NA’s desire to protect their legitimate business interest; Blackwell’s desire to practice medicine in southwestern Longville).

No more than 20% can be quoted sources with proper attribution. At least 80% must be your original words.

Grading Criteria:

See Memorandum Evaluation form (Attachment A) page 4 of the instructions for specific factors used in evaluating your memorandum.

Due Date: Draft 7/31/2024 11:59 pm

Final 8/11/2024 11:59 pm

Policy on Late Work: No extensions

Attachment “A”

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Memorandum Evaluation

Student: ________________________

Possible

Score

Facts

40

Relevant summary of facts used throughout analysis

Analysis

80

Demonstrated understanding of legitimate business interests (Wellspan Case point of Law point b, Excerpt b1,b2,b3)

40

Demonstrated understanding of balancing tests (Wellspan case point of law Point D)

40

Demonstrated understanding of reasonable scope and duration (Regional Hospital case Points of Law and Opinion Excerpts)

40

Used case law to support points

40

Use 2 outside sources to support points (must be no earlier than 1/1/2020)

40

Offered a tenable non-judicial solution

Writing style

40

Sentences were direct, clear and concise with appropriate syntax and legal expression

40

Written as a persuasive essay

Comments:

400

Total

Evaluation Guidelines:

Issue

Student’s should cover:

Legitimate business interest

What specific legitimate business interests is NA alleging?

How can medical practices have trade secrets?

Can a small practice actually generate enough goodwill to qualify as a legitimate business interest?

What kind of investment did NA make in Blackwell that is similar to the one in the Wellspan case?

Balancing Tests

How should the balancing test be applied? Does it weigh in favor of NA since they are merely attempting to protect their patient base and referral base? Since the practice is specialized, isn’t it even more important to enforce the covenant given the devastating impact that your relocation could have on their revenue from patients?

Given the lack of neurologists in the region, what public policy issues apply? Shouldn’t patients choose their own physician?

Reasonably necessary in scope and duration

Can NA legitimately protect their interests in their patient base and referral base in entire the 50-mile radius? Couldn’t Blackwell simply locate her practice outside the restricted area?

The case law does not give an exact number of years, but there are no cases that provide for a three-year covenant such as the one Blackwell signed. Why are three years necessary to protect NA’s interest?

Some other things to ponder

Tips:

The Stipulated Facts are designed to have some facts that favor Blackwell’s position and some that cut towards NA’s position. Neither side has a distinct advantage it is often a good idea to inform students that they should not only articulate their own arguments, but also to anticipate alternative arguments because you will need to write about them.

You are only to focus on enforceability of the covenant and not on the issues in the fact pattern that could arise regarding proper formation and performance of contract.

Students sometimes are confused how to use points and facts in their arguments. Students should be encouraged to cite specific points of law and excerpts.. Students should also be encouraged to factually distinguish any cases that do not support their arguments. That is, tell the reader why one case or the other can’t be applied because it is factually different from the NA v. Blackwell case.

Issue

Legitimate business interest

NA: What specific legitimate business interests are you alleging?

How can medical practices have trade secrets?

Can a small practice actually generate enough goodwill to qualify as a legitimate business interest?

What kind of investment did you make in Blackwell that is similar to the one in the Wellspan case?

Blackwell: Why isn’t NA’s patient referral base protectable?

Balancing Tests

Blackwell: Doesn’t the balancing test weigh favor of NA since they are merely attempting to protect their patient base and referral base? Since the practice is specialized, isn’t it even more important to enforce the covenant given the devastating impact that your relocation could have on their revenue from patients?

NA: Given the lack of neurologists in the region, doesn’t public policy demand that Dr. Blackwell be released from the agreement despite your protectable interests? Are you asking me to rule that patients cannot choose their own physician?

Competition

NA: Could it reasonable be said that NA is really not a “competitor” of Galway Hospital? Does a small practice really compete with a large city hospital for patients?

Blackwell: If your current patients find out that you left, isn’t it reasonable to assume they would be willing to drive 30-40 minutes extra in order to continue care under you? If so, isn’t that competition?

Reasonably necessary in scope and duration

Blackwell: Given that the neurology is practiced throughout Longville, why can’t NA protect their interests in their patient base and referral base in entire the 50-mile radius? Couldn’t you simply locate your practice outside the restricted area?

NA: The case law does not give an exact number of years, but there are no cases that provide for a three-year covenant such as the one Blackwell signed. Why is three years necessary to protect your interest?

Some other ways to analyze

8. Enforceability: Assuming that the non-compete covenant was properly formed, is it enforceable against Blackwell? What specific legitimate business interests is NA alleging? How can medical practices have trade secrets? Can a small practice actually generate enough goodwill to qualify as a legitimate business interest? What kind of investment did NA make in Blackwell that is similar to the one in the Wellspan case?

9. Balancing tests: How should the balancing test be applied? Does it weigh in favor of NA since they are merely attempting to protect their patient base and referral base? Since the practice is specialized, isn’t it even more important to enforce the covenant given the devastating impact that your relocation could have on their revenue from patients? Given the lack of neurologists in the region, what public policy issues apply? Shouldn’t patients choose their own physician?

10. Scope and Duration of Restriction: Can NA legitimately protect their interests in their patient base and referral base in entire the 50-mile radius? Couldn’t Blackwell simply locate her practice outside the restricted area? The case law does not give an exact number of years, but there are no cases that provide for a three-year covenant such as the one Blackwell signed. Is three years necessary to protect NA’s interest?

11. Non-Judicial Solution: Given the objectives of each party (e.g., NA’s desire to protect their legitimate business interest; Blackwell’s desire to practice medicine in southwestern Longville), could the parties agree to a tenable, non-judicial solution that is mutually beneficial? What terms would you propose?

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