Doctor who violates non-compete agreement cannot obtain tax information or explore employment-related sexual activity of employer-CEO
Opthalmologist David Krebs worked for Great Lakes Eye Institute and signed an agreement that promised he wouldn't compete with his employer for two years. The agreement also prohibited him from using his employer's customer list for purposes of competing with the employer. After about nine years with the firm, Krebs started his own practice and invited his patients to move to the new practice with him. The employer sued him to require payment of the liquidated damages in his contract (basically 40% of his gross receipts for 12 months or $200,000.00, whichever is greater). Krebs attempted to justify his move by documenting sexual relationships occurring between the Great Lakes' CEO, Shokoohi, and staff employees. Krebs claimed these affairs created liability exposure in the employer which devalued the company stock which he would have the right to purchase under the contract.
The Court of Appeals ruled that Krebs could not question Shokoohi about sexual dalliance issues, because Krebs' claims of diminished stock value were irrelevant to the dispute over the liquidated damages provision in the parties' contract. The Court also held that Great Lakes was not required to disclose its tax and income information to Krebs for the same reason. The Court noted that these materials may be relevant to other claims by Great Lakes (for example, its claim of interference with business relationships) but since the parties hadn't explored that issue in the lower court, it wasn't ripe for decision in the Court of Appeals.