FLORIDA NON-COMPETE DEFENSE: APPELLATE COURT REVERSES DECISION FOR FAILURE TO APPLY PRESUMPTION OF IRREPARABLE HARM

Florida’s Non-Compete Covenant Statute, section 542.335, establishes certain requirements for covenants restraining competition, and once such statutory requirements are met, the restrictive covenant becomes enforceable. Section 542.335(1)(j) allows restrictive covenants to be enforced through a temporary injunction, which, pursuant to Rule 1.610(a)(1)(A) of the Florida Rules of Civil Procedure, may be granted only if “it appears from the specific facts shown by affidavit or verified pleading that immediate and irreparable injury, loss, or damage will result to the movant before the adverse party can be heard in opposition.” As such, section 542.335(1)(j) includes a provision stating that “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 critical to the issuance of a temporary injunction to enjoin a violation of a restrictive covenant because at the time a party is seeking such an injunction, he or she may not have had the benefit of completing discovery to ascertain the exact nature and amount of harm suffered due to the violation of the restrictive covenant. Thus, the presumption of irreparable injury allows the party seeking to enforce the restrictive covenant to do so without the need for such discovery. An example of just how critical this presumption is can be found in a recent Florida appellate court decision out of the Second District Court of Appeals.

In Medco Data, LLC v. Bailey, 152 So. 3d 105, 106 (Fla. 2d DCA 2014), the plaintiff, Medco Data, LLC (“Medco Data”), appealed a trial court’s denial of a temporary injunction against three of its former employees for violating the restrictive covenants contained in their respective employment agreements. The trial court found that the agreements were “well written” and “valid,” and further found that the former employees “did something to breach the relationship and it cost Medco Data money.” Nevertheless, the trial court denied Medco Data’s motion for temporary injunction, stating “Medco Data has to prove a likelihood of irreparable harm. I don’t find that the company can show that in this case.” Relying primarily on the wording of section 542.335 and prior appellate court authority, the Second District Court of Appeals reversed the trial court’s denial of the temporary injunction “because the trial court failed to apply the statutory presumption of irreparable injury under section 542.335(1)(j),” and remanded the case to the trial court for reconsideration in view of the presumption.

The appellate court’s decision in Medco Data, LLC v. Bailey makes it clear that a trial court’s failure to apply the presumption of irreparable injury when a party is seeking an injunction to enjoin the violation of an enforceable restrictive covenant constitutes reversible error. The application of the presumption, however, does not always mean that an injunction will be granted. The presumption is a rebuttable. In other words, once the presumption is applied, the burden shifts to the party opposing the injunction to show the absence of injury. Nevertheless, the fact that the presumption must be applied after a court finds that an enforceable restrictive covenant has been violated is significant because, as discussed above, it avoids the need for lengthy discovery prior to the issuance of a temporary injunction.

The Mavrick Law Firm has successfully represented many businesses in Florida non-competition covenant litigation in the Miami-Dade, Broward, and Palm Beach County areas encompassed by the Third and Fourth District Courts of Appeal, as well as Hillsborough, Sarasota, and other counties encompassed by the Second Circuit Court of Appeals. This article is not a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311; Email: peter@mavricklaw.com.