MIAMI NON-COMPETE AGREEMENTS: DIVERGENT LEGAL STANDARDS FOR INJUNCTIONS IN STATE AND FEDERAL COURTS

The decision whether to bring a case in federal court or Florida state court can have significant consequences to the disposition of non-compete litigation. While both federal and Florida will usually apply the same substantive law, the procedure applied differs. This is particularly pertinent in non-compete litigation. Florida courts, when considering whether to enjoin a former employee from competing, will not consider particular categories of evidence because of a Florida statute (§ 542.335(g)(1-3). Federal courts are free of this limitation, and may consider nearly any admissible and relevant evidence. This distinction can ultimately mean the difference between whether an employee or an employer will prevail in non-compete litigation. Peter Mavrick is a Miami non-compete attorney, and also advocates for clients in Fort Lauderdale, Boca Raton, and Palm Beach, Florida. The Mavrick Law Firm represents clients in business litigation, trade secret litigation, employment litigation, trademark litigation, and other legal disputes in federal and state courts and in arbitration.

Non-compete litigation can be heard in both federal courts and state courts. While a Florida court almost always has jurisdiction to hear a Florida non-compete case, there are certain requirements before a matter may be heard in federal court. The primary method by which a federal court would have jurisdiction is that a “federal question” is raised. This can happen when a non-compete claim is brought along with a trade secret claim under the federal Defend Trade Secrets Act. 18 U.S.C. § 1836, et seq. While it is technically possible that a federal court can have jurisdiction over the parties because a “diversity of citizenship” between the plaintiff and defendant, this would rarely happen because both a company attempting to enforce a non-compete and the employee will usually qualify as a citizens of Florida.

Federal courts and Florida courts have their own rules of civil procedure. While the Florida Rules of Civil Procedure were derived in significant part from the federal rules, the differences between them are substantial, and include different pleading and discovery requirements. There are also differences between federal and Florida courts which do not arise from the differences in procedural rules. Generally, federal courts have a greater budget and fewer cases, and so may have more time and staff to address complex and nuanced issues. Federal courts also tend to place more time constraints which are less flexible than their Florida counterpart.

Federal courts have different considerations when analyzing whether to enjoin an employee from breaching his or her non-compete agreement. In both federal and Florida courts, an employer seeking an injunction to enjoin a former employee must generally show a strong likelihood of success on the merits of the case, that the employer would be irreparably harmed without an injunction, and that public policy factors weigh in favor of the injunction.

Section 542.335, Florida Statutes, specifically identifies and excludes from consideration certain arguments when considering the enforceability of restrictive covenants.

(g) In determining the enforceability of a restrictive covenant, a court:

1. 1. Shall not consider any individualized economic or other hardship that might be caused to the person against whom enforcement is sought.
   2. May consider as a defense the fact that the person seeking enforcement no longer continues in business in the area or line of business that is the subject of the action to enforce the restrictive covenant only if such discontinuance of business is not the result of a violation of the restriction.

§ 542.335, Florida Statutes. This provision represents a mandate by the Florida legislature that the courts should not consider the issues of hardship for the employee or whether the business continues to operate because of the employee’s conduct.

Federal courts, however, consider these barred factors. The reason that these federal courts have this dichotomy is because of the principle of federal supremacy. Pursuant to the Eerie doctrine, the Florida legislature cannot make law which controls or limits whether a federal court can balance the equities when considering whether to issue a temporary injunction. TransUnion Risk & Alternative Data Sols., Inc. v. MacLachlan, 625 Fed. Appx. 403 (11th Cir. 2015) (explaining the conflict between 542.335 and Fed.R.Civ.P. Rule 65 and describing how the presumption of irreparable harm within 542.335 is proper, while the mandate the court not consider certain matters was not proper, explaining “[w]e apply Rule 65 to the exclusion of any contrary state procedure”).

The courts’ respective interpretations and enforcement of § 542.335(1)(g) is only one consideration when evaluating whether to pursue litigation in federal or Florida court. An employer may reasonably elect a federal forum even though the federal court’s interpretation and enforcement of § 542.335(1)(g) may favor the employee. Peter Mavrick is a Miami-Dade non-compete lawyer who also practices non-compete litigation in Palm Beach, Boca Raton, and Fort Lauderdale. This article does not serve as a substitute for legal advice tailored to a particular situation.