FORT LAUDERDALE BUSINESS LITIGATION: PROTECTING CUSTOMER LISTS AS TRADE SECRETS

A prevalent issue arising in business litigation throughout Florida is whether the customer list of a business or employer is a protected trade secret under Fl as a trade secret Florida’s Uniform Trade Secret Act (FUTSA). Trade secrets are broadly defined under FUTSA and include information that “derive[s] economic value from not being readily ascertainable by others and must be the subject of reasonable efforts to protect its secrecy.” Del Monte Fresh Produce Co. v. Dole Foods Co., Inc., 136 F. Supp. 2d 1271 (S.D. Fla. 2001). Florida law considers a business’s customer lists and the information contained therein to be trade secrets subject to protection. Variable Annuity Life Ins. Co. v. Dull, No. 09-80113, 2009 WL 3180498 (S.D. Fla. Sept. 25, 2009). Peter Mavrick is a Fort Lauderdale business litigation attorney, and represents clients in business litigation in Miami, Boca Raton, and Palm Beach. The Mavrick Law Firm represents 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.

FUTSA provides that “a complainant is entitled to recover damages for misappropriation.” Fla. Stat. § 688.004(1). In turn, “misappropriation” is defined as either the “(a) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means, or (b) Disclosure or use of a trade secret of another . . .” Fla. Stat. § 688.002(2) (emphasis added). Thus, a plain reading of the statute makes clear that the wrongful acquisition of a trade secret, even without its actual use, constitutes a violation of FUTSA. See H2Ocean v. Schmitt, 2006 WL 1835974 (N.D. Fla. June 30, 2006). A trade secret is misappropriated if it is either acquired via improper means, or if it is disclosed or used by someone without proper consent.

FUTSA permits injunctive relief to redress any actual or threatened misappropriation of trade secrets. Se. Mech. Servs., Inc. v. Brody, 2008 WL 4613046 (M.D. Fla. Oct. 15, 2008). Florida law protects customer lists from misappropriation through injunctive relief. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Silcox, No. 01- 8800, 2001 WL 1200656 (S.D. Fla. Oct. 4, 2001). To prove a violation of FUTSA, a plaintiff must show that it: (1) possessed secret information and took reasonable steps to protect its secrecy and (2) the secret it possessed was misappropriated, either by one who knew or had reason to know that the secret was improperly obtained or by one who used improper means to obtain it. Del Monte Fresh Produce Co. v. Dole Foods Co., Inc., 136 F. Supp. 2d 1271 (S.D. Fla. 2001). Florida courts have held that “documents containing strategic marketing plans and pricing information have been held to constitute trade secrets under Florida law.” VAES Aero Servs. v. Arroyo, 860 F. Supp. 2d 1349, 1359 (S.D. Fla. 2012).

Irreparable injury occurs where trade secrets have been obtained through improper means, especially where the information is misappropriated through a breach of a duty to maintain secrecy. Sensormatic Elecs. Corp., 632 F. Supp. 2d 1147 (S.D. Fla. 2008). Moreover, “[t]he loss of customers and good will is an irreparable injury and is difficult to measure” and “irreparable harm may be suffered if [Defendants] continues to solicit customers from Plaintiff’s customer list.” Int’l Hair and Beauty Sys., LLC v. Simply Organic, 2011 WL 5359263 (M.D. Fla. Sept. 26, 2011). Courts will consider the harm resulting from misappropriating a client list as irreparable because the resulting damages are not easily quantifiable in money terms and there is typically no adequate remedy at law. Fortline, Inc. v. Moody, 2013 WL 12101142 (S.D. Fla. Jan. 7, 2013). For example, in Ryan, LLC v. Evans, the United States District Court for the Middle District of Florida found irreparable harm because the “undue loss of competitive advantage caused by the taking of [employer’s] data and information likewise is difficult to quantify monetarily and supports claim for irreparable harm in the absence of injunctive relief.” 2012 WL 1532492, at *9 (M.D. Fla. Mar. 20, 2012).

Additionally, in Fortiline, Inc. v. Moody, the United States District Court for the Southern District of Florida found “ample evidence to suggest that [the defendants] acquired [plaintiff’s] trade secrets through improper means” when a defendant “removed [plaintiff’s] customer contact [list] and pricing information from the company server to his laptop hard drive, and used this information to solicit customers for [his new company] while working for [the plaintiff].” 2013 WL 12101142 (S.D. Fla. Jan. 3, 2013). The Fortiline defendant “had exclusive use of Fortiline’s customer list after his resignation, and used this to send a mass email to all of Fortiline’s customers” to solicit their business. 2013 WL 12101142, at *11. Even though the defendant did not acquire the information from a third-party, the court still found that the defendant “actively obtain[ed] trade secrets through improper means” because he utilized plaintiff’s confidential customer data for his own benefit after he resigned.

Peter Mavrick is a Fort Lauderdale business litigation lawyer, and represents clients in Miami, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.