MIAMI BUSINESS LITIGATION: NON-COMPETE AGREEMENTS BASED ON CONFIDENTIAL INFORMATION

Under Florida law, restrictive covenants are generally unenforceable under Florida law as restraints on trade. Section 541.18, Florida Statutes, states that “[e]very contract, combination or conspiracy in restrain of trade or commerce in this state is unlawful.” Precedent from the Supreme Court of Florida in White v. Mederi Caretenders Visiting Servs. of Se. Fla, LLC, 226 So.3d 774 (Fla. 2017), held that “covenants ‘whose sole purpose is to prevent competition per se'” are “void against public policy.” But, under Florida Statutes Section 542.335(1), where such covenants are set forth in writing, “reasonable in time, area, and line of business,” and “supported by a legitimate business interest” they are not prohibited. The Supreme Court in the White decision explained that for a non-compete agreement or other restrictive covenant to be enforceable, “‘there must be special facts present over and above ordinary competition’ such that, absent a non-competition agreement, ‘the employee would gain an unfair advantage in the future competition with the employer.'” Confidential information can qualify as a legitimate business interest, but in many cases courts have found businesses’ designations of information as “confidential” is unfounded and therefore does not qualify as a legitimate business interest. Peter Mavrick a Miami business litigation attorney, and represents clients in Fort Lauderdale, 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 litigation, and other legal disputes in federal and state courts and in arbitration.

To sufficiently plead and prove a legitimate business interest in confidential information, the employer must articulate the information that it deems confidential. For example, in Passalacqua v. Naviant, Inc., 844 So.2d 792 (Fla. 4th DCA 2003), Florida’s Fourth District Court of Appeal found there was no legitimate business interest where the employer failed to “articulate how any activity, method or technique utilized by [the company] was unique or proprietary in any way.” Similarly, the United States District Court for the Middle District of Florida, in Lucky Cousins Trucking, Inc. v. QC Energy Res. Texas, LLC, 223 F.Supp.3d 1221 (M.D. Fla. 2016), explained that “information commonly known in the industry and not unique to [the] allegedly injured party [is] not ‘confidential’ and thus not entitled to protection.”

Florida’s restrictive covenant statute, at Florida Statutes Section 542.335(b), requires not only that the information is truly “confidential,” but it must also be “valuable.” An employer must prove that the employee could use the information to gain an unfair advantage, and the employer must prove this with specific factual evidence. In the Passalacqua case, the appellate court determined that the allegedly “confidential” information was not valuable, and explained in pertinent part: “Hirsch did not articulate how any activity, method or technique utilized by Naviant was unique or proprietary in any way. Nor did he give any reason to believe that the manual was anything but a compilation of widely known and commonly used sales and marketing techniques. Naviant failed to prove, through Hirsch or otherwise, anything which even approximates a ‘legitimate business interest’ as defined in the statute, section 542.335(1)(b), Florida Statutes.” In Passalacqua, the employer failed to meet its legal burden of proof, but its case weakened further when the employee presented counter-evidence. The appellate court explained that: “Although not required to disprove Naviant’s conclusory and unsubstantiated claims of proprietary information, appellants presented detailed and uncontroverted testimony and other evidence showing that there was nothing unique about Naviant’s operations, sales methods or other aspects of its business that anyone with their history of making unsolicited sales calls (“cold calling”) does not know.”

Litigation over non-compete agreement is often assessed at an evidentiary hearing on a temporary injunction motion, where witness credibility and case strength are assessed by the Judge. In this regard, Gould & Lamb, LLC v. D’Alusio, 949 So.2d 1212 (Fla. 2d DCA 2007), upheld the trial court’s ruling of no legitimate business interest where the employer “spoke in the briefest and most general terms” of a desire to protect vague categories of information.

Peter Mavrick is a Miami business litigation lawyer, and represents clients in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.