FORT LAUDERDALE NON-COMPETE AGREEMENTS: SUMMARY JUDGMENT CAN BE INAPPROPRIATE TO DETERMINE REASONABLENESS AND SCOPE OF A NON-COMPETE COVENANT

In Whitby v. Infinity Radio Inc., 951 So.2d 890 (Fla. 4th DCA 2007), Florida’s Fourth District Court of Appeal decided an appeal from a former employee who had lost on summary judgment in Palm Beach Circuit Court. The trial court had decided in favor of the employer, and against the employee, that the non-compete covenant was enforceable. The appellate court held that the trial court erred in holding the non-compete covenant enforceable on summary judgment without allowing Appellants to present evidence as to the covenant’s reasonableness and scope. Peter Mavrick is a Fort Lauderdale non-compete lawyer 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.

The Whitby decision involved a radio personality who was known on-air as “Jennifer Ross” but whose real name was Elena Whitby. Whitby had signed an employment agreement that included a non-compete covenant, prohibiting Whitby from appearing on radio or television and from working for any competing business with in 125 miles of the radio station or for 12 months after leaving her employment with the radio station. In addition, the employment agreement included an exclusivity provision that prevented Whitby from discussing or entering into any agreement with any other entity concerning her present or future services during her employment with the radio station.

Thereafter, a competing radio station approached Whitby “to discuss the possibility of her working as an on-air personality. Whitby later accepted employment with the competing radio station. Thereafter, Whitby’s former employer Infinity Radio Inc. (Infinity) sued Whitby and filed an Emergency Motion For Temporary Injunction. The trial court thereafter denied the Emergency Motion For Temporary Injunction, Infinity appealed that ruling and the appellate court reversed the trial court’s decision in favor of Infinity.

The parties continued the litigation, and ultimately the trial court granted summary judgment against Whitby that the non-compete was enforceable. The appellate court began its analysis of Florida’s restrictive covenant statute, section 542.335(1), Florida Statutes (1999). Florida law permits enforcement of contracts that restrict or prohibit competition, but only “so long as such contracts are reasonable in time, area, and line of business….” The statute also requires that the party seeking enforcement “shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant.” § 542.335(1)(b), Fla. Stat. (1999). It provides further that: “Any restrictive covenant not supported by a legitimate business interest is unlawful and is void and unenforceable.” Section 542.335(1)(c) provides:

A person seeking enforcement of a restrictive covenant also shall plead and prove that the contractually specified restraint is reasonably necessary to protect the legitimate business interest or interests justifying the restriction. If a person seeking enforcement of the restrictive covenant establishes prima facie that the restraint is reasonably necessary, the person opposing enforcement has the burden of establishing that the contractually specified restraint is overbroad, overlong, or otherwise not reasonably necessary to protect the established legitimate business interest or interests. If a contractually specified restraint is overbroad, overlong, or otherwise not reasonably necessary to protect the legitimate business interest or interests, a court shall modify the restraint and grant only the relief reasonably necessary to protect such interest or interests.

Whether a non-compete covenant is reasonable or overly broad is a question of fact for the trial court. See Orkin Exterminating Co. v. Girardeau, 301 So.2d 38, 40 (Fla. 1st DCA 1974), cert. denied, 317 So.2d 75 (Fla.1975) (recognizing that “[w]hat is a reasonable area is a factual matter to be determined in each [non-compete] case”); Sarasota Beverage Co. v. Johnson, 551 So.2d 503, 507 (Fla. 2d DCA 1989) (citing Dorminy v. Frank B. Hall Co., Inc., 464 So.2d 154 (Fla. 5th DCA 1985)) (concluding that “[t]he facts of each [non-compete] case determine whether the area and time restrictions are reasonable”). “[A] trial court may not resolve disputed issues of fact when considering a motion for summary judgment.” Albelo v. S. Bell, 682 So.2d 1126, 1129 (Fla. 4th DCA 1996). The Fourth District Court of Appeal reasoned that most of the evidence in the case concerned Infinity’s legitimate business interests and the broadness of the non-compete covenant. Because much of that evidence was witness testimony, such evidence necessarily gives rise to questions of credibility which are inappropriate on summary judgment. Kuczkir v. Martell, 480 So.2d 700 (Fla. 4th DCA 1985) (“Where the issue of credibility is present, summary judgment is inappropriate”).

Therefore, the appellate court decided that the trial court erred in granting Infinity’s motion for partial summary judgment and concluding that the non-compete covenant was enforceable, without conducting an evidentiary hearing to hear testimony and receive evidence. The appellate court added that its decision was particularly appropriate because the trial Judge’s had said Whitby would be allowed to present such evidence during the course of the litigation.

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