FORT LAUDERDALE NON-COMPETE AGREEMENTS: EMPLOYEE’S MILITARY SERVICE MAY NOT TOLL NON-COMPETE PERIOD

A non-compete period may not be tolled because an employee is called for active military duty. While an employee may not be denied reemployment on account of a person’s performance of military duty, under the Uniformed Services Employment and Reemployment Rights Act of 1994, 38 U.S.C. § 4311, a court may consider the fact that the employee was not competing when serving his or her military duties. Peter Mavrick is a Fort Lauderdale non-compete attorney, and also advocates for clients in Palm Beach, Boca Raton, and Miami, Florida. The Mavrick Law Firm represents clients in breach of contract litigation, trade secret litigation, non-compete agreement litigation, employment litigation, trademark litigation, and other legal disputes in federal and state courts and in arbitration.

An example of this circumstance occurred in the case of SCI Funeral Services of Florida, Inc. v. Henry, 839 So. 2d 702 (Fla. 3d DCA 2002). Anel Henry (Henry) was employed by SCI Funeral Services of Florida, Inc. (SCI) as a sales department group leader. He signed a non-compete agreement with SCI, which prohibited him from competing with SCI for a period of twelve months after his employment had been terminated for any reason, with or without cause. Henry later became the subject of SCI’s investigation of a sexual harassment claim. SCI temporarily suspended his employment while they conducted their investigation. Henry was also on reserve duty with the United States Army. During the suspension, he was called up for military service in Panama. Henry received a phone call from a SCI employee to warn him that SCI’s sales manager was terminating his employment.

Henry received orders from the Army extended his tour of duty to total about one year. After Henry returned from service in Panama, he requested to resume employment, but SCI refused. Henry then applied for work with Woodlawn Park Cemetery Company (Woodlawn), a competitor of SCI. Woodlawn offered Henry a job, which would begin in the following month. SCI’s counsel sent a letter to the Henry, with a copy to Woodlawn, that threatened a lawsuit for violation of the non-compete agreement. SCI contended that SCI did not formally terminate Henry until his return from military duty, therefore the twelve-month period began when he came back from Panama rather than when he left about twelve months earlier. Woodlawn terminated Henry’s employment due SCI’s threats to enforce the non-compete agreement. SCI, however, never filed suit to enforce the non-compete agreement.

Henry filed a lawsuit against SCI for damages resulting from his termination by Woodlawn. Henry alleged that: a) SCI breached the employment contract by threatening suit on an expired non-compete agreement, b) SCI had tortiously interfered with his employment with Woodlawn, and c) SCI violated the Uniformed Services Employment and Reemployment Rights Act of 1994, 38 U.S.C. § 4311, which prohibited denial of reemployment on account of a person’s performance of military duty. Henry contended that his twelve-month non-compete period expired, because he ceased work with SCI before he was deployed by the Army.

Henry removed the case to the United States District Court for the Southern District of Florida based on the federal cause of action. The District Court entered summary judgment finding that SCI’s reasons for terminating Henry were not related to his military service. The District Court also found that there was no breach of contract, and remanded the tortious interference claim back to the Florida court. Upon return to the Florida trial court, SCI moved to dismiss and contended that the tortious interference cause of action was barred by the litigation privilege and the privilege for settlement discussions. SCI’s motion to dismiss was denied. After trial, the jury returned a verdict for Henry for $500,000, which was reduced by the trial court to $350,000. SCI immediately appealed.

SCI contended that its demand letter and subsequent conversations with Henry were absolutely privileged under the litigation privilege recognized in the case of Levin, Middlebrooks, Mabie, Thomas, Mayes, & Mitchell, P.A. v. U.S. Fire Insurance Co., 639 So.2d 606 (Fla.1994). Levin held that the litigation privilege bars causes of action in tort for statements made in connection with a judicial proceeding. SCI’s contention was that the litigation privilege applied to its demand letter because it threatened litigation. The appellate court did not address the question of whether the litigation privilege applied, rather it held that SCI was equitably estopped from asserting this argument. The appellate court reasoned that when an employer wrongly threatens an employee with litigation over a non-compete agreement which has expired and caused the employee to lose his or her job, there must necessarily be a judicial remedy for such conduct. The appellate court concluded that SCI’s conduct was not protected by a privilege.

SCI also contended that Henry’s absence for military duty did not count against the twelve months non-compete period. SCI argued that Henry was not formally separated from SCI until his return from Panama, and that SCI could “tack” the non-compete period on to the end of the military leave. The appellate court rejected this argument and found SCI contracted for a twelve-month non-compete period, and that is what SCI received. Because no competition took place during the military leave, the appellate court found that it was properly counted as part of the non-compete period. The appellate court affirmed the trial court’s decision.

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