MIAMI BUSINESS LITIGATION: POACHING CUSTOMERS WHEN THERE IS NO NON-COMPETE AGREEMENT

Florida’s non-compete statute, Section 542.335, Florida Statutes, accords broad protection in favor of a business seeking to prevent former employees from competing with the business via goodwill with customers with whom the former employee dealt during his employment. In this regard, section 542.335(1)(b)(3) expressly considers a “legitimate business interest” to include “[s]ubstantial relationships with specific prospective or existing customers, patients, or clients.” Under Florida law, however, in the absence of a non-soliciation agreement or non-compete agreement, a former employee cannot be precluded from using contacts and expertise he gained from employment with his former employer. Businesses have sometimes tried to bar former employees from competing for customers when the employee never even signed a non-compete or non-soliciation agreement. In such cases, businesses have argued that the customers are part of a “trade secret” and are confidential. Florida’s Second District Court of Appeal, in Templeton v. Creative Loafing Tampa, Inc., 552 So.2d 288 (Fla. 2d DCA 1989), held in pertinent part that: “The only arguably secret information on the advertiser list was the contact person. However, the testimony shows that appellant knows all of these persons on a first name basis as a result of his experience working for Music and that he did not need a secret list to enable him to ascertain their identity. Appellant cannot be precluded from utilizing contacts and expertise gained during his former employment.” Peter Mavrick is 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.

Florida appellate courts distinguish between customer lists that are the product of great expense and effort, that are distillations of larger lists, or include information that is not available from public sources. Under appropriate circumstances, such customer lists can qualify as trade secrets. However, an employee’s mental knowledge of customer relationships, as per prior employment, generally will not qualify for protection as a trade secret. Precedent from the Supreme Court of Florida, in Pure Foods, Inc. v. Sir Sirloin, Inc., 84 So.2d 51 (Fla. 1956), stated in pertinent part: “We do not think the circumstances in this case justify further exploration of the law on that subject or a condemnation of appellee’s erstwhile employees because they undertook to sell to customers whom they had come to know during their former employment. Both corporations were wholesalers and their products were sold to retailers of food such as restaurants and ‘drive-ins.’ Certainly, the names of such concerns were easily obtainable from classified telephone directories and like sources, and surely the employees of appellee who became owners of an interest in the appellant-corporation could not be precluded from attempting to sell all customers whom they had known in their former positions.” Florida’s Fifth District Court of Appeal, in Fish v. Adams 401 So.2d 843 (Fla. 5th DCA 1981), has taken these legal principles a step further, explaining that “an employee may take with him a customer list he himself has developed.” How broadly courts will interpret this wording from Fish v. Adams will likely depend on the factual details, including how intricate and valuable was the customer list the employee took and used after leaving his employment with the business. It is important to emphasize that when the employer-employee relationship does not include a restrictive covenant barring competition or solicitation, it can be an uphill battle to bar an employee’s dealing with his former employer’s customers.

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.