FORT LAUDERDALE NON-COMPETE AGREEMENTS: PROOF OF REASONABLE NECESSITY TO ENFORCE A NON-COMPETE COVENANT

To enforce a non-compete agreement, it is not sufficient to merely show that the scope of the restrictions in the non-compete agreement are reasonable. There must between a connection between the restrictions of the non-compete agreement and the business information. For example, if a business has a legitimate business interest in its product pricing information, the business may need to show how that information would improve the marketability of competitor’s products. Peter Mavrick is a Fort Lauderdale non-compete attorney, and also advocates for clients in Miami, Boca Raton, and Palm Beach, 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 NuVasive, Inc. v. Leduff, 2019 WL 5962658 (M.D. Fla. Nov. 13, 2019), NuVasive, Inc. (“NuVasive”) was a medical device company that manufactured products for spine disorders. It employed Christopher LeDuff (“LeDuff”) to market and sell its products. LeDuff was privy to the company’s confidential and proprietary information such as prices, customer preferences, products details, product research sales techniques, and sales forecasts. NuVasive also trained LeDuff on products, methodology, trade secrets and other proprietary information.

NuVasive discovered that LeDuff planned to go to work for its direct competitor, Alphatec, Inc. (“Alphatec”), and was soliciting NuVasive customers and an employee to join him. NuVasive terminated LeDuff’s employment. NuVasive then discovered that four of LeDuff’s former NuVasive customers began using Alphatec’s products. NuVasive filed a lawsuit against LeDuff for breach of the non-solicitation and non-compete provisions of his employment contract. NuVasive also moved for an injunction to prohibit LeDuff from further violation of the agreement.

Under Section 542.335 of the Florida Statutes, the party seeking to enforce a non-solicitation or non-compete agreement must “plead and prove” (1) the existence of one or more legitimate business interests justifying the non-solicitation or non-compete agreement; and (2) that “the contractually specified restraint is reasonably necessary to protect” those interests. Fla. Stat. § 542.335(1)(b)-(c). Legitimate business interests include valuable confidential business information, substantial relationships with specific prospective or existing customers, client goodwill associated with an ongoing business, and specialized training. Fla. Stat. § 542.335(1)(b).

The district court found that NuVasive did not provide evidence on why the non-compete and non-solicitation agreements are reasonably necessary to protect its legitimate business interests. NuVasive alleged several legitimate business interests, including confidential business information, substantial relationships and goodwill with customers in LeDuff’s former sales territory, and specialized training given to sales agents. The district court found that NuVasive neither pled nor proved why it needed the non-compete and non-solicitation to protect those interests.

NuVasive contended that its non-compete and non-solicitation agreements were reasonably necessary based on its limits in time, area and scope to protect its business. NuVasive asserted that the non-compete agreement was enforceable because it only lasted for one year, was limited geographically to Naples and Fort Myers, and pertained only to competitors like Alphatec. The district court held that the “time, area, and line of business” principle only goes to the general enforceability of a non-compete and non-solicitation agreement. These criteria alone did not show why NuVasive’s non-compete was reasonably necessary to protect its business interests.

NuVasive produced three declarations to support its motion for injunctive relief. Two of these declarations stated, “to protect its legitimate business interests, NuVasive required LeDuff to agree to certain reasonable confidentiality, non-competition, and non-solicitation obligations as a condition of NuVasive allowing him to sell its products.” The district court rejected this statement as conclusory with no supporting facts. The third declaration stated that “[t]he specialized training and access to confidential and proprietary information that NuVasive provided to LeDuff will drastically increase his ability to market and distribute Alphatec products on behalf of [Alphatec].” The district court rejected this statement also because it did not identify the confidential and proprietary information that would have given LeDuff the advantage. Assuming that the confidential and proprietary information referenced in the declaration included the pricing, customer preferences, sales techniques, product research, and sales forecasts, it did not explain how that information improved the marketability of Alphatec’s products.

In federal court, the party seeking a preliminary injunction must show (1) a substantial likelihood of success on the merits; (2) irreparable injury without the injunction; (3) the threatened injury to the movant outweighs whatever damage the proposed injunction may cause the opposing party; and (4) if issued, the injunction would not be adverse to the public interest. Bloedorn v. Grube, 631 F.3d 1218 (11th Cir. 2011). Because preliminary injunctions are an extraordinary remedy, the movant must clearly establish the burden of persuasion on each element. The district court held that NuVasive did not show a likelihood of success on the merits to warrant a preliminary injunction, because it was insufficient for NuVasive to simply claim the non-compete and non-solicitation clauses are reasonably necessary to protect its business interest, without also proving the connection between them. The district court denied the motion for preliminary injunction.

Peter Mavrick is a Fort Lauderdale non-compete lawyer 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.