PALM BEACH NON-COMPETE AGREEMENTS: TEMPORARY INJUNCTION TO STOP “IRREPARABLE HARM”

Businesses seeking to enforce their non-compete agreements often need to seek a temporary injunction to prevent irreparable harm. Non-compete law is unique because the moving party does not need to provide evidence quantifying the amount of possible damages in order to show irreparable harm. Under Florida law, the business instead needs to allege that immeasurable damages would result without a temporary injunction. Peter Mavrick is a Palm Beach non-compete attorney, and also advocates for clients in Boca Raton, Fort Lauderdale, and Miami, Florida. Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

An example of this occurred in the case of Data Payment Sys., Inc. v. Caso, 253 So. 3d 53 (Fla. 3d DCA 2018). Data Payment Systems, Inc. (Data Payment), a payment processing company, entered a written sub-office agreement with Ignite Payments, Inc. (“Ignite”), an independent contractor. The sub-office agreement contained a non-compete clause and a confidentiality clause. Juan Marcos Batista (Batista) executed this agreement on behalf of Ignite. Batista and Christopher Caso (Caso) created Onepay LLC (Onepay). Data Payment then entered a sub-office agreement with One-pay with nearly identical non-compete and confidentiality clauses.

During the course of Ignite and Onepay’s work for Data Payment, Caso and Batista were provided access to Data Payment’s confidential information and trade secrets. Caso and Batista allegedly created Ireland Pay LLC (Ireland Pay), a payment processing service in direct competition with Data Payment in violation of the non-compete clause. Data Payment terminated its agreements with Ignite and Onepay because Caso and Bastista allegedly misappropriated Data Payment’s trade secrets to solicit its customers. Caso also allegedly threatened a Data Payment employee with violence.

Data Payment filed a lawsuit against Ignite, Onepay, Ireland Pay, Batista and Caso. Data Payment asserted claims for temporary and permanent injunctive relief, misappropriation of trade secrets, breach of contract, tortious interference, and to pierce the corporate veils of Ignite, Onepay and Ireland Pay. Data Payment also sought emergency temporary injunctive relief to enjoin defendants: (i) from threatening any further acts of violence toward Data Payment and its employees, (ii) from retaining any of Data Payment’s trade secrets or other confidential business information, (iii) from further violation of the non-compete and confidentiality clauses by Batista, Ignite, and Onepay; and (iv) from further aiding and abetting the violation of the non-compete and confidentiality clauses by Caso and Ireland Pay.

After an evidentiary hearing, the trial court denied Data Payment’s temporary injunction motion. The trial court denied Data Payment’s motion because Data Payment presented no testimony “putting a quantification” on any irreparable harm Data Payment allegedly would suffer if the injunction were not entered, and because Data Payment asserted other causes of action for damages which established the existence of an adequate remedy at law. Data Payment immediately appealed.

Citing precedent from the 2010 appellate case Reliance Wholesale, Inc. v. Godfrey, 51 So.3d 561 (Fla. 3d DCA 2010), Florida’s Third District Court of Appeal in the Data Payment Systems case explained that the party seeking a temporary injunction must establish, among other things, a likelihood of irreparable harm and unavailability of an adequate remedy at law. Because the trial court found that Data Payment failed to prove irreparable harm, the trial court denied Data Payment’s injunction motion without conducting any further analysis. The appellate court found that the trial court applied the wrong standard concerning the element of irreparable harm.

The appellate court found that the trial court erred in failing to apply the statutory presumption of irreparable harm. Section 542.335(1)(j), Fla. Stat. states, in pertinent part, “The violation of an enforceable restrictive covenant creates a presumption of irreparable injury to the person seeking enforcement of a restrictive covenant.” The appellate court held that a party seeking a temporary injunction based on a violation of a non-compete agreement is not required to establish the amount of damage caused, but rather the difficulty of measuring the amount of damages inflicted.

The appellate court also found that the trial court erred in determining that Data Payment was not entitled to injunctive relief because of the existence of other causes of action. The appellate court held that “[w]hether Data Payment may prevail at trial for damages on any of its underlying causes of action against the defendants…does not ipso facto preclude entry of a temporary injunction in this case.”

Because it appeared from the record that the trial court failed to consider the statutory presumption of irreparable injury potentially implicated in this case and erroneously determined that Data Payment had an adequate remedy at law that precluded injunctive relief, the appellate court reversed the trial court’s order and remanded for the trial court to conduct a new hearing on Data Payment’s motion.

Peter Mavrick is a Palm Beach non-compete lawyer who also practices non-compete litigation in Boca Raton, Fort Lauderdale, and Miami. This article does not serve as a substitute for legal advice tailored to a particular situation.