FORT LAUDERDALE BUSINESS LITIGATION: NON-COMPETE AGREEMENT LITIGATION IN FEDERAL AND FLORIDA COURTS

Much of non-compete agreement litigation centers on the availability of obtaining a preliminary injunction barring competition. As the United States Court of Appeals for the Eleventh Circuit explained in United States v. Lambert, 695 F.2d 536 (11th Cir. 1983), a preliminary injunction is “an extraordinary and drastic remedy” that is “the exception rather than the rule.” A federal court may grant injunctive relief only if the moving party establishes the following elements: (1) “a substantially likelihood of success on the merits”; “irreparable injury” without an injunction; (3) the movant’s injury outweighs the harm an injunction may cause the opposing party; and (4) an injunction is not “adverse to the public interest.” Siegel v. LePore, 234 F.3d 1163 (11th Cir. 2000) (en banc). Since a preliminary injunction is an extreme remedy, federal courts do not grant it “unless the movant clearly establishes the ‘burden of persuasion’ as to all four requisites.” All Care Nursing Serv., Inc. v. Bethesda Mem’l Hosp., 887 F.2d 1535 (11th Cir. 1989). 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 law, and other legal disputes in federal and state courts and in arbitration.

Concerning the injunction legal element of “irreparable harm,” there is an important conflict between Florida statutory law and case law versus the decisions of federal courts. Florida’s restrictive covenant statute has a presumption of irreparable harm. Florida Statutes, Section 542.335(1)(j), presumes that a person seeking to enforce a valid restrictive covenant suffered irreparable harm. Florida law removes the burden to prove irreparable harm and shifts that legal burden to the nonmovant, who must rebut the presumption. The Supreme Court of Florida in Caprano v. Lanier Bus. Prods., Inc., 466 So.2d 212 (Fla. 1985), explained that this presumption exists “because of the inherently difficult, although not impossible, task of determining just what damage actually is caused by the employee’s breach of the agreement.” The Supreme Court in Caprano emphasized that, “[i]t truly can be said in this type of litigation that relief delayed is relief denied.” The presumption means that “a party seeking to enforce a restrictive covenant by injunction need not directly prove that the defendant’s specific activities will cause irreparable injury.” Am. II Elecs., Inc. v. Smith, 830 So.2d 906 (Fla. 2d DCA 2002). Florida’s Second District Court of Appeal in Fam. Heritage Life v. Combined Ins. Co., 319 So.3d 680 (Fla. 3d DCA 2021), explained that the presumption applies if the restrictive covenant was violated and if it protects a legitimate business interest.

Federal courts, however, often will not apply Florida’s Florida’s presumption of irreparable harm. See, for example, the United States District Court for the Southern District of Florida in S. Wine & Spirits of Am., Inc. v. Simpkins, 2011 WL 124631 (S.D. Fla. Jan. 14, 2011) (Cooke, J.) (concluding that Florida’s presumption of irreparable harm does not apply in federal court). This based in part on Federal Courts interpretation of Rule 65 of the Federal Rules of Civil Procedure (i.e., the federal rule governing injunctions), which “does not place upon the [nonmovant] the burden of coming forward and presenting its case against a preliminary injunction.” Granny Goose Foods, Inc. v. Bhd. of Teamsters & Auto Truck Drivers Loc. No. 70, 415 U.S. 423 (1974). In the view of many federal courts, a presumption of irreparable harm effectively replaces the “equitable discretion” that the United States Supreme Court discussed in important precedent in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006). In eBay Inc., the Supreme Court chided federal courts for abandoning the traditional equity factors in patent infringement claims and for adopting a presumption in favor of injunctions. eBay, Inc. explained that Judges must exercise balance equitable factors (such as the balancing test for Judges to issue injunctions) “consistent with traditional principles of equity.” In Amoco Prod. Co. v. Bill. of Gambell, AK, 480 U.S. 531 (1987), the Supreme Court also stated that a “presumption” of irreparable harm is “contrary to traditional equitable principles.”

For these reasons, the choice of forum in non-compete litigation can make an important difference in how the case is litigated and, possibly, its outcome. Peter Mavrick is a Fort Lauderdale business litigation lawyer. The Mavrick Law Firm represents clients in Miami, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.