Articles Posted in Business Litigation

Published on: October 12, 2024

MIAMI BUSINESS LITIGATION: DOCTRINES OF RES JUDICATA AND COLLATERAL ESTOPPEL

A lawsuit is generally considered over once a litigant obtains judgment in its favor assuming no appeal is taken and no post-judgment collection issues exist. However, the losing party is often left unsatisfied. Therefore, the loser may try to “re-do” the lawsuit by suing the defendant again using slightly different claims or lodging the lawsuit in a different jurisdiction. The doctrines of res judicata and collateral estoppel can prevent a litigant from having a second bite of the apple. The Miami business litigation attorneys of the Mavrick Law Firm represent 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.

Res judicata, also known as “claim preclusion,” is a judicial doctrine that prevents parties from relitigating issues decided in a previous action. Anderson v. Vanguard Car Rental USA Inc., 60 So. 3d 570 (Fla. 4th DCA 2011). “Under the doctrine of res judicata, a final judgment issued by a court of competent jurisdiction bars a subsequent suit between the same parties based upon the same cause of action.” Felder v. State, Dep’t of Management Services, Div. of Retirement, 993 So. 2d 1031 (Fla. 1st DCA 2008). A court of competent jurisdiction has been defined to include courts in other states and even other countries. See, e.g., Republic of Ecuador v. Dassum, 346 So. 3d 1250 (Fla. 3d DCA 2022) (finding res judicata barred lawsuit because issues were litigated to final determination in Ecuador).

Florida law requires a party arguing res judicata to establish four “identities.” They are (1) identity of the thing sued for; (2) identity of the cause of action; (3) identity of the parties; (4) identity of the quality in the person for or against whom the claim is made. Saadeh v. Stanton Rowing Foundation, Inc., 912 So. 2d 28 (Fla. 1st DCA 2005). The first identity (the identity of the thing sued for) applies if the remedies requested in the previous and subsequent lawsuits are the same and are based on the same facts. See Accardi v. Hillsboro Shores Improvement Ass’n, Inc., 944 So. 2d 1008 (Fla. 4th DCA 2005) (finding no identity in the things sued for because the prior lawsuit requested equitable relief to prevent a continued violation of a restrictive covenant, while the subsequent lawsuit requested monetary damages based on nuisance and trespass stemming from violations of the restrictive covenant).

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Published on: October 5, 2024

DEFENDING FLORIDA EMPLOYERS: EMPLOYEES VS INDEPENDENT CONTRACTORS

By Mavrick Law Firm

It is important that businesses classifying workers as independent contractors ensure they are properly classified. Whether workers are independent contractors can have important implications for various federal and state statutes. For example, if a worker is an independent contractor, the business does not have to pay them overtime under the Fair Labor Standards Act. Many federal and state discrimination statutes cover only employers with a certain minimum number of employees. Title VII of the Civil Rights Act of 1965 (Title VII) and the Florida Civil Rights Act, for example, only cover employers with fifteen or more employees. Independent contractors are not counted for this purpose. This could exclude some small businesses that work with independent contractors outside the purview of Title VII. But how does one determine whether a worker is an independent contractor. The Miami business litigation attorneys of the Mavrick Law Firm represent 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 worker is not an independent contractor simply because a business labeled them as such. The determination requires an in-depth legal analysis of the various aspects of the worker’s actual duties and relationship with the business. The Eleventh Circuit Court of Appeals established the following factors to determine whether a worker is an independent contractor under Title VII:

the kind of occupation, with reference to whether the work usually is done under the direction of a supervisor or is done by a specialist without supervision;

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Published on: October 2, 2024

FORT LAUDERDALE NON-COMPETE LITIGATION: NATIONAL LABOR RELATIONS BOARD PROHIBITS NON-COMPETE

By Mavrick Law Firm

Non-compete agreements have received significant attention this year after the Federal Trade Commission issued a rule on April 23, 2024, banning most employee non-compete agreements. The rule was scheduled to go into effect on September 4, 2024. However, on August 20, 2024, a court in the United States District Court for the Northern District of Texas permanently enjoined the rule from going into effect. See Ryan LLC v. FTC, Case No. 3:24-CV-00986, 2024 WL 3879954 (N.D. Tex., Aug. 20, 2024). That injunction has not deterred the Federal Government from trying to eliminate or limit non-competes in the workplace. The National Labor Relations Board (NLRB), the agency that enforces the National Labor Relations Act (NLRA) is also taking aim at employee non-compete agreements in J.O. Mory, Inc., NLRB Case No. 25-CA-309577. The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent 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

On June 14, 2024, an administrative law judge with the NLRB issued a decision in J.O. Mory, Inc., finding that an employer’s non-compete and non-solicitation provisions violated Section 7 of the NLRA. In J.O. Mory, a union organizer began working for an HVAC company without revealing that he was a union organizer. The company required him to sign an employment agreement that contained a non-compete provision and a non-solicitation provision. The non-compete provision prohibited employees from working for a competitor for twelve months after the employment terminated. The non-solicitation provision prohibited employees from soliciting other employees to leave employment with the company for twenty-four months after employment terminated.

The union organizer eventually revealed to the company that he intended to recruit the company’s employees to join a union. The company terminated the organizer’s employment as a result. The organizer then filed a complaint with the NLRB alleging he was terminated in violation of the NLRA for being a member of a union and engaging in union activities. The organizer also alleged that the company’s non-compete provision and non-solicitation provision violated Section 7 of the NLRA. Section 7 of the NLRA states employees have the right to engaged in “concerted activities” such as forming and joining labor unions. 29 U.S.C. § 157.

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Published on: September 28, 2024

MIAMI NON-COMPETE LITIGATION: LINE OF BUSINESS LIMITATION

By Mavrick Law Firm

Many businesses require employees, independent contractors, and others to sign restrictive covenants. Common restrictive covenants are non-compete agreements prohibiting competition with the business, non-solicitation covenants prohibiting solicitation of the businesses’ customers and employees, and non-disclosure covenants preventing the disclosure of certain company information. However, these covenants have certain restrictions on enforceability. Some of those restrictions limit enforceability to a particular durational period of time. Other restrictions prevent the covenant from being enforced beyond a certain geographic area or a particular line of business. Fla. Stat. § 542.335. The limitations placed on restrictive covenants can provide a defendant with a basis to avoid enforcement of the covenant. The Miami business litigation attorneys of the Mavrick Law Firm represent 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.

The defendant in a lawsuit for breach of a restrictive covenant can argue his or her alleged competitive actions do not breach the restrictive covenant because they pertain to a different line of business as the plaintiff’s company. A defendant might argue he or she does not target the same types of customers or offers different product or services than those of the plaintiff even both operate in the same industry. USI Insurance Services of Fla., Inc. v. Pettineo, 987 So. 2d 763 (Fla. 4th DCA 2008), addressed this issue within the context of a business purchase. In USI, the owner of an insurance agency sold the company to a buyer pursuant to a sales agreement that included a non-compete provision prohibiting the seller from providing any insurance-related services. After the purchase, the buyer decided it would only sell expensive insurance policies. The seller then opened a new business selling more economical insurance policies that the buyer refused to sell. The buyer sued the seller for breaching the non-compete restrictive covenant and asked the trial court to enjoin the seller from competing. The trial court denied the injunction request because the buyer did not operate a “like business” as the seller. The buyer catered to persons desiring expensive insurance policies while the seller catered to persons desiring more economical insurance policies. However, the trial court was reversed on appeal. The appellate court determined the buyer’s decision to refrain from selling economical insurance policies did not remove the buyer from the broad “line of business” the seller agreed to avoid under the sales contract. USI Insurance’s broad interpretation of “line of business” suggests that persons or companies targeting different customers in the same industry are within the same “line of business.”

The holding in USI Insurance raises questions about when companies are, and are not, in the same line of business. The questions can get more complex for companies with different divisions or product lines. Lincare, Inc. v. Tinklenberg, 2020 WL 10354020 (M.D. Fla., June 26, 2020) may provide some instruction on these complexities. In Lincare, a large conglomerate had many business lines in the medical services and supplies industry. The conglomerate hired a manager that only worked in two of the conglomerate’s business lines. The manager was required to sign a broad non-compete agreement prohibiting the manager from competing against the conglomerate in all of its business lines. The manager left the conglomerate for a competing company and the conglomerate sought an injunction to stop the manager from competing. The court found that the agreement was overbroad and narrowed the restrictive covenant to the two specific business lines the manager worked in during her employment with the conglomerate.

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Published on: September 25, 2024

FORT LAUDERDALE BUSINESS LITIGATION: GARNISHMENT COLLECTION

By Mavrick Law Firm

After a claimant successfully prevails in a lawsuit and obtains a money judgment against the opposing party, the claimant must collect on the judgment. However, collecting is often easier said than done because the losing party does not usually pay the judgment voluntarily. The prevailing party must often undertake further legal proceedings to collect on the judgment. One option available to the judgment holder is garnishment. The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent 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

Garnishment is a procedure in which a judgment creditor can obtain the wages or property of a judgment debtor to satisfy a monetary judgment. The garnishor seeks to obtain the property of the judgment debtor held by a third person. See Fla. Stat. § 77.01 (allowing garnishment of any debt due to the defendant or any personal property of the defendant held by a third person). Garnishment actions often pursue funds held in the judgment debtor’s bank account or the judgment debtor’s wages.’

The procedures for garnishment proceeding in Florida are set out in Florida Statutes Chapter 77. The first step in the garnishment process is to file a motion for writ of garnishment. Fla. Stat. § 77.03. The motion can be filed ex parte, meaning without notice to the judgment debtor. United Presidential Life Ins. Co. v. King, 361 So. 2d 719 (Fla. 1978). Once the court grants the motion for writ of garnishment, the clerk of courts will then execute the writ of garnishment. If the judgment debtor is an individual, the clerk will attach a “Notice to Defendant” form to the writ. Fla. Stat. § 77.041. The Notice advises the judgment debtor that he or she may file a claim of exemption.

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Published on: September 21, 2024

MIAMI BUSINESS LITIGATION: TRADE SECRET REMEDIES AND DAMAGES

By Mavrick Law Firm

A trade secret could be the lifeblood of a business, and it is critical for businesses to protect their trade secrets. If a business’ trade secret is misappropriated, the business likely will want to commence litigation. What remedies can the business obtain for the trade secret misappropriation? Determining the remedies for trade secret misappropriation is a complicated matter and highly dependent on the factual circumstances of each particular case. The Miami business litigation attorneys of the Mavrick Law Firm represent 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.

Under the Defendant Trade Secrets Act (DTSA), an injunction and damages can be remedies. 18 U.S.C. § 1836. These remedies are not exclusive of each other; therefore, a plaintiff can obtain both. An injunction is typically used to prevent “any actual or threatened misappropriation” going forward. An injunction may also require the defendant to take affirmative steps to protect the trade secret. Further, in “exceptional circumstances,” the injunction “may condition further use of the trade secret upon payment of a reasonable royalty for no longer than the period of time for which such use could have been prohibited.”

DTSA also sets out two monetary damages options. One option is actual loss caused by the misappropriation and any unjust enrichment caused by the misappropriation not addressed in computing actual loss damages. Damages for actual loss and unjust enrichment are both available as long as there is no double counting. LBF Travel Management Corp. v. DeRosa, 2024 WL 1298001 (S.D. Cal. March 26, 2024). Actual loss damages are intended to put the plaintiff in the position it would have been had the misappropriation not occurred. Actual loss is usually measured by the plaintiff’s lost profits, while unjust enrichment damages are usually calculated by the revenues the defendants generated misappropriating the trade secret. See, e.g., FX Group, LLC v. Astorga, 2021 WL 8200229 (M.D. Fla., Sept. 27, 2021) (analyzing lost profits in assessment of actual loss). But sometimes actual loss can include price erosion and lost investments. See Salsbury Laboratories, Inc. v. Merieux, 735 F. Supp. 1555 (M.D. Ga. 1989) (allowing the plaintiff to use price erosion to calculate actual loss damages).

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Published on: September 18, 2024

FORT LAUDERDALE BUSINESS LITIGATION: THIRD-PARTY TRADE SECRET LIABILITY

By Mavrick Law Firm

It is important for businesses to protect their trade secrets to prevent their misappropriation. But sometimes, a business’s trade secrets are stolen despite the business’s best efforts to protect them. For example, an employee may steal his employer’s trade secrets and start a competing business or provide the secret to an already established competing business. The business will presumably want to commence litigation against the former employee and the competitive business to stop the misappropriation and recover damages resulting from the improper use of its trade secrets. A fundamental question arising from this common fact pattern will likely be, how does the business prove the competing entity knew the trade secret was improperly misappropriated? The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent 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 prove a claim of trade secret misappropriation under the Defend Trade Secrets Act (DTSA), a plaintiff must prove the following elements:

(1) the plaintiff owned a trade secret;

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Published on: September 14, 2024

MIAMI BUSINESS LITIGATION: CLAIMS OF MALICIOUS PROSECUTION

By Mavrick Law Firm

When a business prevails in a lawsuit that was brought unjustly, it might have a cause of action for malicious prosecution. The cause of action for malicious prosecution arises out of the wrongful commencement of a judicial proceeding. “The essence of the tort of malicious prosecution is the misuse of legal machinery for an improper purpose.” Rushing v. Bosse, 652 So. 2d 869 (Fla. 4th DCA 1995). Malicious prosecution could be an option if your business is sued in a baseless lawsuit. The Miami business litigation attorneys of the Mavrick Law Firm represent 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 prevail on a claim of malicious prosecution, a plaintiff must prove the following elements:

an original judicial proceeding against the present plaintiff was commenced or continued’

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Published on: September 11, 2024

FORT LAUDERDALE BUSINESS LITIGATION: CONTRACT REMEDIES

By Mavrick Law Firm

Breach of contract is a common cause of action in business disputes. When deciding whether to file a lawsuit for breach of contract, one must determine the remedies are available for the particular breach of contract in question. Florida law allows remedies for damages, restitution, and specific performance. Ocean Commc’ns, Inc. v. Bubeck, 956 So. 2d 1222 (Fla. 4th DCA 2007). A plaintiff should carefully consider the potential remedies before lodging the lawsuit to obtain the best possible recovery. The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent 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 party may maintain an action at law for breach of contract to recover damages. The typical measure of damages in Florida is expectancy damages. See Capitol Environmental Servs., Inc. v. Earth Tech, Inc., 25 So. 3d 593 (Fla. 1st DCA 2009). Expectancy damages are “monetary damages that will put [the injured party] in the same position it would have been had the other party not breached the contract.” In other words, expectancy damages place the non-breaching party in the position they expected to be in but for the breach. A subcategory of expectancy damages are general damages and special damages. General damages are those damages that naturally flow from the breach of contract. Hardwick Properties, Inc. v. Newbern, 711 So. 2d 35 (Fla. 1st DCA 1998). While special damages do not normally result from the breach of contract, but “may reasonably be supposed to have been in the contemplation of the parties at the time they made the contract.” Lost profits are a common form of special damages in business disputes.

But what if a business does not want expectancy damages, but instead wants to be placed in the position it was in immediately prior to the entering into the contract? This is covered by restitution. “The purpose of restitution . . . is to require the wrongdoer to restore that which he has received and thus tend to put the injured party in as good a position as he occupied before the contract was made; in this context the injured party may be said to have considered the contract as ‘terminated’ or ‘ended.’” Beefy Trail, Inc. v. Beefy King Intern’l, Inc., 267 So. 2d 853 (Fla. 4th DCA 1972). Restitution may be applicable if, for example, a business wants the breaching party to return the money it paid the breaching party pursuant to the contract terms. A plaintiff may elect between restitution and expectancy damages discussed above when there is a total breach of contract. McCray v. Murray, 423 So. 2d 559 (Fla. 1st DCA 1982).

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Published on: September 7, 2024

MIAMI BUSINESS LITIGATION: LEGALITY OF GEOGRAPHIC AREA IN NON-COMPETE AGREEMENTS

By Mavrick Law Firm

Businesses commonly enter into restrictive covenants with their employees to prohibit them from unfairly competing with the business during and after employment. Restrictive covenants include contracts that restrict competition, such as non-compete agreements, non-disclosure agreements, and confidentiality agreements. When preparing a restrictive covenant, what provisions should be included? Typically, a business should include provisions that specifically define the geographic area, time limit, and line of business of the covenant. Many states require that the restrictive covenant be reasonable in time, geographic area, line of business, and be supported by a legitimate business interest. Seemingly, the requirement that a restrictive covenant be reasonable in geographic area means that the restrictive covenants should have a defined geographic scope. However, a recent case from the Supreme Court of Georgia, North American Senior Benefits, LLC v. Wimmer, 2024 WL 4029937 (Ga. 2024), has eliminated any such requirement in Georgia. The Miami business litigation attorneys of the Mavrick Law Firm represent 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.

The Georgia Supreme Court issued its decision in North American Senior Benefits, LLC v. Wimmer, 2024 WL 4029937 (Ga. 2024), on September 4, 2024. Wimmer involved a non-solicitation agreement between an employer and two former employees that prohibited the former employees from soliciting any employees of the employer. The non-solicitation agreement had an effective period of two years after the end of employment, and was not limited to a geographic area. The employees left the employer and started a competing business. The employer then sued the employees for violation of the non-solicitation provision. The trial court granted to the employees a motion for judgment on the pleadings because the non-solicitation provision did not define a geographic area, and the Georgia Court of Appeals affirmed. However, the Georgia Supreme Court reversed. The Georgia Supreme Court held that a restrictive covenant does not require an express geographic area. It reasoned that the geographic area can be determined “from the facts and circumstances” of the case without being expressly stated in the restrictive covenant.

Florida law also enforces restrictive covenants only if they are reasonable in time, geographic area, and line of business. Fla. Stat. § 542.335. Yet, some courts have also treated Florida’s geographic area requirement with flexibility. For example, recently, in Hayes Medical Staffing, LLC v. Eichelberg, 2024 WL 670440 (S.D. Fla., Jan. 23, 2024), a court in the Southern District of Florida granted a permanent injunction that enforced a non-disclosure provision that did not contain a geographic area. In another example, in Office Depot v. Babb, 2020 WL 1306984 (S.D. Fla., March 19, 2020), the court enforced a broad restrictive covenant that included the entire United States. It is also notable that Florida has the “blue pencil” rule. The “blue pencil” rule allows courts to modify an overly broad restrictive covenant to make its scope reasonable. See Fla. Stat. § 542.335 (“If a contractually specified restraint is overbroad, overlong, or otherwise not reasonably necessary to protect the legitimate business interest or interests, a court shall modify the restraint and grant only the relief reasonably necessary to protect such interest or interests.”).

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