Articles Posted in Business Litigation

Published on: November 9, 2022

FORT LAUDERDALE NON-COMPETE AGREEMENTS: FLORIDA LAW REQUIREMENTS FOR INJUNCTIONS

Florida law sets forth the requirements for entry of a non-compete injunction, i.e., a court order barring competition under specified circumstances and duration. Relevant here, section 542.335(1)(j), Florida Statutes, provides that a court shall enforce a valid “restrictive covenant by any appropriate and effective remedy, including but not limited to, temporary and permanent injunctions.” 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 litigation, and other legal disputes in federal and state courts and in arbitration.

To obtain a temporary injunction, a party must establish “(1) a substantial likelihood of success on the merits, (2) the unavailability of an adequate remedy of law, (3) irreparable harm absent entry of an injunction, and (4) that the injunction would serve the public interest.” Florida Department of Health v. Florigrown, LLC, 317 So.3d 1101 (Fla. 2021). Under Florida’s restrictive covenant statute, section 542.335(1)(a), to be enforceable a non-compete covenant must be reasonable as to “time, area, and line of business” and “set forth in a writing signed by the person against whom enforcement is sought. In addition, Florida law requires that a contractual provision restricting competition must involve a legitimate business interest as defined by statute to be enforceable. Section 542.335(1)(b), Florida Statutes, states that “[t]he person seeking enforcement of a restrictive covenant shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant.” Florida’s non-compete covenant statute provides a non-exhaustive list of legitimate business interests. The Supreme Court of Florida has explained that “the determination of whether an activity qualifies as a protected legitimate business interest under the statute is inherently a factual inquiry, which is heavily industry and context specific.” White v. Mederi, 226 So.3d 774 (Fla. 2017). A party seeking a temporary injunction “must plead and prove that the contractually specified restrain is reasonably necessary to protect the legitimate business interest or interests justifying the restriction.” § 542.335(1)(c). Once a party establishes a prima facie case that the restriction is reasonably necessary, the statute explains that “the person opposing enforcement has the burden of establishing that the contractually specified restrain is overbroad, overlong, or otherwise not reasonably necessary to protect the established legitimate business interest or interests.” Importantly, Florida’s restrictive covenant statute, at section 542.335(1)(h), requires that courts construe restrictive covenants “in favor of providing reasonable protection to all legitimate business interests established by the person seeking enforcement,” and without application of “any rule of contract construction that requires the court to construe a restrictive covenant narrowly, against the restraint, or against the drafter of the contract.”

To issue an injunction, Florida courts are required to follow Florida Rule of Civil Procedure 1.610(c), setting forth the act or acts restrained by the injunction. In other words, the Judge must specify exactly what is prohibited by the injunction. Concerning the specificity of what conduct is prohibited by an injunction, Florida’s Fifth District Court of Appeal in Clark v. Allied Assocs., Inc., 477 so.2d 656 (Fla. 5^th DCA 1985), explained that, “[o]ne against whom an injunction is directed should not be left in doubt as to what he is required to do.” Rule 1.610(c) provides that an injunction “shall describe in reasonable detail the act or acts restrained without reference to a pleading or another document.” “A temporary injunction requires strict compliance with Florida Rule of Civil Procedure 1.610.” Coscia v. Old Fla. Plantation, Ltd., 828 So.2d 488 (Fla 2d DCA 2002).

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Published on: November 5, 2022

FORT LAUDERDALE BUSINESS LITIGATION: SEEKING DAMAGES UNDER THE FLORIDA UNIFORM COMMERICAL CODE

By Mavrick Law Firm

“In an action for breach of contract, the goal is to place the injured party in the position it would have been in had the other party not breached the contract so as to give the aggrieved party the benefit of its bargain.” Katz Deli of Aventura, Inc. v. Waterways Plaza, LLC, 183 So. 3d 374 (Fla. 3d DCA 2013). “A damage award for breach of contract for the sale of goods is typically covered by section 672.713 of Florida’s version of the Uniform Commercial Code” (“Florida’s UCC”). HGI Associates, Inc. v. Wetmore Printing Co., 427 F.3d 867 (11th Cir. 2005). Under Florida’s UCC, “the measure of damages for nondelivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages . . ., but less expenses saved in consequence of the seller’s breach.” § 672.713, Fla. Stat. 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 litigation, and other legal disputes in federal and state courts and in arbitration.

Consequential damages consist of “[a]ny loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise.” § 672.715, Fla. Stat. The Eleventh Circuit in Nyquist v. Randall, 819 F.2d 1014 (11th Cir. 1987), interpreted section 672.715, Florida Statutes, to mean “that (1) ‘consequential damages’ are those damages ‘resulting from general or particular needs’ of the purchaser, (2) such damages are not recoverable unless ‘the seller at the time of contracting had reason to know’ of the possibility that they would occur, and (3) such damages are not recoverable unless they ‘could not reasonably be prevented by cover or otherwise.’” Incidental damages include “any commercially reasonable charges, expenses or commissions . . . resulting from the breach.” § 672.710, Fla. Stat. The purpose of incidental damages is “[t]o authorize reimbursement of the seller for expenses reasonably incurred by him as a result of the buyer’s breach.” Florida Recycling Servs., Inc. v. Peterson Indus., Inc., 858 So. 2d 1114 (Fla. 2d DCA 2003).

Lost profits fall under the category of consequential damages. Nyquist v. Randall, 819 F.2d 1014 (11th Cir. 1987). The general rule in Florida, however, is to avoid lost profit damages because they can be too speculative and conjectural. Levitt-Ansca Towne Park P’ship v. Smith & Co., 873 So. 2d 392 (Fla. 4th DCA 2004). Lost profits can nevertheless be recovered if (1) the breaching party caused the loss; and (2) the amount of such damages can be adequately determined by some standard. W.W. Gay Mech. Contractor, Inc. v. Wharfside Two, Ltd., 545 So. 2d 1348 (Fla. 1989). “Lost profits must be established with some reasonable degree of certainty and must be the natural consequence of the wrong.” Sostchin v. Doll Enterprises, Inc., 847 So. 2d 1123 (Fla. 3d DCA 2003). Thus, to permit recovery of lost profits, the court will consider whether “(1) the seller’s breach naturally caused (2) the buyer to suffer damages arising from the buyer’s general or particular needs that (3) the seller had reason to have known at the time of contracting, and (4) those damages can be proven to a reasonable certainty, but (5) the buyer could not have prevented them by cover or otherwise.” HGI Associates, Inc. v. Wetmore Printing Co., 427 F.3d 867 (11th Cir. 2005) (applying Florida law).

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Published on: November 4, 2022

MIAMI BUSINESS LITIGATION: PIERCING THE CORPORATE VEIL TO HOLD INDIVIDUALS LIABLE FOR DEBTS OF A BUSINESS ENTITY

By Mavrick Law Firm

“A general principle of corporate law is that a corporation is a separate legal entity, distinct from the individual persons comprising them, and, absent some basis to pierce the corporate veil, there is no basis for imposing liability for corporate debts and obligations under the individuals.” Beltran v. Vincent P. Miraglia, M.D., P.A., 125 So. 3d 855 (Fla. 4th DCA 2013). “[T]he Florida Supreme Court has imposed a strict standard upon those wishing to pierce the corporate veil.” Seminole Boatyard, inc. v. Christoph, 715 So. 2d 987 (Fla. 4th DCA 1998). Generally, so long as a business entity is operated as a distinct and separate entity for a legitimate business purpose, the plaintiff cannot pierce the corporate veil and render the individual(s) liable for the company’s debts. Peter Mavrick is a Miami business litigation attorney, and represents clients in business litigation 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.

A plaintiff can pierce the corporate veil and hold an individual liable for the debts of the business entity only if it can prove three factors by a preponderance of the evidence. Seminole Boatyard, inc. v. Christoph, 715 So. 2d 987 (Fla. 4th DCA 1998). Those three factors are as follows: “(1) the shareholder dominated and controlled the corporation to such an extent that the corporation’s independent existence was in fact non-existent and the shareholders were in fact alter egos of the corporation; (2) the corporate form must have been used fraudulently or for an improper purpose; and (3) the fraudulent or improper use of the corporate form caused injury to the claimant.” Gasparini v. Pordomingo, 972 So. 2d 1053 (Fla. 3d DCA 2008). When all three factors are established, the corporate entity may be disregarded to hold a shareholder personally liable for corporate obligations and for the additional purpose of exercising long-arm jurisdiction over a dominating shareholder residing out-of-state. Woods v. Jorgensen, 522 So. 2d 935 (Fla. 1st DCA 1988).

To establish the first factor, “the personal affairs of the shareholder [must] become confused with the business affairs of the corporation. Individual liability under this theory rests in part on the fact that a shareholder has taken it upon himself to disregard the corporate entity.” Solomon v. Betras Plastics, Inc., 550 So. 2d 1182 (Fla. 5th DCA 1989). This determination often focuses on whether the shareholder has maintained the corporation’s separate corporate identity. Lipsig v. Ramlawi, 760 So. 2d 170 (Fla. 3d DCA 2000). “[T]he mere ownership of a corporation by a handful of shareholders is an insufficient reason to pierce the corporate veil and hold shareholders individually liable for a corporate employee’s errors.” Lipsig v. Ramlawi, 760 So. 2d 170 (Fla. 3d DCA 2000). Moreover, “even if a corporation is merely an alter ego of its dominant shareholder or shareholders, the corporate veil cannot be pierced so long as the corporation’s separate identity was lawfully maintained.” Lipsig v. Ramlawi, 760 So. 2d 170 (Fla. 3d DCA 2003).

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Published on: October 29, 2022

FORT LAUDERDALE BUSINESS LITIGATION: PREEMPTION UNDER THE DEFEND TRADE SECRET ACT VS. THE FLORIDA UNIFORM TRADE SECRET ACT

By Mavrick Law Firm

The Defend Trade Secret Act of 2016 (DTSA) provides civil remedies in federal courts for trade secret misappropriation. 18 U.S.C. §§ 1836 et. seq. Before the DTSA was enacted, trade secret holders were required to protect against and remedy trade secret misappropriation in state court. Most states have adopted some version of the Uniform Trade Secrets Act (UTSA). While the DTSA is similar to the UTSA, some substantial differences exist between the DTSA and a state law UTSA claim. There are also advantages to asserting one claim over the other. 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 litigation, and other legal disputes in federal and state courts and in arbitration.

A trade secret holder may choose to assert a DTSA claim because it ensures the case will be subject to federal court jurisdiction. In federal court, a state law UTSA claim could be asserted in addition to a DTSA claim. However, a DTSA claim can never be asserted in a state court. Another difference between DTSA and a state law UTSA claim. Another difference between the DTSA and UTSA is that the DTSA generally does not preempt state trade secret laws. Trade secret holders therefore can seek civil remedies for trade secret misappropriation under either state or federal law, or both. For example, a trade secret holder can assert both a DSTA and Florida UTSA (FUSTA) claim. A Florida trade secret holder, however, may decide not to assert both because the FUTSA contains a preemption clause preempting common law claims based on trade secret misappropriation.

The FUTSA provides that it displaces “conflicting tort, restitutory, and other law of this state providing civil remedies for misappropriation of a trade secret.” § 688.008, Fla. Stat. The FUTSA specifies that this preemption does not apply to “[o]ther civil remedies that are not based upon misappropriation of a trade secret.” § 688.008, Fla. Stat. “In determining whether common law claims are preempted by FUTSA, courts consider whether the allegations supporting the common law claims are distinguishable from the allegations of trade secret misappropriation.” Coihue, LLC v. PayAnyBiz, LLC, 2018 WL 7376908 (S.D. Fla. Feb. 6, 2018). The court “must evaluate whether allegations of trade secret misappropriation alone comprise the underlying wrong; if so, the cause of action is barred by § 688.008.” Sentry Data Sys., Inc. v. CVS Health, 361 F. Supp. 3d 1279 (S.D. Fla. 2018). Thus, where misappropriation of trade secrets forms the basis of the common law claims, the FUTSA preempts the common law claims. Coihue, LLC v. PayAnyBiz, LLC, 2018 WL 7376908 (S.D. Fla. Feb. 6, 2018).

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Published on: October 26, 2022

MIAMI BUSINESS LITIGATION: FRAUD DAMAGES AND LOST PROFITS UNDER FLORIDA LAW

By Mavrick Law Firm

Under Florida law where fraud is alleged and proven, courts calculate damages using a a doctrine called the “flexibility theory” of damages. Totale, Inc., v. Smith, 877 So. 2d 813 (Fla. 4th DCA 2004). Under this doctrine, the plaintiff in a fraud action may seek recovery of “out-of-pocket” expenses or “benefit-of-the-bargain” damages, but not both. Beefy Trail, Inc. v. Beefy King Intern., Inc., 267 So. 2d 853 (Fla. 4th DCA 1972). The doctrine permits the plaintiff to choose, and the trial court to instruct the jury on, the measure of damages that is more likely to compensate the plaintiff for its injury. Nordyne, Inc. v. Fla. Mobile Home, Supply, Inc., 625 So. 2d 1283 (Fla. 1st DCA 1993). Peter Mavrick is a Miami business litigation attorney, and represents clients in business litigation 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.

While Florida law does not explicitly state that recovery of lost profits is permitted in fraud cases, Florida courts have allowed evidence of lost profit damages in fraud cases where such evidence is relevant to calculation of “benefit-of-the-bargain” damages. In Nordyne, Inc. v. Florida Mobile Home Supply, Inc., 625 So. 2d 1283 (Fla. 1st DCA 1993), the First District Court of Appeal held that evidence of lost profits was properly admitted as relevant to the plaintiff’s fraud claim because “but for [defendant’s] fraudulent misrepresentations, [the plaintiff business] would have continued, for at least five years, to enjoy annual profits, as it had for many years.” The court explained “evidence of profits that [the plaintiff business] would have realized in the ensuing five years but for [defendant’s] fraudulent representations was relevant under the ‘out-of-pocket rule,’ because it tended to prove the position that [the plaintiff business] would have been in but for [defendant’s] wrongful acts.” The court further held such evidence was also relevant to the benefit-of-the-bargain rule to the extent “evidence of such damages was necessary to achieve justice.”

The Fourth District Court of Appeal subsequently recognized that lost profits can be relevant to establish damages in a case involving fraudulent misrepresentations. In Teca, Inc. v. WM-TAB, Inc., 726 So. 2d 828 (Fla. 4th DCA 1999), the buyer alleged that had the true status of pending litigation been disclosed, the buyer would not have closed or would have reduced its offer to take into consideration the impact of the new construction on future business. However, the buyer failed to set forth “testimony fixing the actual value of the business on the date of the sale, a crucial element in the damage equation.” The court explained, “[t]he expert testified that he had not analyzed the value of the business at the time of the sale and that such an evaluation would take four or five days. Although the lost profits would have been relevant to establish the value of the business on the date of the sale, they are not the proper measure of damages in this case.”

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Published on: October 22, 2022

FORT LAUDERDALE BUSINESS LITIGATION: UNREGISTERED TRADEMARKS CANNOT BE GENERIC AND MUST BE DISTINCT

By Mavrick Law Firm

A prevalent issue in business litigation is whether a business’ unregistered name or mark qualifies for trademark protection. Under Florida’s common law, to “prevail on a common law trademark infringement claim, where the mark has not been registered, a plaintiff must show that it has trademark rights on the mark or name at issue distinctive enough to deserve protection; and that the defendant’s use of such mark or name is likely to cause consumer confusion as to the proper origin of the services offered.” PortionPac Chem. Corp. v. Sanitech Sys., Inc., 210 F. Supp. 2d 1302 (M.D. Fla. 2002). Peter Mavrick is a Fort Lauderdale business litigation attorney, and represents clients in Miami, Boca Raton, and Palm Beach. The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

To establish a claim of trademark or service mark infringement, a party is required to show that: (1) it owns a valid, protectable trademark (or service mark); and (2) there is a likelihood of confusion caused by an opposing party’s use of the mark. Anderson v. Upper Keys Bus. Group, Inc., 61 So. 3d 1162 (Fla. 3d DCA 2011). Parties typically seek injunctive relief as a remedy for trademark infringement in business litigation. “As a general ground for injunctive relief, the harm does not have to have actually occurred and the remedy is traditionally for protection from threatened or potential future injury likely to occur.” Am. Bank of Merritt Island v. First Am. Bank & Tr., 455 So. 2d 443 (Fla. 5th DCA 1984). However, a party must always allege and prove that a trade mark is distinct to establish common law trademark infringement:

(1) The plaintiff first adopted and used a certain name (or mark or symbol or logo or sign design) in a certain market or trade area, as a means of establishing good will and reputation and to describe, identify or denominate particular services rendered or offered by it (or goods made or sold by it) and to distinguish them from similar services rendered or offered (or similar goods marketed) by others, and

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Published on: October 19, 2022

MIAMI BUSINESS LITIGATION: DESCRIPTIVE TRADEMARKS REQUIRE A SECONDARY MEANING IF THEY ARE NOT INHERENTLY DISTINCT

By Mavrick Law Firm

Trademark infringement claims are common in business litigation. If a trademark application is still pending, or where a mark was never registered at all, then it is not presume that a given mark qualifies for trademark protection under Florida or federal law. Therefore, to establish a claim of trademark infringement, a party “must show that (1) it owns a valid, protectable trademark and (2) there is a likelihood of confusion caused by [another party’s] use of its mark.” Dieter v. B & H Indus. of Southwest Florida, 880 F.2d 332 (11th Cir.1989). An unregistered trademark must always be distinct to qualify. The more descriptive the mark, the greater the likelihood that a Florida court will consider it as a distinct trademark. Peter Mavrick is a Miami business litigation attorney, and represents clients in business litigation in Fort Lauderdale, Boca Raton, and Palm Beach. The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.

“A mark is ‘descriptive’ if it is descriptive of: the intended purpose, function or use of the goods, the size of the goods, the class of users of the goods, a desirable characteristic of the goods, or the end effect upon the user.” Great S. Bank v. First S. Bank, 625 So. 2d 463 (Fla. 1993). “Descriptive marks may be simply descriptive, laudatorily descriptive or geographically descriptive.” Anderson v. Upper Keys Bus. Group, Inc., 61 So. 3d 1162 (Fla. 3d DCA 2011). If a “descriptive mark is inherently distinctive, it will be afforded legal protection without further proof. If a descriptive mark is not inherently distinctive, it will only be protected if it has become distinctive.” Anderson v. Upper Keys Bus. Group, Inc., 61 So. 3d 1162 (Fla. 3d DCA 2011). “This acquisition of distinctiveness is referred to as ‘secondary meaning.’” Bank of Tex. v. Commerce Sw. Inc., 741 F.2d 785 (5th Cir. 1984).

Descriptive marks that are not inherently distinctive require proof of a secondary meaning. “Secondary meaning is the connection in the consumer’s mind between the mark and the provider of the service.” Coach House Rest., Inc. v. Coach & Six Rests., Inc., 934 F.2d 1551 (11th Cir. 1991). The factors to consider in determining whether a name or mark has “acquired secondary meaning are: (1) the length and manner of the mark’s use; (2) the nature and extent of advertising and promotion for the plaintiff’s business; (3) the efforts made by the plaintiff to promote a conscious connection in the public’s mind between the mark and the plaintiff’s business; and (4) the extent to which the public actually identifies the name with the plaintiff’s service.” Anderson v. Upper Keys Bus. Group, Inc., 61 So. 3d 1162 (Fla. 3d DCA 2011).

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Published on: October 15, 2022

FORT LAUDERDALE NON-COMPETE AGREEMENTS: SUBSTANTIAL BUSINESS RELATIONSHIPS MUST BE IDENTIFIABLE AND SPECIFIC

By Mavrick Law Firm

A prevalent issue in non-compete litigation is whether a company’s non-compete agreement is enforceable to protect its substantial business relationships. These business relationships must be specific and identifiable, but they are not required to be contractual in nature. Indeed, prospective substantial business relationships are protected if they fit these requirements. A business’ substantial business relationships qualify as a protectable “legitimate business interest” under Florida’s non-compete statute, Section 542.335. 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 litigation, and other legal disputes in federal and state courts and in arbitration.

“Section 542.335(1), Florida Statutes, permits enforcement of contracts that restrict or prohibit competition, but only ‘so long as such contracts are reasonable in time, area, and line of business….’” Envtl. Servs., Inc. v. Carter, 9 So. 3d 1258 (Fla. 5th DCA 2009). This section also requires “that the restrictive covenant be set forth in a writing signed by the person against whom enforcement is sought, and that the restraint be shown to be reasonably necessary to protect the ‘legitimate business interests’ justifying the restriction.” Henao v. Prof’l Shoe Repair, Inc., 929 So. 2d 723 (Fla. 5th DCA 2006).

“[L]egitimate business interest[s]” include “[s]ubstantial relationships with specific prospective or existing customers . . . or clients.” Accordingly, “‘the right to prohibit the direct solicitation of existing customers’ is a legitimate business interest.” Hilb Rogal & Hobbs of Fla., Inc. v. Grimmel, 48 So. 3d 957 (Fla. 4th DCA 2010). However, “the protection of former customers generally does not qualify as a legitimate business interest where no identifiable agreement exists with such customers establishing that they would return with future work.” Ethan Allen, Inc. v. Georgetown Manor, Inc., 647 So. 2d 812 (Fla. 1994). Moreover, an employer business is not able to protect against ordinary competition, and such covenants designed solely for those purposes are not enforceable. PartyLite Gifts, Inc. v. MacMillan, 895 F. Supp. 2d 1213 (M.D. Fla. 2012).

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Published on: October 12, 2022

MIAMI BUSINESS LITIGATION: BUSINESSES MUST TAKE REASONABLE MEASURES TO MAINTAIN THE SECRECY OF ITS TRADE SECRETS

By Mavrick Law Firm

In business litigation, a commonly litigated issue is whether a business took reasonable measures to maintain the secrecy of its alleged trade secret information. If such measures are not taken, then Florida courts routinely find that the subject information is not a protectable trade secret. Under Florida law, businesses must therefore adequately protect its trade secret information by maintaining its confidentiality and limiting third-party or outside access to such information. Peter Mavrick is a Miami business litigation attorney, and represents clients in business litigation in Fort Lauderdale, Boca Raton, and Palm Beach. The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.

Under the Florida Uniform Trade Secrets Act (“FUTSA”), “trade secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process that:

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

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Published on: October 5, 2022

FORT LAUDERDALE NON-COMPETE AGREEMENTS: ENFORCING REASONABLE RESTRICTIONS

By Mavrick Law Firm

The law regarding the enforceability of non-compete agreements varies by state. Under Florida law, three requirements must be satisfied for a restrictive covenant to be enforceable: (1) the restrictive covenant must be “set forth in writing signed by the person against whom enforcement is sought”; (2) the party seeking to enforce the restrictive covenant “shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant”’ and (3) the party seeking to enforce the restrictive covenant “shall plead and prove that the contractually specified restraint necessary to protect the legitimate business interest or interests justifying the restriction.” § 542.335, Fla. Stat. Peter Mavrick is a Fort Lauderdale non-compete attorney, and represents clients in non-compete litigation in Miami, Boca Raton, and Palm Beach. The Mavrick Law Firm also represents clients in business litigation (including breach of contract litigation and related claims of fraud), trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

Florida courts will enforce non-compete covenants only where they are reasonable. Quirch Foods LLC v. Broce, 314 So. 3d 327 (Fla. 3d DCA 2020). The covenant must be “reasonable in time, area, and line of business . . . ” § 542.335, Fla. Stat. “Thus a prerequisite for enforceability is that the covenant appear on its face to be reasonable.” Silvers v. Dis-Com Securities, Inc., 403 So. 2d 1133 (Fla. 4th DCA 1981). “This is part and parcel of plaintiff’s cause of action so that the court may address the issue of reasonableness in time and area whether or not the defendant raises the question in his pleadings.” Silvers v. Dis-Com Securities, Inc., 403 So. 2d 1133 (Fla. 4th DCA 1981). “On the other hand if the covenant appears on its face to be reasonable then the burden shifts to the defendant to plead and prove that it is for some reason not reasonable on the facts of the particular case.” Silvers v. Dis-Com Securities, Inc., 403 So. 2d 1133 (Fla. 4th DCA 1981).

Employee agreements containing non-compete covenants, however, may contain a choice-of-law provision of another state. Florida courts will generally apply the law of another state when analyzing the reasonableness of a non-compete covenant where the employment agreement containing the non-compete covenant contains a choice of law provision of another state. Mazzoni Farms Inc. v. E.I. DuPont De Nemours & Co., 761 So. 2d 306 (Fla. 2000) (holding that contractual choice-of-law provisions are presumptively valid and enforceable in Florida unless the law of the chosen forum contravenes strong public policy). Thus, if an employee lives in Florida but works remotely in another state, Florida law will not automatically apply. Rather, Florida courts will look to the law of the state governing the employment agreement to determine whether a non-compete clause is enforceable. Additionally, Florida companies may have to enforce their non-compete agreements for remote employees in the state where the employee lives. Not every state follows Florida’s strong public policy of enforcing reasonably written non-compete clauses, and not every state provides the same level of protection to companies that the law in Florida provides.

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