FLORIDA NON-COMPETE AGREEMENTS: JUDICIAL ANALYSIS OF INJUNCTIONS IN THE CONTEXT OF EMPLOYEE DEFENSES

Florida employers seeking an injunction to stop their former employees from engaging in competition in violation of a non-compete agreement must demonstrate specific criteria to a court or tribunal. Under Section 542.335, Florida Statutes, an employer must plead and prove several facts to be entitled to a temporary injunction against a former employee breaching a non-compete agreement. One critical requirement is the employer must show that an injunction is necessary because money damages will not adequately compensate the employer for the damages suffered. Once the employer has made this requisite showing, an employee must overcome the presumption of irreparable harm. Peter Mavrick is a Miami non-compete attorney and business litigation attorney who has substantial experience with non-compete litigation, including injunction proceedings.

An example of this occurred in the recent case of Picture It Sold Photography, LLC v. Bunkelman, 45 Fla. L. Weekly D74 (Fla. 4th DCA Jan. 8, 2020). In Picture It, the former employee contended that an injunction not to compete was unnecessary because the alleged harm had already occurred. Some customers who were solicited by the former employee testified that if the former employee was enjoined from competition, they still would not have continued to be customers of the former employer. The trial court found that the former employer was not entitled to an injunction because its damages were calculable, and thus, it had an adequate remedy at law. The former employer appealed.

Picture It held that evidence showing that some customers would not continue to use the employer’s services does not overcome the presumption of irreparable harm once a breach of the non-compete agreement has been proven. The appellate court also found that “[t]he continued breach of a non-compete agreement threatens a former employer’s ‘goodwill and relationships with its customers, and nothing short of an injunction would prevent this loss.’” TransUnion Risk & Alt. Data Sols., Inc. v. Reilly, 181 So. 3d 548, (Fla. 4th DCA 2015). Picture It also found that the employee’s continued competition was sufficient to show that there was no adequate remedy at law. “Absent an injunction, there is nothing to stop Contractor from soliciting Employer’s current and prospective customers and further competing with Employer in the market.”

The trial court also found that the former employee breached the non-compete agreement but that he had a substantial likelihood of success on his defense that he had been fraudulently induced into entering the noncompete agreement. Picture It disagreed with this argument. The former employee testified in support of his affirmative defense that the former employer misrepresented his future earnings and ability to work mainly in northern Palm Beach County in order to induce him to enter the agreement. “Evidence that an enforceable covenant not to compete was breached will support a trial court’s finding of the likelihood of success on the merits.” But the trial court must also consider any affirmative defenses. When an “employee introduces evidence of the employer’s breach, … the employer must then demonstrate that it is likely to succeed on the merits of the proffered defense, as well [citations omitted]”

The appellate court disagreed with the former employee’s argument and found that the evidence did not support the conclusion that fraudulent inducement occurred as a matter of law. The non-compete agreement contained a merger clause which stated that the contract represented the entire agreement between the parties, and the agreement provided a specific schedule of services and fees. There was no provision in the agreement supporting a representation of a specific annual earnings amount. The former employee testified that it was possible to earn a $60,000 salary with the agreed-upon fee schedule. Picture It found that the agreement itself did not promise a $60,000 salary, nor did it promise that Contractor would work primarily in northern Palm Beach County. The appellate court held that, even assuming the salary and geographic region were orally promised, a party cannot recover in fraud for oral misrepresentations that are later contradicted in a written contract. Picture It held that an employee cannot claim that he was fraudulently induced into entering the agreement if the agreement contains a merger clause and he continued to work for the employer for several years.

The former employee allowed the non-compete agreement to renew at the conclusion of his first year of employment. Picture It reasoned that the employee could not have reasonably relied on oral statements that were made prior to entering the original contract at the time that the contract had been renewed. The former employee would have known that such a statement was false after a year of employment. Thus, the former employee could not avail himself of the defense of fraud in the inducement. Merovich v. Huzenman, 911 So. 2d 125, 127 (Fla. 3d DCA 2005) (“Execution of a contract with knowledge that an initial agreement was fraudulently procured constitutes a waiver of claims based on the previous fraud”). The appellate court determined that the trial court erred as a matter of law in concluding that former employer did not establish the unavailability of an adequate remedy at law and a substantial likelihood of success on the merits.

Peter Mavrick is a Miami non-compete lawyer and business litigation lawyer. This article does not serve as a substitute for legal advice tailored to a particular situation.