Articles Posted in Business Litigation

As a business owner, ensuring that your customer list is adequately protected can often be a challenging task. Employees who have direct access to a customer list can misappropriate that information and use it to compete directly against the business. Fortunately, a business’s customer list may qualify as a trade secret to justify the enforcement of a non-compete agreement under Section 542.335, Florida Statutes. The aim is to prohibit employees from using the customer list for their own benefit. For a customer list to qualify as a trade secret, courts look at various factors, including but not limited to, the extensive work and considerable effort that went into creating the list, as well as the knowledge, time, and expense associated with its creation. Peter Mavrick is a Miami trade secret and non-compete litigation lawyer who has extensive experience with litigation involving misappropriation of business customer lists.

Simply because a business has a customer list, does not mean that list qualifies as a trade secret. When a customer list is more complex and contains information that is not easily obtainable in the public domain, it makes the content of the list more valuable. By contrast, when a customer list contains information that is easily obtainable on the open market, it is less likely that the list will qualify as a trade secret. Unfortunately, the courts have yet to establish a bright line rule when it comes to determining whether a customer list qualifies as a trade secret.

In Unistar Corp. v. Child, 415 So. 2d 733 (Fla. 3d DCA 1982), Florida’s Third District Court of Appeal analyzed a business’s customer list to determine whether it qualified as a trade secret. A former employer who was in the business of selling investment grade diamonds and gemstones to their customers through “financial planners,” sought a preliminary injunction to prevent former employees from contacting and selling to its customers. The employer alleged their customer list was a trade secret. The former employees contended, inter alia, that the employer is not entitled to a preliminary injunction because the customer list does not qualify as a trade secret since it was available to the public. The trial court denied the employer’s injunctive relief. The employer appealed.

During discovery opposing parties request the production of relevant evidence and documents to encourage fair judicial proceedings and case settlements. Although the rules of both state and federal civil procedure are broad enough to encompass most discovery requests, not everything that a party requests is discoverable. There are certain objections and privileges that exist to protect against intrusive discovery requests. A key example of this is the trade secret privilege, which enables a party to refuse production during discovery because the evidence being sought is allegedly a trade secret. Peter Mavrick is a Fort Lauderdale trade secret litigation lawyer who has extensive experience dealing with discovery issues and disputes, including the trade secret privilege.

The trade secret privilege is addressed by Section 90.506, Florida Statutes, which states “a person has a privilege to refuse to disclose, and to prevent other persons from disclosing, a trade secret owned by that person if the allowance of the privilege will not conceal fraud or otherwise work injustice. When the court directs disclosure, it shall take the protective measures that the interests of the holder of the privilege, the interests of the parties, and the furtherance of justice require.  The privilege may be claimed by the person or the person’s agent or employee.” The Fourth District Court of Appeal was confronted with the issue of a party invoking the trade secret privilege in Am. Exp. Travel Related Services, Inc. v. Cruz, 761 So. 2d 1206, 1208 (Fla. 4th DCA 2000).

In Cruz, the plaintiff was a credit card company that sought the recovery of unpaid account charges from a former cardholder and employee. The defendant counterclaimed for damages and alleged that the credit card company had issued a supplemental credit card to a third party on her account and breached the terms of their agreement by authorizing the third party’s charges, even though she had closed her account. During discovery, the defendant requested production of the credit card company’s Internal Credit Authorizations Manual (“Manual”), the personnel files for herself and the other employees alleged to be involved in the unauthorized charges, and a report pertaining to the company’s investigation of these employees for similar misconduct. The plaintiff objected to the production of these items, and claimed the Manual was a protected “trade secret” under Section 688.002(4), Florida Statutes, otherwise known as Florida’s Uniform Trade Secrets Act. The plaintiff further objected to the production of the personnel files and investigative reports and alleged they were confidential and privileged commercial records.