FLORIDA NON-COMPETE CLAUSES AND IRREPARABLE HARM: PRESUMPTION OF IRREPARABLE HARM MAY BE REBUTTABLE IF DAMAGES ARE NOT CALCULATED

Many employment agreements contain covenants not to compete to protect employers from employees competing against them when the employment ends. If the employer seeks to enforce this covenant, it must prove, among other things, that it will suffer irreparable harm if the covenant is not enforced. This irreparable harm is presumed if the employee violates an enforceable covenant. In the case of Litwinczuk, M.D., v. Palm Beach Cardiovascular, 939 So.2d 268 (Fla. 4^th DCA 2006), Palm Beach Cardiovascular (the “Clinic”) sued Mr. Litwinczuk, M.D. (the “Doctor”) to enforce a non-compete clause enjoining the Doctor from operating a competing practice for 2 years within Palm Beach County. Despite the non-compete, the Doctor resigned and opened his own practice in the same field just four blocks away from the Clinic and retained many of the Clinic’s patients. The trial court ruled in favor of the Clinic, finding that the Doctor violated the covenant and, therefore, irreparable harm to the Clinic was presumed. A temporary injunction was issued preventing the Doctor from continuing to operate his new practice for 2 years. However, the court reduced the geographic scope of the noncompete. The court held that the Palm Beach County geographical restriction was overbroad and unreasonable. Peter Mavrick is a Palm Beach non-compete attorney who has extensive experience dealing with non-compete agreements.

The factual background of the case is fairly straightforward. In an effort to expand its business, the Clinic paid a recruiter $22,000 to find a doctor suitable for its practice and purchased an existing practice for $40,000 to provide a patient base for the newly hired doctor. The clinic hired the Doctor and they entered into an employment agreement with a non-complete clause in which the Doctor agreed that if he resigned, he would not enter into any practice with a “competing enterprise” for 2 years within Palm Beach County. Additionally, during those 2 years he was not to interfere with the Clinic’s relationships with its employees or patients. Despite this agreement, the Doctor resigned and began operating his own practice four blocks away from the Clinic, in the same field, and proceeded to see the Clinic’s patients.

The Clinic filed suit to enforce the non-compete covenant arguing that the Doctor had violated the covenant and, as such, the Clinic suffered irreparable harm. “In seeking an injunction, the movant must show: (1) irreparable harm if the status quo is not maintained; (2) no adequate remedy of law; (3) a clear legal right to the relief requested; (4) that any public interest will not be disserved; and (5) a substantial likelihood of success on the merits.” Shafer v. Shafer, 898 So.2d 1053, 1055 (Fla. 4^th DCA 2005). Additionally, Section 542.335(1)(j), Florida Statutes, provides in part, “The violation of an enforceable restrictive covenant creates a presumption of irreparable injury to the person seeking enforcement of a restrictive covenant.” This presumption is rebuttable and not conclusive. Passalacqua v. Naviant, Inc., 844 So.2d 792, 796 (Fla. 4^th DCA 2003). The trial court found the Doctor violated the non-compete clause, presumed irreparable harm, and issued a temporary injunction. The court, however, reduced the geographical location to a more reasonable area.

The Doctor appealed. He argued that damages incurred by the Clinic could be calculated and, therefore, the injury to the Clinic was not irreparable. In First Miami Securities, Inc. v. Bell, 758 So.2d 1229 (Fla. 4^th DCA 2000), the employer established a presumption of irreparable harm, but the presumption was rebutted because the employee was able to prove damages could be calculated through bookkeeping records. The Doctor argued, as in First Miami Securities, Inc., the Clinic’s damages could be calculated and, therefore, there was no irreparable harm. However, the Clinic’s manager persuasively testified that the Clinic’s losses could not be calculated because it was unknown what the Doctor was billing to his patients. The Doctor was thus unable to overcome the presumption of irreparable injury. In addition to irreparable harm, the Clinic was able to establish that the injunction was necessary to protect its “legitimate business interests,” which included its relationships with patients and goodwill of patients associated with the Clinic. (Section 542.335(1)(b), Florida Statutes). The appellate court found that the Clinic had suffered an irreparable harm due to the Doctor’s violation of the non-compete clause and it had a legitimate business interest in the form of patients and patient goodwill to protect, and affirmed the trial court’s decision.

Peter Mavrick is a Palm Beach non-compete attorney. This article does not serve as a substitute for legal advice tailored to a particular situation.