FLORIDA NON-COMPETE LAW: COURTS REQUIRE PROOF OF PARTICULAR FACTS TO ESTABLISH A LEGITIMATE BUSINESS INTEREST FOR A NON-COMPETE AGREEMENT

Any competition by a former employee may injure the business of the former employer. However, the former employer cannot restrain ordinary competition. To be entitled to protection, the former employer must show special facts over and above ordinary competition which show that the former employee would have an unfair advantage without the non-compete agreement. Peter Mavrick is a Miami non-compete lawyer who has extensive experience with non-competition covenant litigation and claims for injunctive relief.

In Passalacqua v. Naviant, Inc., 844 So.2d 792 (Fla. 4th DCA 2003), Naviant, Inc. (“Naviant”) provided “opt-in email marketing services” that claimed its success due to its “unique” high volume marketing methods and techniques. Nicholas Passalacqua (“Passalacqua”) and Matt Sechter (“Sechter”) were hired by Naviant. Passalacqua and Sechter knew each other from their prior work as “cold callers”, i.e. making unsolicited sales calls, selling securities. Naviant required Passalacqua and Sechter to sign an agreement with non-compete and non-disclosure provisions (the “Agreement”).

After working for Naviant for three weeks, Passalacqua resigned to start his own business in the opt-in e-mail marketing industry. Passalacqua joined another person to form E–Mail Analytics, Inc. (“E–Mail Analytics”), which also provided opt-in e-mail services. Shortly thereafter, Sechter resigned from Naviant. Sechter joined E–Mail Analytics and bought Passalacqua’s ownership interest. Passalacqua continued to work for E-Mail Analytics.

Naviant filed a lawsuit seeking injunctive relief, an accounting and damages, and a temporary injunction against Passalacqua, Sechter and E–Mail Analytics (collectively “Defendants”). The trial court issued a temporary injunction which prohibited appellants from engaging in competition with Naviant in the opt-in e-mail marketing business and from disclosing Naviant’s confidential information. The temporary injunction lacked any specific factual findings that Defendant obtained or used any trade secrets or any extraordinary or specialized training from Naviant. The Defendants immediately appealed.

Section 542.335(1)(b) of the Florida Statutes states, in pertinent part, “the person seeking enforcement of a restrictive covenant shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant…including, but [] not limited to… 2. [v]aluable confidential business or professional information that otherwise does not qualify as trade secrets…[and]… 5. [e]xtraordinary or specialized training.” “Any restrictive covenant not supported by a legitimate business interest is unlawful and is void and unenforceable.” Fla. Stat. § 542.335(1)(b).

Naviant’s evidence of a legitimate business interest consisted of its CEO’s testimony that Naviant developed a “wholly unique methodology” to capture a large percentage of the opt-in email market. Defendants did not dispute Naviant’s success in the marketplace but disputed its claim that it possessed a unique methodology. The appellate court held Naviant failed to prove the existence of a legitimate business interest or confidential business information. Naviant’s testimony during the evidentiary hearing asserted that its sales manual presented very unique cold calling sales presentations and closing techniques. However, the appellate court found that the testimony of Naviant’s CEO did not articulate how any activity, method or technique utilized by Naviant was unique or proprietary in any way, nor did it give any reason to believe that the manual was anything but a compilation of widely known and commonly used sales and marketing techniques. There was also no testimony that anyone saw Passalacqua or Sechter remove their sales manuals from Naviant.

The appellate court further found that Naviant did not identify any confidential database or other customer-related material that Defendants’ misappropriated or used. In addition, Navient’s CEO conceded that: (1) Naviant’s new employees are not given names of any existing customers, but rather are given sales leads which Naviant obtained through commercial sources, and (2) Passalacqua and Sechter had no contact with any of Naviant’s customers while employed with Naviant. Passalacqua v. Naviant, Inc. also held that although Defendants were not required to disprove Naviant’s unsubstantiated claims of proprietary information, Defendants’ detailed and uncontroverted testimony demonstrated that there was nothing unique about Naviant’s operations, sales methods, training or other aspects of its business that anyone with their history of “cold calling” would not know.

The appellate court found that the record lacked the required evidentiary showing of a legitimate business interest, confidential information or extraordinary or specialized training to justify an injunction to enforce the non-compete agreement. The court of appeals vacated (i.e., terminated) the temporary injunction.

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