FORT LAUDERDALE BUSINESS LITIGATION: NON-COMPETE COVENANT INJUNCTIONS AND IRREPARABLE INJURY

Florida’s Second District Court of Appeal in Atomic Tattoos, LLC v. Morgan, 45 So.3d 63 (2d DCA 2010), explained that a trial court should order a temporary injunction in non-compete covenant litigation only when “the moving party has demonstrated (1) irreparable harm to the moving party unless the injunction issues, (2) unavailability of an adequate legal remedy, (3) a substantial likelihood of success on the merits, and (4) that the public interest is supported by entry of the injunction.” Florida’s appellate courts construe two of these elements, i.e., “irreparable harm” and “unavailability of a legal remedy,” as being very similar. Florida courts often hold that once irreparable harm is shown, it follows that there is unavailability of a legal remedy. 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.

For a party to be entitled to the presumption of irreparable harm, Florida’s non-compete statute provides that a party needs to prove only that the opposing party violated an enforceable restrictive covenant. Florida Statutes section 542.335(1)(j), states in pertinent part that, “[t]he violation of an enforceable restrictive covenant creates a presumption of irreparable injury to the person seeking enforcement of a restrictive covenant.” That presumption, however, is rebuttable. Variable Annuity Life Ins. Co. v. Hausinger, 927 So.2d 243 (Fla. 2d DCA 2006).

Florida courts have further held that where a party is entitled to a rebuttable presumption of irreparable injury, the party also should be entitled to a rebuttable presumption that there is no adequate remedy available. In Corp. Mgmt. Advisors, Inc. v. Boghos, 756 So.2d 246 (Fla. 5th DCA 2000), Florida’s Fifth District Court of Appeal explained that: “The question of whether the injury is ‘irreparable’ turns on whether there is an adequate legal remedy available. Irreparable injury means, in essence, that injunction is the only practical mode of enforcement. A negative covenant, where one party promises he will not do certain things, is an apt example. The supreme court observed in Miller Mechanical[, Inc. v. Ruth, 300 So.2d 11 (Fla. 1974)] that certain types of contractual covenants, like covenants not to compete, by their nature lend themselves principally to enforcement by injunction because of the difficulty of arriving at a dollar figure for the actual damage done as a result of the breach.” A concurring opinion in Weinstein v. Aisenberg, 758 So.2d 704 (Fla. 4th DCA 2000), emphasized this point, explaining that, “Florida cases often discuss irreparable harm and the inadequacy of a remedy at law as if they were distinct concepts. However, Florida’s application of the irreparable injury rule is consistent with Professor Laycock’s observation that ‘[t]he irreparable injury rule has two formulations. Equity will act only to prevent irreparable injury, and equity will act only if there is no adequate legal remedy. The two formulations are equivalent; what makes an injury irreparable is that no other remedy can repair it. Attempts to distinguish the two formulations have produced no common usage.’”

Once a party is entitled to the rebuttable presumption of irreparable injury, the burden shifts to the party resisting the injunction to establish its absence. For example, in Medco Data, LLC v. Bailey, 152 So.3d 105 (Fla. 2d DCA 2014), the appellate court explained, “because Medco Data was entitled to a presumption of irreparable injury based on the findings the court had already made, the court was required to apply the presumption pursuant to section (1)(j), shifting the burden to the defendants to establish its absence.” This same burden shifting also would apply to the element of unavailability of legal remedy.

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.