A business can seek an injunction to enforce a non-compete agreement before a lawsuit is completed if the business is suffering losses due to the violation of a non-compete agreement. There are different legal standards for issuance of a temporary injunction, depending on whether the lawsuit and motion occur in federal or state court. The federal legal standard (1) a substantial likelihood of success on the merits; (2) irreparable injury without the injunction; (3) the threatened injury to the movant outweighs whatever damage the proposed injunction may cause the opposing party; and (4) if issued, the injunction would not be adverse to the public interest. Bloedorn v. Grub, 631 F.3d 1218 (11th Cir. 2011). “Because preliminary injunctions are an extraordinary remedy, this relief is appropriate only if the movant clearly establishes the burden of persuasion on each element.” Nuvasive, Inc. v. Leduff, 2019 WL 5962658 (M.D. Fla. 2019). In addition, however, the party who obtains the injunction is required to post a bond. Posting a bond can be expensive and may impact damages. As a result, it should be considered when seeking or opposing an injunction. Peter Mavrick is a Fort lauderdale non-compete attorney and business litigation attorney who has substantial experience with non-compete litigation, including injunction proceedings.
When seeking an injunction in federal court, a bond must be posted pursuant to Federal Rule of Civil Procedure 65(c). The purpose of posting a bond is to redress costs and damages suffered by any party that is wrongfully enjoined. Although the court has some discretion as to the amount of the bond to be posted, the amount should be enough to cover costs and damages that the enjoined party may suffer.
As an example, in North American Products Corporation v. Moore, 196 F. Supp. 2d 1217 (M.D. Fla. 2002), the District Court for the Middle District of Florida determined that an injunction should be imposed against a former employee of North American Products Corporation and Tru-Cut, a corporation the former employee started after leaving North American Products Corporation. The former employee proceeded to compete against North American Products Corporation in violation of a non-compete agreement. After finding that North American Products Corporation met the requirements for imposition of an injunction, the District Court held that a bond had to be posted. To determine the amount of the bond, an evidentiary hearing was requiredThe District Court looked to the yearly revenues being earned by Tru-Cut and ordered North American Products Corporation to post a bond that would at least satisfy Tru-Cut’s annual projected revenue. The Court set the bond at $500,000.