FORT LAUDERDALE TRADE SECRET LITIGATION: PREEMPTION UNDER FLORIDA’S UNIFORM TRADE SECRET ACT

Business litigation involving claims under Florida’s Uniform Trade Secrets Act (FUTSA) for trade secret misappropriation often also include similar additional claims for tortious interference, fraud, or violations of Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA). However, these additional claims rarely survive past the pleading stage because FUTSA prohibits parties from maintaining common law and statutory claims arising from facts substantially similar to the alleged trade secret misappropriation. FUTSA “displace[s] conflicting tort, restitutory, and other laws of this state providing civil remedies or misappropriation of a trade secret.” Section 688.008, Florida Statutes. This “provision expressly prohibits a pleader from asserting alternative claims based on trade secret misappropriation because Florida’s Legislature decreed that FUTSA preempts all other causes of action.” Coihue, LLC v. PayAnyBiz, LLC, 2018 WL 7376908 (S.D. Fla. Feb. 6, 2018). Peter Mavrick is a Fort Lauderdale trade secret attorney, and also advocates for clients in Palm Beach, Boca Raton, and Miami, Florida. The Mavrick Law Firm represents corporations and their owners in business litigation, non-compete agreement litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.

Under Florida law, a party’s “separate tort claim is preempted by FUTSA if there is no material distinction between the plaintiff’s FUTSA claim and the other allegation.” Sentry Data Systems, Inc. v. CVS Health, 361 F. Supp. 3d 1279 (S.D. Fla. 2018). “To determine whether allegations of trade-secret misappropriation preempt a plaintiff from sufficiently pleading a separate, but related tort, the Court must evaluate whether allegations of trade secret misappropriation alone comprise the underlying wrong; if so, the cause of action is barred by § 688.008.” Sentry Data Systems, Inc. v. CVS Health, 361 F. Supp. 3d 1279 (S.D. Fla. 2018). “In determining if a tort cause of action is preempted by the FUTSA, courts have examined whether there are “material distinctions between the allegations comprising the additional torts and the allegations supporting the FUTSA claim.” Digiport, Inc. v. Foram Dev. BFC, LLC, 314 So. 3d 550 (Fla. 3d DCA 2020). “In other words, the allegations must be separate and distinct.” ThinkLite LLC v. TLG Sols., LLC, 2017 WL 5972888 (S.D. Fla. Jan. 31, 2017). If the trade secret misappropriation alone comprises the underlying wrong, the claim is preempted. Allegiance Healthcare Corp. v. Coleman, 232 F. Supp. 2d 1329 (S.D. Fla. 2002).

Florida courts will dismiss additional tort or statutory claims as preempted under FUTSA where “the underlying wrong in each of those claims [was] limited to trade secret misappropriation and each re-allege[d] all the prior allegations” related to FUTSA. Fla. Beauty Flora Inc. v. Pro Intermodal L.L.C., 2021 WL 1945821, (S.D. Fla. May 14, 2021). In Pelfrey v. Mahaffy, the U.S. District Court for the Southern District of Florida dismissed claims for tortious interference where he alleged a party stole and deleted confidential business information and then used it to divert clients to a competing business. Pelfrey v. Mahaffy, 2018 WL 3110794 (S.D. Fla. Feb. 7, 2018). Similarly, in American Registry, LLC v. Hanaw, the U.S. District Court for the Middle District of Florida dismissed FDUTPA claims as preempted under FUTSA where the plaintiff alleged FDUTPA claims based on allegations that defendant used trade secret information to solicit and steal customers. 2014 WL 12606501 (M.D. Fla. July 16, 2014).

Tort claims for unjust enrichment and conversion are also preempted if the claims are materially similar to a party’s FUTSA claim. If the subject matter of the business litigation constitutes a “trade secret” under the statutory definition, claims for conversion or unjust enrichment are improperly pled. Any such action is precluded by [FUTSA] if the subject of the action is information claimed to be a “trade secret.” Del Monte Fresh Produce Co. v. Dole Food Co., Inc., 136 F. Supp. 2d 1271 (S.D. Fla. 2001). For example, in Gonzalez-Hernandez v. Orbay, a South Florida federal district court dismissed a party’s unjust enrichment claim based on “nearly identical allegations” as the FUTSA claim. 2009 WL 10668626 (S.D. Fla. Jan. 15, 2009). In Pelfrey, the federal court dismissed a conversion claim on the grounds that it was preempted under FUTSA. The Judge explained that the “conversion must relate to items and/or information not designated as trade secrets in order to survive preemption.” 2018 WL 3110797 (S.D. Fla. Feb. 7, 2018).

Nevertheless, Florida and federal courts analyzing Florida law will uphold claims that are shown to be independent of FUTSA allegations. In Audiology Distribution, LLC v. Simmons, the Court refused to dismiss a tortious interference claim based on preemption because the “crux of [the claim was] not the misappropriation of trade secrets, but the use of that information to interfere with . . . business relationships.” 2014 WL 7672536 (M.D. Fla. May 27, 2014). Likewise, the U.S. District Court for the Northern District of Florida determined there was no preemption under FUTSA where the parties’ breach of fiduciary duty claim arose from a relationship between employer and employee rather than the misappropriation of the employer’s trade secrets.

Peter Mavrick is a Fort Lauderdale trade secret lawyer, and also 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.