FORT LAUDERDALE BUSINESS LITIGATION: ENFORCEMENT OF NON-COMPETE AGREEMENTS

Florida law protects employers and similarly situated persons from unlawful competition. But every competitive act does not qualify as an unlawful competitive act. White v. Mederi Caretenders Visiting Services of Se. Florida, LLC, 226 So. 3d 774 (Fla. 2017) (“Section 542.335 does not protect covenants ‘whose sole purpose is to prevent competition per se’ because those contracts are void against public policy.”). There “must be special facts present over and above ordinary competition” to be protected by Florida’s non-compete laws. Passalacqua v. Naviant, Inc., 844 So. 2d 792 (Fla. 4th DCA 2003). “These special facts must be such that without the covenant not to compete the employee would gain an unfair advantage in future competition with the employer.” Id (emphasis removed). 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.

Florida’s legislature created a list of special facts constituting unlawful competition. They are called legitimate business interests and are as follows:

1: Use of another’s trade secrets;

2: Use of another’s valuable confidential business or professional information that otherwise does not qualify as trade secret;

3: Competing with, or soliciting, substantial relationships with specific prospective or existing customers, patients, or clients;

4: Using customer, patient, or client goodwill associated with (a) an ongoing business or professional practice, trade name, trademark, service mark, or trade dress, (b) a specific geographic location, or (c) a specific marketing or trade area; and

5: Extraordinary or specialized training.

Fla. Stat. § 542.335. However, the list is not exhaustive. 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.”). Additional unlisted legitimate business interests could therefore support enforcement of a non-compete agreement and interference therewith, could cause unfair competition.

Former employers and similarly situated individuals sometimes try impermissibly expanding the “special facts” needed to establish a legitimate business interest. In many cases, the former employer asserts that the defendant unlawfully competed by conducting business with, or soliciting, a former customer or some hopeful future relationship that has not yet materialized. Interactions with former customers and hopeful future customers cannot however constitute unlawful competition because the customer relationship was previously severed or not sufficiently substantial to be established. See Fla. Stat. § 542.335 (omitting former customers as a legitimate business interest and requiring substantial customer relationships); Envtl. Services, Inc. v. Carter, 9 So. 3d 1258, 1265 (Fla. 5th DCA 2009) (The “protection of former customers generally does not qualify as a legitimate business interest where no identifiable agreement exists with such customers establishing that they would return with future work.”).

Below we provide two examples illustrating Florida’s refusal to recognize legitimate business interests with former customers and future hopeful customers. In IDMWORKS, L.L.C. v. Pophaly, 192 F. Supp. 3d 1335 (S.D. Fla 2016), the plaintiff alleged that the defendant violated a non-compete agreement and unlawfully competed by accepting employment with the plaintiff’s former customer. Id. However, the evidence demonstrated that the customer “made plans to replace [the p]laintiff and implemented a transition plan earlier in December.” Id. This evidence caused the court to reject the plaintiff’s claim because a “company cannot successfully claim a protectable business interest in a relationship with a former customer.” Id. In Properties of Villages, Inc. v. Kranz, 2020 WL 5939942, at *1 (M.D. Fla. Oct. 7, 2020), the court refused to hold the defendant liable for violating a non-compete agreement because the “evidence [only] reflected customers that Plaintiff hoped to contract with in the future.” The court determined this evidence was insufficient to establish liability, especially in an industry where customers have freedom or choice absent an existing contractual relationship. Id. Therefore, it is imperative for a plaintiff seeking to enforce a non-compete agreement to demonstrate that breach of the agreement gave rise to an unlawful act of competition and misuse of a legitimate business interest. 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.