FORT LAUDERDALE BUSINESS LITIGATION: NON-COMPETE BURDENS

“Florida law … contains a comprehensive framework for analyzing, evaluating and enforcing restrictive covenants contained in employment contracts.” Vital Pharmaceuticals, Inc. v. Alfieri, 23 F. 4th 1282, 1291 (11th Cir. 2022) (quotation and citation omitted). This framework includes a burden shifting approach between the restrictive covenant’s enforcer and enforcee that provides each party with an opportunity the negate the other’s position. Below we explore the framework’s burden shifting approach and each parties’ ability to use those burdens to their advantage. Peter Mavrick is a Fort Lauderdale business litigation attorney. 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 law, and other legal disputes in federal and state courts and in arbitration.

The restrictive covenant’s enforcer has the initial burden of pleading and proving that the restrictive covenant is supported by one or more legitimate business interests justifying the restrictive covenant. Fla. Stat. § 542.335. These legitimate business interests are identified by statute in a non-exhaustive list and include the protection of trade secrets, valuable confidential business information that does not qualify as a trade secret, substantial relationships with specific prospective or existing customers, and customer good will. Id; Alonso-Llamazares v. Int’l Dermatology Research, Inc., 339 So. 3d 385 (Fla. 3d DCA 2022) (“Section 542.335(1)(b) sets forth a non-exhaustive list of legitimate business interests that may justify the restrictive covenant sought to be enforced.”). The initial requirement that the enforcer plead and prove the existence of a legitimate business interest may present the enforcee with his or her first opportunity to thwart enforcement. If the enforcee can demonstrate the enforcer failed to prove the existence of a legitimate business interest, the court cannot enforce the restrictive covenant. See Blue-Grace Logistics LLC v. Fahey, 653 F. Supp. 3d 1172 (M.D. Fla. 2023), appeal dismissed, 2023 WL 3691014 (11th Cir. Apr. 12, 2023) (granting summary judgment against the enforcer because it “repeatedly speaks of ‘confidential’ and ‘proprietary’ information, but it never explains exactly what that information is or what makes it proprietary or confidential. Even where it describes the information with slightly more detail, it fails to explain the information’s value”).

The enforcer must also plead and prove that the restrictive covenant is reasonably necessary to protect the legitimate business interest asserted. Fla. Stat. § 542.335. This presents the enforcee with his or her second opportunity to thwart enforcement of the restrictive covenant if the enforcee can prove the covenant does not reasonably protect the legitimate business interest. For example, maybe the confidential information the enforcer is trying to protect has no utility in the hands of a competitor. See Blue-Grace Logistics LLC, 653 F. Supp. 3d 1172 (granting summary judgment because the plaintiff failed to show that the purported confidential information “was still relevant ‘given fluctuations in the industry,’ which Blue-Grace’s corporate representative agreed led to rate changes and customers having to rebid their freight”). Or maybe, the enforcer no longer conducts business with the customer it is trying to protect. IDMWORKS, L.L.C. v. Pophaly, 192 F. Supp. 3d 1335 (S.D. Fla 2016) (rejecting the plaintiff’s request to enforce a non-compete agreement because a “company cannot successfully claim a protectable business interest in a relationship with a former customer”). These are just two ways the enforcee can demonstrate that the enforcer failed to meet its second burden.

The tides turn after the enforcer satisfies both burdens because the enforcee then has the burden to demonstrate the restrictive covenant “is overbroad, overlong, or otherwise not reasonably necessary to protect the established legitimate business interest.” Fla. Stat. § 542.335. The enforcee cannot simply negate the enforcer’s arguments but must instead provide affirmative evidence demonstrating the restrictive covenant’s overbreadth. See Southernmost Foot & Ankle Specialists, P.A. v. Torregrosa, 891 So. 2d 591 (Fla. 3d DCA 2004) (reducing the effective geographic scope of the restrictive covenant). However, the enforcee’s burden can be eased when he or she disputes the reasonableness of the duration of a restrictive covenant. This is because the restrictive covenant statute provides certain bright-line presumptions for testing durational reasonableness. Fla. Stat. § 542.335. Courts apply these presumptions when determining whether a restrictive covenant is presumptively reasonable in duration under certain circumstances. See Milner Voice & Data, Inc. v. Tassy, 377 F. Supp. 2d 1209 (S.D. Fla. 2005) (finding the duration of the restrictive covenant reasonable based on the statute and the relevant circumstances).

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.