FORT LAUDERDALE NON-COMPETE AGREEMENTS: RELEASES MUST SUFFICIENTLY REFERENCE NON-COMPETE AGREEMENTS

Separation agreements commonly include releases of liability for employers and employees to avoid litigation for any claims that may have been asserted by either party. The presence of a release in the separation agreement does not necessarily relieve the employee of non-compete, non-solicitation, and confidentiality clauses from a prior agreement. Peter Mavrick is a Fort Lauderdale non-compete attorney and business litigation attorney who has substantial experience with non-compete litigation, including injunction proceedings. The Mavrick Law Firm also represents clients in non-compete litigation and business litigation in Miami, Boca Raton, and Palm Beach.

An example of this occurred in the recent case of Accuform Mfg., Inc. v. Nat’l Marker Co., 8:19-CV-2220-T-33AEP, 2020 WL 1674577 (M.D. Fla. Jan. 13, 2020), report and recommendation adopted, 8:19-CV-2220-T-33AEP, 2020 WL 634416 (M.D. Fla. Feb. 11, 2020). Accuform Manufacturing Inc. (“Accuform”) entered an employment agreement with Bradford Montgomery (“Montgomery”), Peter Bloniarz (“Bloniarz”), John Donati (“Donati”), Rebecca Longo (“Longo”) (collectively “Defendants”). The employment agreement contained non-competition, non-solicitation, and confidentiality clauses. Accuform was later acquired by Justrite Manufacturing Company, LLC (“Justrite”). The acquisition resulted in consolidation of several departments which eliminated many jobs at the company. Accuform gave Montgomery, Bloniarz, and Donati a choice to assume a new role at Justrite or sign a separation agreement (“Separation Agreement”). Montgomery, Bloniarz, and Donati departed from Accuform and signed a Separation Agreement.

The terms of the Separation Agreement detailed certain benefits in exchange for the release of any claims against Accuform. Defendants were then hired by National Marker Company (“National Marker”), a competitor of Accuform. Accuform filed a lawsuit and a motion for a preliminary injunction against the Defendants for violation of the non-compete, non-solicitation, and confidentiality clauses. Accuform argued that preliminary injunctive relief was necessary because (a) Montgomery, Bloniarz, and Longo solicited and continued to solicit Accuform customers in violation of the employment agreements; (b) Montgomery, Bloniarz, Longo and Donati, breached and continued to breach the employment agreements by soliciting current Accuform employees to work for National Marker; and (c) all Defendants misappropriated, disclosed, and used Accuform’s confidential business information and continued to do so in violation of the confidentiality clauses of the employment agreements.

Defendants argued that the non-compete, non-solicitation, and confidentiality clauses in the individual Defendants’ employment agreements were rendered void by the Separation Agreements and subsequent communications by Accuform. Defendants contended that the Separation Agreements integrated the original employment agreements, and therefore released the individual Defendants from the post-employment obligations. Defendants relied on paragraph 10 of the Separation Agreement, which stated:

This Agreement sets out the entire agreement between you and Accuform and supersedes any and all prior oral or written agreements and understandings between you and Accuform concerning your separation.

Defendants also argued that there were oral discussions and email correspondence between Montgomery and Vickie Whitlock (“Whitlock”), Justrite’s Vice President of Human Resources. Montgomery alleged that when he asked about paragraph 10 of the Separation Agreement, Whitlock told him that it released him from his “noncompete agreement.” Montgomery alleged that he specifically asked Whitlock if he could work for Accuform’s competitor Brady, or anyone he wanted to, and Whitlock again answered, “Yes”. Montgomery asked for it to be put in writing, and Whitlock told him that paragraph 10 was sufficient. Montgomery further asserted that in email correspondence, Whitlock stated that the wording of paragraph 10 of the Separation Agreement, “is clear…in that this agreement supersedes all other agreements.” Montgomery further asserted that John Murphy (“Murphy”), Vice President of Administration at Accuform, also verified that paragraph 10 of the Separation Agreement released him from his non-compete, non-solicitation, and confidentiality clauses in the employment agreement.

The district court held that contrary to Defendants’ argument, the Separation Agreements could not be construed to be an integration of the employment agreements because they do not concern the same subject matter as the employment agreements. Palm Beach Maritime Museum, Inc. v. Hapoalim Securities USA, Inc., No. 18-cv-80596, 2019 WL 2167727 (S.D. Fla. Jan. 28, 2019) (found that the parties did not enter into an entirely new and unambiguous agreement of equal or greater dignity to the agreement first made with respect to the same subject). The basis for Defendants’ argument was that because the Separation Agreements stated that they superseded all previous oral and written agreements between Defendants and Accuform, that automatically included the employment agreements. Defendants also argued that the oral discussion, and email correspondence between Montgomery and Whitlock, which was reiterated between Montgomery and Murphy, established that the parties’ intentions was that the Separation Agreements integrated of the employment agreements.

The district court found that the Separation Agreements only referenced the separation of the Defendants’ employment. The Separation Agreements did not reference, in any way, the prior employment agreements, and more importantly the non-compete, non-solicitation, and confidentiality clauses. The district court found that no integration occurred.

Defendants argued in the alternative that Whitlock’s oral representations either orally modified the employment agreements or constituted a waiver its obligations. Defendants concluded that this modification or waiver released Defendants from the original obligations of the employment agreements. The district court disagreed. The employment agreements specifically stated that:

A waiver or amendment of this Agreement or any provision of it, will be valid and effective only if it is in writing and signed by both parties or the party waiving such provision. No waiver agreement will operate as waiver of any other term of this Agreement or of that same.

The district court found that the email correspondence did not constitute a written waiver because the wording in the email was vague and lacked any mention of the material terms of the original employment agreements. The email also did not qualify as new consideration to modify the employment agreements. McGuire v. Adex Corporation, Case No. 8:15-cv-2670-T-27-AAS, 2017 WL 1422426 (M.D. Fla. Apr. 19, 2017) (email correspondence did not create an enforceable amendment to the employment agreement because it lacked material terms and a modification to a contract must be supported by new consideration as well as consent of both parties). The district court concluded that the Separation Agreements in no way infringed upon the validity of the Employment Agreements, and thus were enforceable.

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