Articles Posted in Business Litigation

Published on: July 13, 2023

FORT LAUDERDALE BUSINESS LITIGATION: TRADE SECRET CLAIMS BASED ON PUBLIC INFORMATION

Under Florida law, trade secrets may be enforced via a statutory cause of action for trade secret misappropriation. Florida Statute Section 688.002(4) defines the term “trade secret” as: “[I]nformation, including a formula, pattern, compilation, program, device, method, technique, or process that: (a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” Peter Mavrick is a Fort Lauderdale business litigation attorney, and represents clients in business litigation in Miami, Boca Raton, and Palm Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.

As the United States District Court for the Middle District of Florida explained in Furmanite Am., Inc. v. T.D. Williamson, Inc., 506 F.Supp.2d 1134 (M.D. Fla. 2007), “[t]he question of whether an item…constitutes a ‘trade secret’ is of the type normally resolved by a fact finder after full presentation of evidence from each side.” This is because a trade secret can take readily available and public information and uniquely assemble or order that information in a manner that creates a competitive advantage. “[A] trade secret can exist in a combination of characteristics and components, each of which, by itself, is in the public domain, but the unified process, design and operation of which in unique combination, affords a competitive advantage and is a protectible trade secret.” In re TXCO Res., Inc., 475 B.R. 781 (Bankr. W.D. Tex. 2012). In Capital Asset Rsch. Corp. v. Finnegan, 160 F.3d 683 (11th Cir. 1998), the United States Court of Appeals for the Eleventh Circuit explained that “[e]ven if all of the information is publicly available, a unique compilation of that information, which adds value to the information, also may qualify as a trade secret.”

For these reasons, trade secret claims often are not amenable to disposition via summary judgment. Summary judgment evidence, considered in the light most favorable to the nonmoving party (often the plaintiff in trade secret litigation), frequently raises factual issues as to the viability of the trade secret claim. For example, in Digiport, Inc. v. Foram Development BFC, LLC, 314 So.3d 550 ( Fla. 3d DCA 2020), the defendant, Foram, moved for summary judgment on the grounds that the plaintiff, Digiport, had no real trade secret. “Forum…first argued Digiport’s proposal for the building was not a trade secret under FUTSA because it was based on overall, general design features of a colocation center, which were well-known in the data center provider industry prior to 2008. Forum…further contended that the concept at issue lacked the ‘genuine novelty’ element required to prevail on a claim for misappropriation of an idea ….” The trial court agreed and granted the motion for summary judgment. Florida’s Third District Court of Appeal reversed, finding there were unresolved factual questions that required trial. The appellate court explained that “although Eloy and Senneff contended through their submission that the centralized data system was not, in an of itself, novel, Billings’ declaration and the internal emails between Foram Group’s agents created a genuine issue as to whether the proposed project contained ‘elements which by themselves may be readily ascertainable in the public domain, but when viewed together may still qualify for trade secret protection.'” It is the context of the use or unique compilation of the information constituting the alleged trade secret that often will require vetting in a trial.

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Published on: June 25, 2023

DEFENDING FLORIDA EMPLOYERS: CLAIMS ALLEGING INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS

By Mavrick Law Firm

Some Florida employers and their owners or managers have been sued for alleged intentional infliction of emotional distress. The Supreme Court of Florida in Metro. Life Ins. Co. v. McCarson, 467 So.2d 277 (Fla. 1985), held that to prove intentional infliction of emotional distress, the plaintiff must prove (1) the defendant engaged in intentional or reckless conduct; (2) the conduct was “outrageous”; (3) the conduct caused emotional distress; and (4) the emotional distress was severe. In Noah v. Asor, 379 F.Supp.3d 1284 (S.D. Fla. 2019), the United States District Court for the Southern District of Florida explained that what constitutes “outrageous” conduct is a question of law. Peter Mavrick is a Fort Lauderdale employment attorney, who defends businesses and their owners against employment law claims, including claims asserting employment discrimination and retaliation as well as claims for overtime wages and other related claims. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

The Florida Supreme Court in its Metro. Life Ins. Co. decision adopted this explanation of the meaning of outrageous conduct: “Liability has ben found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond the bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community. Generally, the case is one in which the recitation of the facts to an average member of the community would arouse his resentment against the actor, and leave him to exclaim, ‘Outrageous!'” The Restatement (second) of Torts, § 46, comment d, adds the following: “The liability clearly does not extend to mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities. The rough edges of our society are still in need of a good deal of filing down, and in the meantime plaintiffs must necessarily be expected and required to be hardened to a certain amount of rough language, and to occasional acts that are definitely inconsiderate and unkind. There is no occasion for the law to intervene in every case where some one’s feelings are hurt. There must still be freedom to express an unflattering opinion, and some safety valve must be left through which irascible tempers may blow off relatively harmless steam.”

Although there is no exhaustive or concrete list of what qualifies as outrageous conduct, Florida and federal case law has clarified that proof of this tort subject to a high bar and, in the words of the Noah decision, “only in ‘extremely rare circumstances.'” Florida and federal courts generally hold that there must be relentless physical as well as verbal harassment to prove outrageous conduct. For example, Florida’s First District Court of Appeal in Johnson v. Thigpen, 788 So.2d 410 (Fla. 1st DCA 2001), affirmed a finding of “outrageousness” where the employer repeatedly engaged in “offensive, unwelcomed physical contact” with his employee at the workplace by touching her breasts, running a pencil up her thigh, and forcibly placing her hand on the crotch of the defendant-employer’s pants. In Vernon v. Med. Mgmt. Assocs. of Margate, Inc., 912 F.Supp. 1549 (S.D. Fla. 1996), a federal district court Judge found there was “outrageousness” where, at work, the supervisor-defendant repeatedly touched the employee-plaintiff’s buttocks, breasts, and belly button, squeezed her nipples, hugged and tickled her, and repeatedly made lewd and vulgar sexual remarks. In one extreme case, Stockett v. Tolin, 791 F.Supp. 1536 (S.D. Fla. 1992), the court found outrageous conduct where the defendant, a majority shareholder of the plaintiff’s employer, sexually harassed the plaintiff by “groping and kissing” her, “repeated[ly] and offensive[ly] touching…the most private parts of Plaintiff’s body,” “pinning Plaintiff against the wall and refusing to allow her to escape,” and other “repeated verbal licentiousness.”

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Published on: June 18, 2023

DEFENDING FLORIDA EMPLOYERS: WHISTLEBLOWER ACT CLAIM AND CONSTRUCTIVE DISCHARGE

By Mavrick Law Firm

Florida’s Whistleblower’s Act, governing private sector employers, prohibits the employer from taking “retaliatory personnel action” against an employee because the employee “[o]bjected to, or refused to participate in, any activity, policy, or practice of the employer which is in violation of a law, rule, or regulation.” Section 448.102(3), Florida Statutes. The statute defines “retaliatory personnel action” as “the discharge, suspension, or demotion by an employer of an employee or any other adverse employment action taken by an employer against an employee in the terms and conditions of employment.” In Kearns v. Farmer Acquisition Co., 157 So.3d 458 (Fla. 2d DCA 2015), Florida’s Second District Court of Appeal explained that to state a claim under Florida’s Whistleblower’s Act, a plaintiff must allege sufficient facts to show that “he engaged in statutorily protected expression; he suffered an adverse employment action; and the adverse employment action was causally linked to statutorily protected activity.” Florida and federal courts analyze retaliatory discharge actions under Florida’s Whistleblower’s Act under the same standards as a retaliation claim under Title VII of the federal Civil Rights Act of 1964. Peter Mavrick is a Miami employment attorney, who defends businesses and their owners against employment law claims asserting employment discrimination and retaliation as well as claims for overtime wages and other related claims. The Mavrick Law Firm also represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

Following common sense, there would be two types of employment terminations: (1) the employer “fires” (i.e., terminates) the employee or (2) the employee quits. Over time, courts created an exception the situation where the employee quits and, under certain factual circumstances, treated it as if the employer fired the employee. Courts refer to such a situation as “constructive discharge,” meaning in truth the employee quit his or her employment, but the courts will treat interpret the quitting as an employer firing the employee. To prove “constructive discharge” is an uphill battle for the employee. Rutledge v. Sun Trust Bank, 262 F.App’x 956 (11th Cir. 2008), explained that to establish that a voluntary resignation (i.e., quitting) amounts to a constructive discharge, the employee must show that the working conditions were so intolerable that a reasonable person in his position would have felt compelled to resign. This is an exceedingly high standard. The United States Court of Appeals for the Eleventh Circuit in Hipp v. Liberty Nat’l Life Ins. Co., 252 F.3d 1208 (11th Cir. 2001), explained that the standard to prove constructive discharge is actually “higher than the standard for proving a hostile work environment.”

Federal courts have held that only extreme circumstances warrant a finding of constructive discharge. For example, Poole v. Country Club of Columbus, Inc., 129 F.3d 551 (11th Cir. 1997), held that a plaintiff was constructively discharged when she was “[s]tripped of all responsibility, given only a chair and no desk, and isolated from conversations with other workers.” As another example, in Meeks v. Comput. Assocs. Int’l, 15 F.3d 1013 (11th Cir. 1994), the federal appellate court affirmed the district court’s finding of constructive discharge when the plaintiff, a woman returning from maternity leave, was given an unjustified unsatisfactory work evaluation and written warning, and was then summoned to a meeting with her male supervisors, where they physically intimidated her and screamed in her face such that she was hit with their spit). By contrast, Fitz v. Pugmire Lincoln-Mercury, Inc., 348 F.3d 974 (11th Cir. 2003), held that a withdrawn reprimand, an offer to transfer the employee to another managerial role, and accurate statements of coworkers to the employee that the employer planned to fire him, among other conduct, was not sufficient to establish constructive discharge due to the fact the working conditions were not intolerable. Similarly, Hill v. Winn-Dixie Stores, Inc., 934 F.2d 1518 (11th Cir. 1991), held that a written reprimand, criticism from supervisors, and withdrawal of customary support did not create intolerable working conditions to warrant a finding of constructive discharge, particularly when the employer made efforts to rectify the situation.

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Published on: June 14, 2023

FORT LAUDERDALE BUSINESS LITIGATION: CLAIMS OF FALSE ADVERTISING UNDER THE LANHAM ACT

By Mavrick Law Firm

Claims of false advertising are often asserted under the federal Lanham Act. In Tobinick v. Novella, 848 F.3d 935 (11th Cir. 2017), the United States Court of Appeals for the Eleventh Circuit explained that “[t]he Lanham Act prescribes liability for false advertising to ‘commercial advertising or promotion.'” To evaluate whether a claim can be asserted under the Lanham Act, courts first assess whether the particular advertising/promotion constitutes the kind of “commercial advertising or promotion” addressed by the Lanham Act. The Tobinick decision explained that commercial advertising or promotion includes “(1) commercial speech; (2) by a defendant who is in commercial competition with plaintiff; (3) for the purpose of influencing consumers to buy defendant’s goods or services[;]” and (4) “the representations…must be disseminated sufficiently to the relevant purchasing public to constitute ‘advertising’ or ‘promotion’ within that industry. Peter Mavrick is a Fort Lauderdale business litigation attorney, and represents clients in business litigation in Miami, Boca Raton, and Palm Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.

Federal courts initially require plaintiffs to prove they have “standing” under the Lanham Act. The United States Supreme Court’s precedent in Lexmart Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014), established a two-part inquiry, requiring courts to determine (1) whether a plaintiff’s interests “fall within the zone of interests protected by the law invoked” and (2) whether the injuries suffered by plaintiff were “proximately cause by violations of the statute.” The Supreme Court explained the scope of the “zone of interests as follows: “[T]o come within the zone of interests in suit for false advertising under § 1125(a), a plaintiff must allege an injury to a commercial interest in reputation or sales. A consumer who is hoodwinked into purchasing a disappointing product may well have an injury-in-fact cognizable under Article III, but he cannot invoke the protection of the Lanham Act–a conclusion reached by every Circuit to consider the question…Even a business misled by a supplier into purchasing inferior product is, like consumers generally, not under the Act’s aegis.” Following the Lexmart decision, one federal district court found there was standing, holding in pertinent part, “Diamond’s central allegation is that TET solicited Diamond customers with deceptive advertisements and then induced them to breach their contracts with Diamond, thereby alleging an injury to its commercial interest in sales and bringing Diamond’s claim within the zone of interests protected by the Lanham Act.

Once Lanham Act standing is established, the plaintiff must prove five elements: (1) the advertisements of the opposing party were false or misleading; (2) the advertisements deceived, or had the capacity to deceive, consumers; (3) the deception had a material effect on purchasing decisions; (4) the misrepresented product or service affects interstate commerce; and (5) the movant has been–or is likely to be–injured as a result of the false advertising. Federal courts will often scrutinize the allegedly false and misleading statements made in the sales efforts to determine the extent to which those statement were disseminated to potential customers. For example, in Wyndham Vacation Ownership v. Sussman, No. 6:18-cv-2171-GAP-DCI, 2021 U.S. Dist. LEXIS 208752 (M.D. Fla. Sept. 27, 2021), the federal district court stated that, “[t]he question here is whether Wyndham has supplied any evidence that TET routinely told Wyndham’s timeshare owners to stop making timeshare payments in the [oral sales presentation]s.” The court added that “Wyndham must show that the OSPs directly caused its owners to stop making payments and Wyndham cannot do this if it cannot prove that the OSPs contained the alleged false statements.”

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Published on: June 11, 2023

MIAMI BUSINESS LITIGATION: REMEDIES FOR BREACH OF NON-COMPETE AGREEMENT

By Mavrick Law Firm

In Florida, an injunction is the generally favored remedy in cases of breach of a non-compete agreement. The Supreme Court of Florida in Miller Mechanical, Inc. v. Ruth, 300 So.2d 11 (Fla. 1974), explained that in cases of breach of a restrictive covenant, “[t]he Court may award damages for breach of contract but the normal remedy is to grant an injunction…This is so because of the inherently difficult, although not impossible, task of determining just what damage actually is caused by the employee’s breach of the agreement.” In its Miller Mechanical decision, the Supreme Court reversed the trial court’s refusal to enjoin the defendant, stating in pertinent part: “The trial court in this case determined that part of the contract was unreasonable, refused to enjoin the defendant and awarded only nominal damages because the plaintiff had been unable to prove damages. It is precisely because damages are so difficult to show that injunctive relief becomes a favored remedy. The trial court should have determined what length of time would have been reasonable under all of the circumstances and granted an injunction for that period of time.” Peter Mavrick a Miami business litigation attorney, and represents clients in Fort Lauderdale, Boca Raton, and Palm Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

Although injunctions are the typical remedy in non-compete litigation, parties may recover damages with sufficient proof. Generally, the aggrieved party in a breach of a noncompetition agreement case seeks lost profits as the measure of damages. Lost profits, however, are not the only recoverable damages. In Camel Investments, Inc. v. Webber, 468 So.2d 340 (Fla. 1st DCA 1985), Florida’s First District Court of Appeal stated that the measure of damages is “the actual damages suffered as a result of the breach[.]” Under Florida law, “[t]here are two generally recognized methods of proving lost profits: (1) the before and after theory and (2) the yardstick test.” G.M. Brod & Co., Inc. v. U.S. Home Corp., 759 F.2d 1526 (11th Cir. 1985). Florida’s Second District Court of Appeal in 4 Corners Insurance, Inc. v. Sun Publications of Florida, Inc., 5 So.3d 780 (Fla. 2d DCA 2009), explained that “[t]he yardstick test is generally used when a business has not been established long enough to compile an earnings record that would sufficiently demonstrate lost profits. This test compares the profits of the business “‘that are closely comparable to the plaintiff’s.'” The yardstick test is often employed when the plaintiff “is driven out of business before he is able to compile an earnings record sufficient to allow estimation of profits.” By contrast, under the “before and after theory,” the Fifth Circuit in Lehrman v. Gulf Oil Corporation, 500 F.2d 659 (5th Cir. 1974), explained that the plaintiff needs to present proof that compares “the plaintiff’s profit record prior to the violation with that subsequent to it.” However, a plaintiff’s method of proof may not strictly adhere to either method. Relying on United States Supreme Court precedent in Story Parchment Co. v. Paterson Parchment Co., 282 U.S. 555 (1931), Lehrman explained that, “while damages may not be determined by mere speculation or guess, it will be enough if the evidence show(s) the extent of the damages as a matter of just and reasonable inference, although the result be only approximate.”

As a practical matter, most businesses obtain injunctions to arrest continuous harm from breaches of restrictive covenants. Purchasers of businesses often pay a premium for the value inherent in barring the seller from competing against the newly purchased business. In cases where a business has been purchased and the seller is breaching its non-compete agreement, the seller might lose a substantial benefit of its bargain and therefore seek an injunction as well as recovery of damages.

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Published on: June 3, 2023

DEFENDING FLORIDA EMPLOYERS: SEXUAL HARASSMENT CLAIMS ASSERTING HOSTILE WORK ENVIRONMENT

By Mavrick Law Firm

Sexual harassment is a form of sex discrimination prohibited by the Florida Civil Rights Act and under the federal civil rights law referred to as Title VII, so that an employee may assert a claim for sexual harassment under section 760.10, Florida Statutes. Although neither the Florida nor the Federal Civil Rights Acts specifically mention sexual harassment, the United States Supreme Court in Harris v. Forklift Sys., Inc., 510 U.S. 17 (1993), recognized that “[t]he phrase ‘terms, conditions, or privileges of employment’ evinces a congressional intent to strike at the entire spectrum of disparate treatment of men and women in employment, which includes requiring people to work in a discriminatorily hostile or abusive work environment.” Although Title VII’s prohibition of sex discrimination clearly includes sexual harassment, Supreme Court precedent Oncale v. Sundowner Offshore Services, Inc., 523 U.S. 75 (1998), has held that Title VII is not a federal “civility code.” In Oncale, the Supreme Court stated that, “[w]e have never held that workplace harassment, even harassment between men and women, is automatically discrimination because of sex merely because the words used have sexual content or connotations.” Along this line, in Faraghar v. City of Boca Raton, 524 U.S. 775 (1998), the Supreme Court explained its interpretation of TitleVII claims asserting a hostile work environment that, “[a] recurring point in these opinions is that ‘simple teasing,’ offhand comments, and isolated incidents (unless extremely serious) will not amount to discriminatory changes in the ‘terms and conditions of employment.’” In other words, “not all workplace conduct that may be described as ‘harassment’ affects a ‘term, condition, or privilege’ of employment within the meaning of Title VII.” Meritor Savings Bank, FSB v. Vinson, 477 U.S. 57 (1986). Peter Mavrick is a Miami employment attorney, who defends businesses and their owners against employment law claims asserting employment discrimination and retaliation as well as claims for overtime wages and other related claims. The Mavrick Law Firm also represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

In brief, hostile work environment cases are based on bothersome attentions or sexual remarks that are sufficiently severe or pervasive to create a hostile work environment. Businesses defending against such claims will objectively look at the facts in light of what case law requires to defend against the claims. Where harassment is perpetrated by a co-worker (as opposed to a supervisor or manager), to establish a hostile work environment sexual harassment claim, an employee must show that: (1) the employee is a member of a protected group; (2) the employee was subjected to unwelcome sexual harassment, such as sexual advances, requests for sexual favors, and other conduct of a sexual nature; (3) the harassment was based on the sex of the employee; (4) the harassment was sufficiently severe or pervasive to alter the terms and conditions of employment and create a discriminatorily abusive working environment; and (5) that the employer knew or should have known about the harassment and took insufficient remedial action. Speedway v. SuperAmerica, LLC v. Dupont, 933 So.2d 75 (Fla. 5th DCA 2006). The United States Court of Appeals for the Eleventh Circuit in Mendoza v. Borden, Inc., 195 F.3d 1238 (11th Cir. 1999), explained that in a sexual harassment lawsuit, courts consider four factors to objectively determine whether an alleged hostile environment is sufficiently severe and pervasive to alter the terms and conditions of employment: (1) the frequency of the conduct; (2) the severity of the conduct; (3) whether the conduct was physically threatening or humiliating; and (4) whether the conduct unreasonably interfered with the employee’s job performance. The Mendoza decision explained that the objective severity of the harassment must be judged from the perspective of a reasonable person in the plaintiff’s position, taking into consideration all the circumstances. For example, in Mendoza the Eleventh Circuit explained that “a single instance of a slight physical contact, one arguably inappropriate statement, and three instances of [a co-worker] making a sniffing sound[,]…over an eleven month period,” were “far too infrequent to alter conditions” under which the harassment victim was required to perform her job. Similarly, the United States Court of Appeals for the Tenth Circuit in Sprague v. Thorn Americas, Inc., 129 F.3d 1355 (10th Cir. 1997), held that five “sexually-oriented, offensive” statements over sixteen months was insufficient to show a hostile work environment, even though the offensive statement from one of the harassers occurred while he put his arm around plaintiff, looked down her dress. These cases, however, do not tell the whole story in an evolving area of law. Decisions of liability will depend on the fact pattern as well as the credibility of witnesses and other evidence.

Peter Mavrick is a Miami employment lawyer, and represents clients in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.

Published on: June 1, 2023

FORT LAUDERDALE BUSINESS LITIGATION: EXPRESS AND IMPLIED WARRANTIES

By Mavrick Law Firm

Under Florida law, commercial litigation cases involving sales of goods are governed by the Uniform Commercial Code (UCC). Under Florida’s version of the UCC, at Florida Statutes Section 672.318, “[a] seller’s warranty whether express or implied extends to any natural person who…is an employee, servant or agent of his or her buyer if it is reasonable to expect that such person may use, consume or be affected by the goods and who is injured in person by breach of the warranty.” In Kramer v. Piper Aircraft Corp., 520 So.2d 37 (Fla. 1988), the Supreme Court of Florida explained that privity of contract is not required in cases “which fall within the scope of § 672.318, Fla. Stat.[,]…of the Florida Uniform Commercial Code.” There are two types of warranties: express and implied warranties. To create an express warranty, under § 672.313(1)(a), Florida Statutes, “[a]ny affirmation of fact or promise made by the seller to the buyer which relates to the goods or becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.” Peter Mavrick is a Fort Lauderdale business litigation attorney, and represents clients in business litigation in Miami, Boca Raton, and Palm Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.

Implied warranties have more variants. For example, Florida’s version of the UCC recognizes an implied warranty of merchantability and an implied warranty for fitness for a particular purpose. The implied warranty of fitness for a particular purpose arises only when “a seller has reason to know a particular purpose for which the goods are required and the buyer relies on the seller’s skill or judgment to select or furnish suitable goods.” Armadillo Distribution Enterprises, Inc. v. Hai Yun Musical Instruments Manufacture Co. Ltd., 142 F.Supp.3d 1245 (M.D. Fla. 2015) (quoting Royal Typewriter Co. v. Xenographic Supplies Corp., 719 F.2d 1092 (11th Cir. 1983)). Under those circumstances, an implied warranty arises “that the goods shall be fit for such purpose.” § 672.315, Florida Statutes. The United States District Court for the Southern District of Florida in Zendejas v. Redman, 2016 WL 1242349 (S.D. Fla. Mar. 30, 2016), explained that “[t]he implied warranty of fitness for a particular purpose may, however, be excluded or modified in certain circumstances.” In addition, an implied warranty for fitness for a particular purpose may be waived due to a pre-purchase inspection. Under Section 672.316(3)(b), Florida Statutes, an implied warranty does not attach “[w]hen the buyer before entering into the contract has examined the goods or the sample or model as fully as he or she desired or has refused to examine the goods, there is no implied warranty with regard to defects which an examination ought in the circumstances to have revealed to him or her.” In business litigation cases concerning the implied warranty for fitness for a particular purpose, the facts an circumstances surrounding the pre-purchase inspection and whether the buyer should have discovered any alleged defects are often highly disputed and typically will require trial testimony and other evidence. By contrast, the warranty of merchantability is implied in any contract for the sale of goods, “if the seller is a merchant with respect to goods of that kind.” § 672.314(1), Florida Statutes. For goods to be merchantable, they must be “fit for the ordinary purposes for which such goods are used,” among other requirements. § 672.314(2)(c), Florida Statutes; Marjam Supply Co. of Florida, LLC v. Pliteq, Inc., 2018 WL 4932871 (S.D. Fla. Apr. 23, 2018) (setting forth the elements for breach of implied warranty of merchantability).

Peter Mavrick is a Fort Lauderdale business litigation lawyer, and represents clients in Miami, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.

Published on: May 28, 2023

DEFENDING FLORIDA EMPLOYERS: INDEPENDENT CONTRACTOR EXEMPTION TO OVERTIME WAGE CLAIMS

By Mavrick Law Firm

The Fair Labor Standards Act (often referred to as the “FLSA”) applies to “employees” but does not apply to “independent contractors.” The FLSA has an expansive definition of who constitutes an employee. At 29 U.S.C. section 203(e)1), the FLSA defines the term “employee” as “any individual employed by an employer.” The FLSA, at 29 U.S.C. section 203(g), defines the term “employ” as “to suffer or permit to work.” The United States Supreme Court in Rutherford Food Corp. v. McComb, 331 U.S. 722 (1947), opaquely explained that the determination of whether a person is an employee, as opposed to an independent contractor, is based on the “underlying economic realities” as exposed by the “circumstances of the whole activity. Fortunately, later appellate decisions from the United States Court of Appeals for the Eleventh Circuit (i.e., the federal appellate court governing all federal courts in the State of Florida) along with other appellate courts have clarified specific criteria used to decide whether an individual is properly classified as an “employee” or instead as an “independent contractor.” Peter Mavrick is a Fort Lauderdale employment attorney, who defends businesses and their owners against employment law claims, including claims asserting employment discrimination and retaliation as well as claims for overtime wages and other related claims. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

The United States Court of Appeals for the Fifth Circuit in Usery v. Pilgrim Equip. Co., 527 F.2d 1308 (5th Cir. 1976), the controlling factor whether a person is an employee or independent contractor is whether, “as a matter of economic reality,” a worker is “dependent upon the business to which they render service.” Sometimes businesses have mislabeled employees as independent contractors in employment contracts and visa versa. The particular label is not dispositive. Economic reality, rather than any label placed on the relationship by the parties, controls. In this regard, the Supreme Court’s Rutherford Food Corp. decision stated in pertinent part: “[w]here the work done, in its essence, follows the usual path of an employee, putting on an ‘independent contractor’ label does not take the worker from the protection of the [FLSA].”

The United States Department of Labor has issued a regulation, at 29 C.F.R. section 500.20(h)(4) that follows the “economic realities” test and the guiding factors as set forth the by the federal courts to determine employment status under the FLSA. Precedent from the Eleventh Circuit, in Freund v. Hi-Tech Satellite, Inc., 185 Fed.Appx. 782 (11th Cir. 2006), articulated several factors courts use in a balancing test to decide whether an individual is an independent contractor:

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Published on: May 21, 2023

MIAMI BUSINESS LITIGATION: DEFEATING TRADE SECRETS AND NON-COMPETE CLAIMS BASED ON CUSTOMER LISTS

By Mavrick Law Firm

Many non-compete agreements contain covenants asserting that the employer business has protectible trade secrets. A contractual provision where the parties agree, ex ante, that the employer will have (or actually has) a “trade secret” does not thereby mean the employer will have (or has) a trade secret in the future. As Florida’ Fourth District Court of Appeal explained in Zodiac Records Inc. v. Choice Environmental Services, 112 So.3d 587 (Fla. 4th DCA 2013), “[w]e note that a former employer’s customer relationships do not automatically qualify as trade secrets, even if a party’s restrictive covenant attempts to characterize them as such.” Peter Mavrick a Miami business litigation attorney, and represents clients in Fort Lauderdale, Boca Raton, and Palm Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

Florida Statutes Section 688.002(4), states in pertinent part: “‘Trade secret’ means information, including a formula, pattern, compilation, program, device, method, technique, or process that: (a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” Precedent from Florida’s Second District Court of Appeal in East v. Aqua Gaming, 805 So.2d 932 (Fla. 2d DCA 2001), states that to qualify as a trade secret, there must be evidence that a customer list “was the product of great expense and effort, that it included information that was confidential and not available from public sources, and that it was distilled from larger lists of potential customers into a list of viable customers for [a] unique business.”

Employers often seek to premise restrictive covenants on the existence of trade secrets because Florida’s restrictive covenant statute thereby extends the allowable duration of a non-compete covenant. Under § 542.335(1)(d)(1), an employment agreement that is not based on trade secrets is presumed reasonable for only six months or less and presumed unreasonable when it extends beyond two years. By contrast, Florida’s restrictive covenant statute, at § 542.335(1)(e), extends the presumption of reasonableness to up to five years when actual trade secrets underlie the non-compete agreement and presumes a duration in excess of ten years as unreasonable.

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Published on: May 17, 2023

FORT LAUDERDALE BUSINESS LITIGATION: NON-SIGNATORIES TO CONTRACTS ENFORCEMENT OF ARBITRATION

By Mavrick Law Firm

Arbitration is a private legal dispute resolution process that generally relies on the consent of its participants. Florida courts have considered cases where a person or business that never signed an arbitration contract (which the law typically refers to as a “non-signatory” to the contract) demands arbitration because there is an arbitration contract between the opposing party and someone else. This is an unusual scenario. As Florida’s Fourth District Court of Appeal explained in Marcus v. Fla. Bagels, LLC, 112 So.3d 631 (Fla. 4th DCA 2013), “[a]n obligation to arbitrate is based on consent” and “[f]or this reason a ‘non-signatory to a contract containing an arbitration provision ordinarily cannot compel a signatory to submit to arbitration.'” As with many legal principles, there are exceptions. The Marcus decision explained that “courts ‘have been willing to estop a signatory from avoiding arbitration with a nonsignatory when the issues the nonsignatory is seeking to resolve in arbitration are intertwined with the agreement that the estopped party has signed.'” Peter Mavrick is a Fort Lauderdale business litigation attorney, and represents clients in business litigation in Miami, Boca Raton, and Palm Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.

Following the Marcus decision, a more recent appellate decision in Greene v. Johnson, 276 So.3d 527 (Fla. 3d DCA 2019), explained that “[t]he doctrine of equitable estoppel on the basis of intertwined claims…applies when a signatory to a contract containing the arbitration clause raises allegations of substantially interdependent and concerted misconduct by both a non-signatory and one or more of the signatories to the agreement.” For this reason, “Florida and federal courts have recognized principles of equitable estoppel sometimes allow a nonsignatory to compel arbitration against someone who had signed an arbitration agreement.” Beck Auto Sales, Inc. v. Asbury Jax Ford, LLC, 249 So.3d 765 (Fla. 1st DCA 2018).

To assess whether the doctrine of equitable estoppel applies, Florida courts generally look at whether the claims implicating the non-signatories are based on the same operative facts and are premised upon substantially interdependent and concerted misconduct between the non-signatories and signatories to an arbitration contract. For example, Florida’s Third District Court of Appeal in Kolsky v. Jackson Square, LLC, 28 So.3d 965 (Fla. 3d DCA 2010), held that equitable estoppel was warranted where the plaintiff (who signed the arbitration agreement) had claims against non-signatories that “arise out of the same allegations of concerted conduct among the non-signatory appellants and [signatory], are based on the same facts, and are inherently inseparable.” Similarly, the Greene decision held that the plaintiff was estopped from avoiding arbitration where the plaintiff’s claims against the non-signatory defendants “are based on teh same set of operative facts” that plaintiff alleged against the signatory defendant, and “the defenses of the non-signatory defendants will be dependent upon, if not the same as, [the signatory’s] defenses.”

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