Articles Posted in Business Litigation

Published on: July 13, 2022

FORT LAUDERDALE BUSINESS LITIGATION: TRADE SECRET THEFT BY AN EMPLOYEE

Business litigation in Florida often involves claims for trade secret misappropriation under Florida’s Uniform Trade Secret Act (FUTSA) or the Defend Trade Secrets Act (DTSA). For liability to attach under DTSA or FUTSA, the trade secret information must be the fruit of a wrongful acquisition or misappropriation. Misappropriation of a trade secret occurs “where a person who knows or has reason to know that the trade secret was acquired by improper means acquires the trade secret of another or where a person who has obtained the trade secret by improper means discloses or uses the trade secret of another without express or implied consent.” ACR Elecs., Inc. v. DME Corp., 2012 WL 13005955 (S.D. Fla. Oct. 31, 2012). In business litigation involving an employment relationship, misappropriation may occur during the employment or after an employees’ employment terminates. 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.

The DTSA defines “misappropriation” to include “acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means” or “disclosure or use of a trade secret of another without express or implied consent” in specified circumstances. 18 U.S.C. § 1839(5). “Improper means” under DTSA includes “theft, bribery, misrepresentation, [and] breach or inducement of a breach of a duty to maintain secrecy,” but excludes “reverse engineering, independent derivation, or any other lawful means of acquisition.” 18 U.S.C. § 1839(6). Meanwhile, the definition of “improper means” under FUTSA also includes “breach or inducement of a breach of a duty to maintain secrecy.” Fla. Stat. § 688.002(1). While the general definitions of a trade secret are identical under FUTSA and DTSA, a court’s analysis under each statute is substantially equivalent. Compulife Software Inc. v. Newman, 959 F.3d 1288 (11th Cir. 2020). Actions may be “improper” for trade-secret purposes even if not independently unlawful. Compulife Software Inc. v. Newman, 959 F.3d 1288 (11th Cir. 2020).

Florida courts routinely find that trade secrets may be acquired through improper means after an employment relationship ends. Federal courts within the Eleventh Circuit Court of Appeals must review the facts surrounding the alleged misappropriation on a case-by-case basis. For example, in Int’l Hair & Beauty Sys., LLC v. Simply Organic, Inc., the United States District Court in and for the Middle District of Florida granted plaintiff’s motion for preliminary injunction against the business’ former technical director for misappropriation of company trade secrets and to enforce non-compete and non-solicitation agreements. 2011 WL 5360098 (M.D. Fla. Sep. 26, 2011). During his employment, the Simply Organic defendant “had access to contact management lists including clients, customers and potential customers” of plaintiff’s hair salon. Months after his employment ended, the former employee then obtained, from another former employee of plaintiff, “a list of hair salons and beauty supply stores” that contained several “salons that were utilizing products of Plaintiff.”

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Published on: July 6, 2022

MIAMI BUSINESS LITIGATION: SHOWING DIRECT HARM AND SPECIAL INJURY TO ESTABLISH DIRECT STANDING IN FLORIDA

By Mavrick Law Firm

Business litigation in Florida often involves disputes between corporate entities and the persons with ownership interests in such entities. Two of the more common corporate ownership structures in Florida are the corporation and the limited liability company. The owners of a corporation are known as shareholders, and the owners of a limited liability company are known as members. In Florida, there are certain requirements a shareholder or member must first satisfy to have direct standing to sue and recover damages on their own behalf. Otherwise, the individual must pursue their claims derivatively as a shareholder or member on behalf of the company. To have direct standing under Florida law, an individual must show direct harm and special injury to maintain a direct action. 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 Florida law, “an action may be brought directly only if (1) there is a direct harm to the shareholder or member such that the alleged injury does not flow subsequently from an initial harm to the company and (2) there is a special injury to the shareholder or member that is separate and distinct from those sustained by the other shareholders or members.” Dinuro Investments, LLC v. Camacho, 141 So. 3d 731 (Fla. 3d DCA 2014). “[A] stockholder may bring a suit in his own right to redress an injury sustained directly by him, and which is separate and distinct from that sustained by other stockholders.” Citizens National Bank of St. Petersburg v. Peters, 175 So. 2d 54 (Fla. 2d DCA 1965).

Under the direct harm prong, Courts must examine “whether the harm from the alleged wrongdoing flows first to the company and only damages the shareholders or members due to the loss in value of their respective ownership interest in the company, or whether the harm flows ‘directly’ to the shareholder or member in a way that is not secondary to the company’s loss.” Strazzulla v. Riverside Banking Co., 175 So. 3d 879 (Fla. 4th DCA 2015). The court must then “compare the individual’s harm to the company’s harm.” Only when the damages are unrelated to the damages sustained by the company and when the company would have no rights to recover in its own action can the shareholder bring a direct suit. Strazzulla v. Riverside Banking Co., 175 So. 3d 879 (Fla. 4th DCA 2015).

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Published on: July 2, 2022

FORT LAUDERDALE BUSINESS LITIGATION: ADMISSIBILITY OF BUSINESS RECORDS

By Mavrick Law Firm

In business litigation, business records are admissible as an exception to the hearsay rule under Federal Rule of Evidence 803(6). This “business records exception” permits parties in business litigation to admit into evidence certain business records that are kept in the regular course of business. Business records are often play a key role in business litigation discovery. 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 establish that the business records exception applies to any document, the evidence must first show that the underlying document is authentic under Rule 901. United States v. Dreer, 740 F.2d 18 (11th Cir. 1984). The authentication burden is a light burden. United States v. Lebowitz, 676 F.3d 1000 (11th Cir. 2012). Second, the evidence must show that the authenticated document meets the requirements of Rule 803(6). United States v. Dreer, 740 F.2d 18 (11th Cir. 1984). An authenticated document is admissible as a business record if it “was made at or near the time by – or from information transmitted by – someone with knowledge”; if it “was kept in the course of a regularly conducted activity”; and if “making the record was a regular practice of that activity.” Fed. R. Evid. 803(6)(A)-(C).

The “proponent must [also] establish that it was the business practice of the recording entity to obtain such information from persons with personal knowledge and the business practice of the proponent to maintain the records produced by the recording entity.” U.S. v. Bueno-Sierra, 99 F.3d 375 (11th Cir. 1996). The proponent “could establish those requirements through ‘the testimony of the [record] custodian or other qualified witness,’ or by means of an out-of-court certification procedure established by rule or statute.” In re Int’l Mgmt. Assocs., LLC, 781 F.3d 1262 (11th Cir. 2015). A “qualified witness” is someone who “can credibly testify that it was the practice of the producing business to maintain the records as provided in Rule 803(6).” Cellar Law Organization, Inc. v. Sony Pictures Television Inc., 2014 WL 12580515 (S.D. Fla. April 12, 2014). “[R]ule 803(6) requires the testimony of a custodian or other qualified witness who can explain the record-keeping procedure utilized.” United State v. Garnett, 122 F.3d 1016 (11th Cir. 1997).

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Published on: June 29, 2022

MIAMI BUSINESS LITIGATION: DISCLOSING TRADE SECRETS TO THIRD PARTIES

By Mavrick Law Firm

Trade secret claims in business litigation require courts to determine whether a business adequately protects its alleged trade secrets by preventing disclosure to unauthorized third parties. To qualify for protection under Florida Uniform Trade Secrets Act (“FUTSA”) and the federal Defend Trade Secrets Act (“DTSA”), a business therefore must show that it adequately maintained the secrecy of its trade secrets and confidential information. For this reason, courts often will not protect an alleged trade secret if the subject information is disclosed to other parties who do not have an obligation to keep the information confidential. 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.

“In a trade secret action, the plaintiff bears the burden of demonstrating both that the specific information it seeks to protect is secret and that it has taken reasonable steps to protect this secrecy.” Am. Red Cross v. Palm Beach Blood Bank, Inc., 143 F.3d 1407 (11th Cir.1998). Disclosing the “information to others who are under no obligation to protect the confidentiality of the information defeats any claim that the information is a trade secret.” In re Maxxim Med. Grp., Inc., 434 B.R. 660 (Bankr. M.D. Fla. 2010).

If the party receiving confidential, trade secret information has a legal obligation to maintain secrecy of the information, then disclosure to such parties does not automatically destroy the secrecy element required under FUTSA or DTSA. This remains true even if the disclosing party and the receiving party do not have a confidentiality agreement between them. For example, in XTec, Inc. v. Hembree Consulting Services, Inc., the United States District Court for the Southern District of Florida found that disclosure of confidential information to the government did not necessarily defeat the requirement of secrecy for trade secret protection, because 48 C.F.R. § 27.402 “obligates the government to maintain the secrecy of proprietary data; thus, in this case, there was an accompanying mechanism to maintain [plaintiff’s] secrecy.” 183 F. Supp. 3d 1245 (S.D. Fla. 2016).

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Published on: June 25, 2022

FORT LAUDERDALE BUSINESS LITIGATION: IDENTIFYING TRADE SECRETS UNDER FUTSA

By Mavrick Law Firm

In business litigation, Florida courts require plaintiffs to describe their alleged trade secret with a certain degree of particularity. Failing to do that can be fatal to trade secret claims. A plaintiff does not only have to prove that certain confidential information was misappropriated, but it must also prove that the misappropriated information actually qualifies as a trade secret under Florida or federal law. To establish its claim for trade secret misappropriation, the party must adequately explain what information qualifies as trade secret and why the alleged confidential information’s secrecy makes the trade secret valuable to a business. 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.

Florida’s Uniform Trade Secret Act (FUTSA) defines a trade secret as as “information, including a formula, pattern, compilation, program, device, method, technique, or process that [d]erives 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 [i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” Section 688.002(4), Florida Statutes. Misappropriation under FUTSA also includes circumstances when a party simply possesses the trade secret material. Section 688.002(2), Florida Statutes.

Business litigation plaintiffs asserting trade secret misappropriation claims must show that what was taken is valuable because it is secret. Plaintiffs are also required to show that they acted reasonably when trying to keep its information secret. Trade secret misappropriation claims inherently fail when the litigants do not demonstrate that the allegedly misappropriated information qualifies as a trade secret. “In order to ascertain whether trade secrets exist, the information at issue must be disclosed.” Lovell Farms, Inc. v. Levy, 641 So. 2d 103 (Fla. 3d DCA 1994). “The plaintiff must, as a threshold matter, establish that the trade secret exists. To do so, it must disclose the information at issue.” Revello Med. Mgmt., Inc. v. Med-Data Infotech USA, Inc., 50 So. 3d 678 (Fla. 2d DCA 2010).

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Published on: June 18, 2022

MIAMI BUSINESS LITIGATION: DEFENDING AGAINST IMPROPER ASSERTION OF PERSONAL JURISDICTION

By Mavrick Law Firm

It is important in business litigation to carefully review the forum of the lawsuit to determine whether it is proper. The Supreme Court of Florida in Venetian Salami Co. v. Parthenais, 554 So. 2d 499 (Fla. 1989), created a two-step analysis governing whether a Florida court may exercise personal jurisdiction over a non-resident defendant. “First, it must be determined that the complaint alleges sufficient jurisdictional facts to bring the action within the ambit of Florida’s long-arm statute, section 48.193.” Balboa v. Assante, 958 So. 2d 573 (Fla. 4th DCA 2007). “If so, the next inquiry is whether sufficient ‘minimum contacts’ are demonstrated to satisfy due process requirements.” Balboa v. Assante, 958 So. 2d 573 (Fla. 4th DCA 2007). “Both parts must be satisfied for a court to exercise personal jurisdiction over a non-resident defendant.” Am. Fin. Trading Corp. v. Bauer, 828 So. 2d 1071 (Fla. 4th DCA 2002). 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.

Under Florida law, there are established steps to to successfully dispute the existence of personal jurisdiction. “Initially, the plaintiff may seek to obtain jurisdiction over a nonresident defendant by pleading the basis for service in the language of the statute without pleading the supporting facts.” Venetian Salami Co. v. Parthenais, 554 So. 2d 499 (Fla. 1989). “By itself, the filing of a motion to dismiss on grounds of lack of personal jurisdiction over the person does nothing more than raise the legal sufficiency of the pleadings.” Venetian Salami Co. v. Parthenais, 554 So. 2d 499 (Fla. 1989). “A defendant wishing to contest the allegations of the complaint concerning jurisdiction or to raise a contention of minimum contacts must file affidavits in support of his position.” Venetian Salami Co. v. Parthenais, 554 So. 2d 499 (Fla. 1989). “To be legally sufficient, the defendant’s affidavit must contain factual allegations which, if taken as true, show that the defendant’s conduct does not subject him to jurisdiction.” Hilltopper Holding Corp. v. Estate of Cutchin ex rel. Engle, 955 So. 2d 598 (Fla. 2d DCA 2007).

If a business litigation defendant disputes personal jurisdiction, the company should timely file with the court a legally sufficient affidavit showing the company is not subject to the court’s jurisdiction, the burden then shifts back to the plaintiff to “prove by affidavit the basis upon which jurisdiction may be obtained.” Peznell v. Doolan, 722 So. 2d 881 (Fla. 2d DCA 1998). Where the plaintiff files a counter affidavit that raises conflicting facts, the trial court will hold a limited evidentiary hearing to resolve any disputed facts relating to jurisdiction. Venetian Salami Co. v. Parthenais, 554 So. 2d 499 (Fla. 1989).

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Published on: June 15, 2022

FORT LAUDERDALE NON-COMPETE AGREEMENTS: INTERPRETING NON-SOLICITATION PROVISIONS IN FLORIDA

By Mavrick Law Firm

Florida Courts routinely enforce non-compete agreements to prevent a former or current employees’ improper solicitation of the business’ current and prospective employees and customers. Such restrictive covenants, also commonly referred to as non-solicitation provision, are governed by Section 542.335, Florida Statutes. The non-solicitation provisions must be: (1) reasonable in time, area, and line of business, (2) supported by a legitimate business interest, and (3) reasonably necessary to protect such interest. Non-solicitation clauses are useful to protect a business’ substantial business relationships with its existing or prospective customers. As with other contractual covenants, Florida courts will interpreted interpret non-solicitation provisions under Florida law in business litigation. Peter Mavrick is a Fort Lauderdale non-compete 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.

“Generally, the intentions of the parties to a contract govern its construction and interpretation.” Waverly 1 & 2, LLC v. Waverly at Las Olas Condo. Ass’n, 242 So. 3d 425 (Fla. 4th DCA 2018). Where contractual terms are clear and unambiguous, the court is bound by the plain meaning of those terms. The intent of the parties by their use of such terms must be discerned from within the ‘four corners of the document.’” Emerald Pointe Prop. Owners’ Ass’n, Inc. v. Commercial Const. Indus., Inc., 978 So. 2d 873 (Fla. 4th DCA 2008). ”Furthermore, the language being interpreted must be read in conjunction with the other provisions in the contract.” Waverly 1 & 2, LLC v. Waverly at Las Olas Condo. Ass’n, Inc., 242 So. 3d 425 (Fla. 4th DCA 2018). ”In construing the language of a contract, courts are to be mindful that ‘the goal is to arrive at a reasonable interpretation of the text of the entire agreement to accomplish its stated meaning and purpose.’” Silver Shells Corp. v. St. Maarten at Silver Shells Condo. Ass’n, 169 So. 3d 197 (Fla. 1st DCA 2015). ”To that end, a cardinal principle of contract interpretation is that the conduct must be interpreted in a manner that does not render any provision of the contract meaningless.” Silver Shells Corp. v. St. Maarten at Silver Shells Condo. Ass’n, 169 So. 3d 197 (Fla. 1st DCA 2015).

Florida courts that interpret a “solicitation” term in a non-compete agreements typically find found that the offending “solicitation” must be active, rather than passive. In Scarbrough v. Liberty Nat’l Life Ins. Co., the Florida’s First District Court of Appeal held “that the term ‘solicit’ in an agreement prohibited the employee from being ‘proactive’ in such efforts”. 872 So. 2d 283 (Fla. 1st DCA 2004). In this sense, an employee’s mere suggestion or statement to coworkers that they are starting their own business likely will not, on its own, qualify as a “solicitation” under Florida law.

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Published on: June 11, 2022

MIAMI BUSINESS LITIGATION: CIVIL SEIZURE REMEDY UNDER THE DEFEND TRADE SECRETS ACT

By Mavrick Law Firm

Trade secret claims often arise in business litigation under federal and state law. The Defend Trade Secrets Act (DTSA) provides parties with opportunities to pursue trade secret misappropriation claims in a federal forum. Florida’s Uniform Trade Secret Act (FUTSA) is substantially similar to DTSA and specifically recognizes that it “shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this act among states enacting it.” Section 688.009, Florida Statutes. Trade secret law is generally uniform between states. 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.

DTSA defines a “trade secret” as information which “the owner thereof has taken reasonable measures to keep such information secret; and the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information”). By comparison, FUTSA§ 688.002 (4), Florida Statutes (defining “trade secret” as information which [d]erives 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 [i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy”).

Federal courts in Florida will generally interpret these substantive provisions in the same way. M.C. Dean, Inc. v. City of Miami Beach, Florida, 199 F. Supp. 3d 1349 (S.D. Fla. 2016). The similarity between FUTSA and DTSA provides Florida business litigation plaintiffs with flexibility in terms of their forum. Unlike trade secret claims under state laws like FUTSA, claims under DTSA may be brought in federal court as a “federal question.”

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Published on: June 4, 2022

FORT LAUDERDALE BUSINESS LITIGATION: FLORIDA’S PLEADING REQUIREMENTS FOR TRADE SECRET CLAIMS

By Mavrick Law Firm

A common issue in business litigation involving trade secret misappropriation claims under Florida’s Uniform Trade Secrets Act (FUTSA) is whether the plaintiff sufficiently identified its alleged trade secrets in its pleadings. Under Florida law, a “plaintiff must, as a threshold matter, establish that the trade secret exists. To do so, it must disclose the information at issue.” Revello Med. Mgmt., Inc. v. Med-Data Infotech USA, Inc., 50 So. 3d 678 (Fla. 2d DCA 2010). “The term trade secret is one of the most elusive and difficult concepts in the law to define.” Furmanite America, Inc. v. T.D. Williamson, Inc., 506 F. Supp. 2d 1134 (M.D. Fla. 2007). However, a “party proceeding under FUTSA need only describe the misappropriated trade secrets with ‘reasonable particularity.’” Treco Intern. S.A. v. Kromka, 706 F. Supp. 2d 1283 (S.D. Fla. 2010). 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 plaintiff must identify its trade secrets to prove trade secret misappropriation in business litigation. Without identifying the specific the trade secret at issue, it is impossible to determine whether the party pled each of the elements of a trade secret, which are: (1) “information”; (2) that “derives independent economic value” “from not being generally known”; (3) that is “not readily ascertainable by proper means”; and (4) “is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” Section 688.02 (4)(a)-(b), Florida Statutes. While it is oftentimes difficult to describe a trade secret without divulging its confidential characteristics, Florida courts require “[a] party proceeding under Florida’s Uniform Trade Secrets Act [to] only describe the misappropriated trade secrets with reasonable particularity.” Textile USA, Inc. v. Diageo N. Am., Inc., 2017 WL 10187642 (S.D. Fla. July 31, 2017). The Court’s determination of whether a particular type of information constitutes a trade secret is a question of fact.” Poet Theatricals Marine, LLC v. Celebrity Cruises, Inc., 307 So. 3d 927 (Fla. 3d DCA 2020).

In Poet Theatricals Marine, LLC v. Celebrity Cruises, Inc., Florida’s Third District Court of Appeal held that the plaintiff sufficiently identified its trade secrets by describing them as “(1) ‘proprietary digital and tracking and management systems over the operation and functioning of equipment used in the shows,’ and (2) a ‘unique training system that enabled a cruise line to hire non[ ]acrobatic performers (dancers) who would be trained to perform as skilled aerialists/acrobats in a fraction of the time typically required for acquiring such skills, all while maintaining a high level of safety of the performers, staff, and passengers.’” 2020 WL 5931884 (Fla. 3d DCA Oct. 7, 2020).

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Published on: June 1, 2022

FORT LAUDERDALE NON-COMPETE AGREEMENTS: FLORIDA LAW PROTECTS A COMPANY’S CUSTOMER GOODWILL

By Mavrick Law Firm

A prevalent issue in non-compete litigation is whether a company’s non-compete agreement is enforceable to protect a company’s customer, patient, or client goodwill. In certain sitations, a company’s goodwill qualifies as a legitimate business interest under Section 542.335, Florida’s non-compete statute. “Florida statutory law (as a matter of public policy) does not allow a party to enforce a restrictive covenant unless it proves that enforcement is necessary to protect its legitimate business interests.” Evans v. Generic Sol. Eng’g, LLC, 178 So. 3d 114 (Fla. 5th DCA 2015). Section 542.335 includes a non-exhaustive list of examples of legitimate business interests, one of which is a party’s “customer, patient, or client goodwill” associated with “a specific geographic location” or “a specific marketing or trade area.” Ansaarie v. First Coast Cardiovascular Inst., P.A., 252 So. 3d 287 (Fla. 1st DCA 2018). 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.

Goodwill typically qualifies as a “legitimate business interest” if it “represent[s] an investment by the employer” and “enable[s] unfair competition if misappropriated.” IDMWORKS, LLC v. Pophaly, 192 F. Supp. 3d 1335 (S.D. Fla. 2016). “Courts are statutorily required to construe a restrictive covenant in favor of providing reasonable protection to all legitimate business interests established by the person seeking enforcement.” SC Maint., Inc. v. Martin, 2021 WL 4948183 (M.D. Fla. Aug. 22, 2021). In business litigation, some Florida courts have viewed a company’s purported goodwill as an asset that generates a reasonable expectation of greater-than-usual business or revenue. Held v. Held, 912 So. 2d 637 (Fla. 4th DCA 2005). In Swann v. Mitchell, Florida’s Supreme Court defined goodwill as “the advantage or benefit the business has beyond the mere value of its property and capital.” Swann v. Mitchell, 435 So. 2d 797 (Fla. 1983). “Black’s Law Dictionary defines goodwill as ‘the ability of a business to generate in excess of a normal rate on assets due to superior managerial skills, a market position, [or] new product technology.’” Nelson v. Nelson, 795 So. 2d 977 (Fla. 5th DCA 2001).

When determining whether goodwill exists in business litigation, Florida courts often must also analyze the scope and nature of the business’ customer relationships. To this end, Florida courts typically focus on the geographic regions where the customers are located. For example, in Surgery Center Holdings, Inc. v. Guirguis, Florida’s Second District Court of Appeal held that the business “established patient goodwill within a specific geographic location and substantial relationships with existing patients, proving legitimate business interests that are reasonably related to the restrictive covenants.” 318 So. 3d 1274 (Fla. 2d DCA 2021). Guirguis relied upon documentation, testimony, and other testimony demonstrating that the business “invest[ed] in physicians, geographies, and markets to best serve their patient population.” Surgery Ctr. Holdings, Inc. v. Guirguis, 318 So. 3d 1274 (Fla. 2d DCA 2021).

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