FORT LAUDERDALE BUSINESS LITIGATION: NON-COMPETE AGREEMENTS AND THE LEGAL DOCTRINE OF THE “BLUE-PENCIL”

The plain terms of a contract control the parties’ course of conduct for all matters subject to that contract’s terms. See Maher v. Schumacher, 605 So.2d 481 (Fla. 3d DCA 1992) (holding that the plain meaning of the contractual language used by the parties controls). The Court is prohibited from rewriting contract terms. Pol v. Pol, 705 So. 2d 51, 53 (Fla. 3d DCA 1997) (“It is well established that a court cannot rewrite the clear and unambiguous terms of a voluntary contract.”). However, non-complete law contains a powerful exception allowing courts to disregard the well- pronounced prohibition against rewriting contracts. Courts can “blue-pencil” (i.e., Judicially modify) provisions of non-compete agreements when they do not conform to the requirements of Florida’s restrictive covenant statute, Section 542.335, Florida Statutes. In doing so, blue pencil laws breathe life into an otherwise invalid contractual provision. The blue pencil exception can be an important tool for those attempting to obtain relief under a contractual provision that violates the restrictive covenant statute. 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.

A court’s ability to “blue-pencil” a restrictive covenant is limited to modifying the scope of the provision to bring it within the ambit of non-compete law. See White v. Mederi Caretenders Visiting Services of Se. Florida, LLC, 226 So. 3d 774 (Fla. 2017) (Courts are commanded to “modify, or blue pencil, a non-competition agreement that is overbroad, overlong, or otherwise not reasonably necessary to protect the legitimate business interest.”). The court can only narrow a restrictive covenant to the extent needed to protect the plaintiff’s established legitimate business interests. Id. (noting that courts can modify overbroad restrictive covenants to “grant only the relief reasonably necessary to protect such interest”). Courts can shorten a restrictive covenant that is too long in duration, may curtail the geographical scope to a more limited area, or may constrain the subject matter to particular legitimate business interests. Id.

Blue penciling laws can create perverse incentives for employers and similarly situated parties to draft overbroad provisions they know have little chance of being enforceable. Employers may force their employees to agree to overbroad restrictive covenants to intimidate employees and make them believe they cannot compete in any respect. Employers may believe there is little risk in drafting an overbroad restrictive provision because a court will probably blue-pencil the provision if enforcement is necessary. Therefore, employers could face little risk in purposefully drafting an onerous overbroad restrictive covenant.

Overzealous employers should use care when drafting overbroad restrictive covenants because some states do not allow blue-penciling. In states that do not use the “blue-pencil” legal doctrine, the party seeking to enforce the restrictive covenant can be barred from doing so if the covenant is overbroad. For example, the United States Court of Appeals for the Eleventh Circuit, in Keener v. Convergys Corp., 342 F.3d 1264 (11th Cir. 2003), evaluated Georgia law where the federal trial Judge had granted summary judgment in favor of the defendant because the restrictive covenant was unenforceable under Georgia law. The Eleventh Circuit opinion stated in pertinent part, “Recognizing that Georgia does not employ the ‘blue pencil’ doctrine of severability, the district court deemed the NCA overbroad.” Therefore, employers in these states should be cognizant of the breadth of their restrictive covenants to ensure they are enforceable. Employers should also be aware of the possible states where an action to enforce a restrictive covenant may need to be brought and those states’ blue pencil laws. An overbroad restrictive covenant may be enforceable in the employer’s home state using blue pencil laws, but the same provision may not be enforced in the employee’s home state if blue-penciling is prohibited.

Peter Mavrick is a Fort Lauderdale business litigation lawyer, and 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.