FORT LAUDERDALE BUSINESS LITIGATION: ACCESS TO CONFIDENTIAL INFORMATION COULD ITSELF VIOLATE A NON-COMPETE AGREEMENT

A litigant seeking to obtain an injunction usually has to prove it was irreparably harmed to obtain an injunction. Hollywood Towers Condo. Ass’n, Inc. v. Hampton, 40 So. 3d 784 (Fla. 4th DCA 2010) (“To obtain a permanent injunction, the petitioner must establish a clear legal right, an inadequate remedy at law and that irreparable harm will arise absent injunctive relief.”). Establishing irreparable harm can be difficult in many factual scenarios. Reserve at Wedgefield Homeowners’ v. Dixon, 948 So. 2d 65 (Fla. 5th DCA 2007) (Entry “of temporary injunctive relief in this matter would have been improper because the alleged facts are insufficient to support a conclusion that Dixon would suffer irreparable harm if injunctive relief were not granted and that she does not have an adequate remedy at law.”). However, a plaintiff in a restrictive covenant lawsuit does not need to prove irreparable harm because it is statutorily presumed when that plaintiff establishes a violation of the underling restrictive covenant. Fla. Stat. § 542.335 (“The violation of an enforceable restrictive covenant creates a presumption of irreparable injury to the person seeking enforcement of a restrictive covenant.”). The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

The presumption of irreparable harm can be rebutted by a defendant trying to prevent the imposition of an injunction based on a restrictive covenant. Don King Productions, Inc. v. Chavez, 717 So. 2d 1094 (Fla. 4th DCA 1998) (“This case involves the interpretation of section 542.335… and whether the statutory presumption of irreparable injury [is] a rebuttable one. We hold that it is a rebuttable presumption…”). However, rebutting the presumption can be difficult. JonJuan Salon, Inc. v. Acosta, 922 So. 2d 1081 (Fla. 4th DCA 2006) (holding that the defendant did not rebut the presumption of irreparable harm by establishing that his solicitation attempts were unsuccessful). Especially when the defendant had access to confidential information. For example, in Autonation, Inc. v. O’Brien, 347 F. Supp. 2d 1299 (S.D. Fla. 2004), the court enjoined the defendant because he had “access to confidential and proprietary business information including [the plaintiff]’s Best Practices;… Peer Performance Reports;… Monthly Operating Review Meeting information; and… Dealer Central Website [information].” The court determined the defendant was “in a position to use [the plaintiff]’s confidential and proprietary business information in a way that would irreparably harm [the plaintiff]’s business interests.” However, this ruling may allow a defendant to rebut the presumption of irreparable harm or allow a defendant to demonstrate he or she did not violate the restrictive covenant by merely accessing the plaintiff’s confidential information. A defendant can do this by demonstrating he or she is not in a high-level position or is not in a position to use the information.

The Autonation, Inc. case can be problematic for a defendant trying to escape liability under a restrictive covenant because his or her access to confidential information by itself may violate a restrictive covenant and trigger the presumption of irreparable harm. Those who have access to such information should carefully consider whether a finder of fact could determine that he or she is in a position to use that new information.

The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.