Eastern Carolina Internal Med., P.A. v. Faidas,
No. COA01-626 (N.C. Ct. App. May 7, 2002)

A hospital sued a former employee for failure to make payments under the employment contract's "cost sharing" provision, which allowed the hospital to recoup payments from an employee who left the hospital and then became employed by a competitor. The former employee argued that the provision was an unreasonable restraint of trade, void against public policy, and an unenforceable penalty. The Court of Appeals of North Carolina found that the contract did not prohibit the former employee from engaging in the practice of her profession so, therefore, it was not a covenant not to compete, which would be subject to strict scrutiny as to reasonableness and public policy. The court also found that the liquidated damages provision was precise and estimated a reasonable sum that was not a penalty and therefore enforceable.