NON-COMPETE AGREEMENTS (“RESTRICTIVE COVENANTS”): THE EVOLUTION OF THE LEGAL STANDARD FOR TEMPORARY INJUNCTIONS

Non-compete agreements, also commonly referred to as “restrictive covenants,” have been subject to countless legal disputes arising between employers and their employees. The primary purpose of a restrictive covenant is to protect an employers’ alleged business interests and restrain employees from engaging unfair competition which can be highly detrimental to the employer’s own business. Peter Mavrick is a Fort Lauderdale non-compete lawyer who has extensive specialized experience dealing with restrictive covenants and business litigation.

When a restrictive covenant is violated, the preferred remedy is a temporary or permanent injunction. The granting or denial of a temporary injunction is a matter within the discretion of the trial court. An appellant who challenges the trial court’s order on a motion for temporary injunction has a heavy burden to meet since the court’s ruling is presumed to be correct and can only be reversed where it is clear the court abused its discretion.” Florida Digestive Health Specialists, LLP v. Colina, 192 So. 3d 491, 494 (Fla. 2d DCA 2015). Florida Statute 542.335 governs the enforcement of restrictive covenants dated on or after July 1, 1996, and repealed the previous Florida Statute 542.33.

In July 1996, the legal standard for granting a temporary injunction changed. The previous legal standard for a party seeking a temporary injunction required the plaintiff to prove four elements: (1) a likelihood of irreparable harm and the unavailability of an adequate remedy at law; (2) a substantial likelihood of success on the merits; (3) that the threatened injury to the petitioner outweighs possible harm to the respondent (“balancing of the harms”); and (4) that the granting of a temporary injunction will not disserve the public interest. Cordis Corp. v. Prooslin, 482 So. 2d 489, 490 (Fla. 3d DCA 1986). In Colina, however, the Second District Court of Appeal found that the trial court had erred in its analysis since the third element which requires the courts to use a “balancing of the harms,” is in direct conflict with F.S. 542.335(1)(g)(1). Florida Digestive Health Specialists, LLP v. Colina, 192 So. 3d 491, 494 (Fla. 2d DCA 2015). F.S. 542.335(1)(g) specifically states that a court “shall not consider any individualized economic or other hardship that might be caused to the person against whom enforcement is sought.”

The current legal standard for granting a temporary injunction changes the previous third element of a “balancing of the harms.” In Colucci, the Fourth District Court of Appeal required the plaintiff to show the following to determine if the temporary injunction should be granted: (1) that it will suffer irreparable harm unless the status quo is maintained; (2) that it has no adequate remedy at law; (3) that it has a substantial likelihood of success on the merits; and (4) that a temporary injunction will serve the public interest. Colucci v. Kar Kare Auto. Group, Inc., 918 So. 2d 431, 438 (Fla. 4th DCA 2006).

The Fourth District Court of Appeal in Colucci reversed the trial court’s granting of the temporary injunction. The employer contended that the employee was responsible for its loss of business. Although there was evidence that the employee breached the agreement by using a similar business name, the employee successfully rebutted the employer’s claim of irreparable harm under F.S. 542.335(j). The court determined that there was no irreparable harm because there was no evidence the employee misappropriated clients or caused a decline in sales. In view of the lack of evidence, the Fourth District Court of Appeal ruled that the employer was not substantially likely to prevail on the merits and is therefore not entitled to a temporary injunction. Colucci v. Kar Kare Auto. Group, Inc., 918 So. 2d 431, 441 (Fla. 4th DCA 2006).

Peter Mavrick is a Fort Lauderdale non-compete attorney who has successfully represented many clients in Florida restrictive covenant cases in the Miami-Dade, Broward, and Palm Beach County areas encompassed by the Third and Fourth District Courts of Appeal, as well as Hillsborough, Sarasota, and other counties encompassed by the Second Circuit Court of Appeal. This article does not serve as a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311.