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Attorneys’ fee provisions in contracts can significantly influence how a dispute will be resolved.  An aggrieved party can become emboldened if an attorneys’ fees award is available as a prevailing party.  At first blush, it may appear prudent for a business to have its contract contain an attorneys’ fee provision which allows it to claim attorneys’ fees if it prevails, but not allow the other party to claim attorneys’ fees if the opposing party prevails.  Florida law generally requires that all attorneys’ fee provisions be treated as if they are mutual.  The Florida Supreme Court recently resolved a “circuit split” which appeared to permit some litigation parties to continue to gain the benefit of a unilateral attorneys’ fee provision without that provision being applied mutually.  Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also advocates for clients in Palm Beach, Boca Raton, and Miami, Florida. The Mavrick Law Firm represents clients in breach of contract litigation, trade secret litigation, non-compete  agreement litigation, employment litigationtrademark litigation, and other legal disputes in federal and state courts and in arbitration.

The default “American Rule” generally provides that parties pay for their own attorneys’ fees unless there is a contract or statute governing attorneys’ fees.  When litigants in business litigation sue for bogus claims or engage in litigation misconduct, courts may order that the other party be compensated for their attorneys’ fees.  § 57.105(1)-(4), Florida Statutes (describing the standard by which attorneys’ fees may be awarded against a party that brought improper claims or defenses).  In contrast, traditional English law allows courts to order losers in litigation to pay the attorneys’ fees of the victors.

The character of business litigation can change dramatically depending upon whether litigants can be awarded their attorneys’ fees.  It may not make economic sense for a plaintiff to pursue a claim when the potential recovery is outweighed by the cost of retaining counsel and prosecuting litigation.  When a litigant can potentially be awarded his or her attorneys’ fees, it may incentivize litigation over smaller claims which would not have otherwise been worth pursuing.  It is not uncommon for the attorneys’ fee awards in such cases to dwarf the matter at issue.

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Preservation of a business’ trade secrets may constitute a legitimate business interest that justifies the enforcement of a non-compete agreement. However, it is vital that a business seeking to enforce the non-compete agreement sufficiently prove the existence of the trade secret. General statements that the business has such valuable information cannot act as a substitute for proof. Peter Mavrick is a Fort Lauderdale non-compete attorney, and also advocates for clients in Palm Beach, Boca Raton, and Miami, Florida. The Mavrick Law Firm represents clients in breach of contract litigation, trade secret litigation, non-compete agreement litigation, employment litigationtrademark litigation, and other legal disputes in federal and state courts and in arbitration.

An example of this occurred in the case of Gould & Lamb, LLC v. D’Alusio, 949 So. 2d 1212 (Fla. 2d DCA 2007). Gould & Lamb, LLC (Gould & Lamb) and John D’Alusio (D’Alusio) executed an employment agreement that contained a non-compete provision that prohibited D’Alusio from working for a competitor for a two-year period after termination of his employment. Gould & Lamb later terminated D’Alusio’s employment because they eliminated his position from the firm. After an intensive negotiation, Gould & Lamb and D’Alusio entered into a severance agreement.  The severance agreement did not reference the earlier non-compete agreement, but instead referenced a different agreement that the parties entered. D’Alusio filed a lawsuit against Gould & Lamb, seeking a declaration that the severance agreement superceded the non-compete agreement.  Gould & Lamb filed a counterclaim against D’Alusio to enforce the non-compete agreement.

Gould & Lamb requested that the court reform the severance agreement to incorporate the noncompete provisions of the earlier contract. Reformation is a legal doctrine that is applied to correct a defective writing to accurately reflect the true terms agreed to by the parties. Providence Square Assn v. Biancardi, 507 So. 2d 1366 (Fla. 1987). To allege a claim for reformation, a plaintiff must allege that: 1) there was a written agreement, 2) there was a defect in the writing due to mutual mistake, fraud or misrepresentation, and 3) proof by clear and convincing evidence. Providence Square Assn v. Biancardi, supra. The trial court found there was no mistake of fact or inequitable conduct by D’Alusio that would support reformation of the severance agreement. The trial court concluded that the noncompete agreement did not survive.

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Resolving a dispute through arbitration can affect the scope and amount of discovery, the speed of resolution, as well as the ultimate result of business litigation.  Whether a particular dispute between parties is arbitrable is defined by what the parties agreed to.  Arbitration clauses often narrow the scope of arbitrable issues to particular types of disputes.  As a result, parties may have both arbitrable and non-arbitrable disputes.  When this happens, parties may be required to address their arbitrable claims in arbitration and their non-arbitrable claims in court.  To the extent that the non-arbitrable claims are inextricably intertwined with claims in arbitration, those non-arbitrable claims may be stayed.  Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also advocates for clients in Palm Beach, Boca Raton, and Miami, Florida. The Mavrick Law Firm represents clients in breach of contract litigation, trade secret litigation, non-compete  agreement litigation, employment litigationtrademark litigation, and other legal disputes in federal and state courts and in arbitration.

Court and arbitration are two alternate methods of dispute resolution.  Because most disputes in business litigation are addressed in either court or arbitration, there is a common misconception that all of a parties’ claims must be addressed in only one forum.  However, neither the Federal Arbitration Act (FAA) nor the Revised Florida Arbitration Code (RFAC) require that parties’ disputes be brought in a single forum.

Both the FAA and RFAC require that parties’ arbitrable disputes be addressed in arbitration and non-arbitrable disputes be addressed in court, even when those claims are related.  To the extent that arbitrable and non-arbitrable claims are so intertwined that it would be impossible independently resolve the parties’ disputes in both forums simultaneously, the court proceedings should be stayed pending arbitration.  RFAC states this explicitly at § 682.03(7), Florida Statutes, which provides, “[i]f the court orders arbitration, the court on just terms shall stay any judicial proceeding that involves a claim subject to the arbitration.  If a claim subject to the arbitration is severable, the court may limit the stay to that claim.” The FAA does not expressly state this rule, however, United States Supreme Court precedent has made it clear that “piecemeal” dispute resolution is necessary when parties have both arbitrable and non-arbitrable claims.  The Supreme Court interpreted the FAA to require “district courts to compel arbitration of pendent arbitrable claims when one of the parties files a motion to compel, even where the result would be the possibly inefficient maintenance of separate proceedings in different forums.”  Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985); see also KPMG LLP v. Cocchi, 88 So. 3d 327 (Fla. 4th DCA 2012) (quoting Dean Witter Reynolds).

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Trial of a business dispute through the court system or through arbitration can have significant consequences.   As discussed in previous articles, resolving a dispute through arbitration can affect the scope and amount of discovery, the speed of resolution, as well as the ultimate result of the case.  Arbitration of a dispute may be more beneficial for one party than for the other.  Accordingly, parties in business litigation often contest whether the dispute is covered by an arbitration clause.  Courts typically determine these disputes based on the issue of whether the terms of the arbitration agreement contemplate the dispute being arbitrated.  Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also advocates for clients in Palm Beach, Boca Raton, and Miami, Florida. The Mavrick Law Firm represents clients in breach of contract litigation, trade secret litigation, non-compete  agreement litigation, employment litigationtrademark litigation, and other legal disputes in federal and state courts and in arbitration.

In disputes about arbitrability, courts analyze three elements.  “[T]here are three elements for courts to consider in ruling on a motion to compel arbitration of a given dispute: (1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitration was waived.” Seifert v. U.S. Home Corp., 750 So.2d 633 (Fla.1999). The existence of an arbitration agreement between the parties does not necessarily mean that a particular dispute is arbitrable.  Courts analyze the intent of the parties as to whether a particular business litigation dispute is arbitrable.  “The general rule is that where an arbitration agreement exists between the parties, arbitration is required only of those controversies or disputes which the parties have agreed to submit to arbitration.”  Miller v. Roberts, 682 So. 2d 691 (Fla. 5th DCA 1996), citing to Pacemaker Corp. v. Euster, 357 So.2d 208 (Fla. 3d DCA 1978).

While courts generally favor arbitration as a form of dispute resolution, “arbitration is favored only as to those disputes which the parties actually agreed to arbitrate.” Medanic v. Citicorp Inv. Services, 954 So. 2d 1210 (Fla. 3d DCA 2007); Episcopal Diocese of Cent. Florida v. Prudential Sec., Inc., 925 So. 2d 1112 (Fla. 5th DCA 2006) (“Federal law favors arbitration only as to issues the parties have actually agreed to arbitrate”). When evaluating whether a dispute is arbitrable, courts generally compare the language of the arbitration provision with the allegations made in the complaint. “The determination [of] whether a dispute must be arbitrated ‘turns on the parties’ intent,’ which is manifested in the plain language of the contract itself.”  Vanacore Constr., Inc. v. Osborn, 260 So. 3d 527 (Fla. 5th DCA 2018), quoting Maguire v. King, 917 So.2d 263 (Fla. 5th DCA 2005).  “Because arbitration provisions are contractual in nature, they are subject to the rules of contract interpretation.” Vanacore Constr., Inc. v. Osborn, 260 So. 3d 527 (Fla. 5th DCA 2018), citing to Jackson v. Shakespeare Found., Inc., 108 So.3d 587 (Fla. 2013). “Whether a claim falls within the scope of an arbitration agreement turns on the factual allegations in the complaint rather than the legal causes of action asserted.” Gregory v. Electro-Mech. Corp., 83 F.3d 382 (11th Cir.1996).

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As a defense to the enforcement of a contract, a party can claim the affirmative defense that the agreement is “unconscionable.”  The unconscionability defense requires that the party claiming it show that both the substance of the agreement is unreasonably favorable to a party and that the agreement was made procedure by which the parties entered the contract was entered into with an absence of meaningful choice.  The recent case, SHEDDF2-FL3, LLC v. Penthouse S., LLC, 3D19-1100, 2020 WL 6472548 (Fla. 3d DCA Nov. 4, 2020), affirmed this dual requirement.  Peter Mavrick is a Miami business litigation lawyer, and also represents clients in business litigation in Fort Lauderdale, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

“Unconscionability is a common law doctrine that courts have used to prevent the enforcement of contractual provisions that are overreaches by one party to gain ‘an unjust and undeserved advantage which it would be inequitable to permit him to enforce.’”  Basulto v. Hialeah Auto., 141 So. 3d 1145 (Fla. 2014). “Unconscionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.” Basulto v. Hialeah Auto., 141 So. 3d 1145 (Fla. 2014).

In business litigation, a party claiming that its contract is unconscionable has a heavy burden.  When possible, courts will tend to enforce a parties’ agreement in accordance with its terms rather than allow a party to evade his or her contractual duties on the basis that the agreement is not fair.  Conceptually, a party is in the best position to bargain for his or her rights.  Accordingly, a court must find that a contract is both unfair in its substance as well as in the process of how it was agreed to.  Florida Holdings III, LLC v. Duerst ex rel. Duerst, 198 So. 3d 834 (Fla. 2d DCA 2016) (“An agreement […] will be deemed unenforceable on grounds of unconscionability when it is both procedurally and substantively unconscionable”).

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The unprecedented COVID-19 pandemic affected many Florida business’ ability to comply with their contractual obligations.  Government quarantine measures as well as changes in economic conditions and consumer demand continue to influence contract compliance.  Mavrick law released two articles at the outset of the pandemic concerning contractual disputes and COVID-19.  The first addressed the contractual defense of force majeure clauses and the second discussed common law defenses of “frustration of purpose” and impossibility.  At that time, there had not been any cases concerning COVID-19 complications in contract law.  Since then, however, several orders have been entered applying the defenses of force majeure and frustration of purpose.  Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also advocates for clients in Palm Beach, Boca Raton, and Miami, Florida. The Mavrick Law Firm represents clients in breach of contract litigation, trade secret litigation, non-compete  agreement litigation, employment litigation, trademark litigation, and other legal disputes in federal and state courts and in arbitration.

“For a breach of contract claim, Florida law requires the plaintiff to plead and establish: (1) the existence of a contract; (2) a material breach of that contract; and (3) damages resulting from the breach.” Vega v. T–Mobile USA, Inc., 564 F.3d 1256 (11th Cir. 2009).  In business litigation, the terms of a contract may sometimes be implied or derived from advertisements and publications.  Salerno v. Florida S. Coll., 8:20-CV-1494-30SPF, 2020 WL 5583522 (M.D. Fla. Sept. 16, 2020) (“It is also generally accepted that the terms and conditions of that contractual relationship may include the publications of the private university”).

Contract law encourages contracting parties to allocate for themselves the risk of certain events which cannot feasibly be mitigated (such as a natural disaster).   This is more easily done when categories of risk are predictable.  For example, leases often describe whether the landlord or the tenant will bear the costs when a natural disaster causes real property to become uninhabitable.  While the COVID-19 pandemic was not entirely unpredictable, it has been more than a hundred years since the United States has experienced a pandemic with a similar scale and scope.  Accordingly, few, if any, contracting parties contemplate how such a risk would be apportioned in their pre-COVID-19 contracts.

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Noncompete agreements sometimes designate the laws of other states to govern the parties’ contractual obligations, even if the agreement is made in Florida. This is known as a choice of law provision. When these choice-of-law provisions are valid and enforceable, they can have significant repercussions on the results of noncompete litigation.  Peter Mavrick is a Fort Lauderdale non-compete attorney, and also advocates for clients in Palm Beach, Boca Raton, and Miami, Florida. The Mavrick Law Firm represents clients in breach of contract litigation, trade secret litigation, non-compete agreement litigation, employment litigation, trademark litigation, and other legal disputes in federal and state courts and in arbitration.

Many corporations and limited liability companies throughout the United States are incorporated or organized under Delaware law, even though they may have no particular connection to Delaware.  This is because there are several benefits that medium to large sized business can enjoy from Delaware incorporation.  For example, intra-corporate disputes for Delaware corporations are adjudicated by the Delaware Court of Chancery which is a judicial body designed to quickly and effectively resolve such matters without a jury.  Because of the attractiveness of Delaware incorporation, many corporations will often choose Delaware as a choice of law in their contracts.  As a result, Florida courts will often adjudicate disputes under Delaware law.

When applying foreign law in Florida, courts “maintains the traditional distinction between substantive and procedural matters.”  Siegel v. Novak, 920 So. 2d 89 (Fla. 4th DCA 2006).  “Generally, when confronted by a choice of law problem, a court will apply foreign law when it deals with the substance of the case and will apply the forum’s law to matters of procedure.”  Siegel v. Novak, 920 So. 2d 89 (Fla. 4th DCA 2006).  This can be a critical issue when employers seek injunctions in non-compete matters.  Florida courts will apply Florida law as it relates to the procedural issues, such as whether a temporary injunction should be issued, and foreign choice of law for the substantive law questions associated with that analysis, such as the element of whether there is a likelihood of success on the merits.

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The Florida Deceptive and Unfair Trade Practices Act (FDUTPA) provides businesses with a civil cause of action against unscrupulous business practices.  While FDUTPA has limitations, it is applicable in a wide variety of circumstances when a plaintiff can show that a defendant engaged in unfair or deceptive business practices against a consumer.  Peter Mavrick is a Miami business litigation lawyer, and also represents clients in business litigation in Fort Lauderdale, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

FDUTPA, § 501.201, Florida Statutes et seq., is a consumer protection statute which permits consumers to bring civil suits when they are wronged by a company’s unfair or deceptive practices.  While most statutes permit a plaintiff to bring a claim only if that plaintiff was the injured party, FDUTPA permits a plaintiff in business litigation to bring a FDUTPA claim against a defendant company when the defendant company injured customers.  For a plaintiff company to have standing under FDUTPA, it must have been injured by the defendant company’s conduct in addition to consumers.

A non-consumer company’s standing to bring FDUTPA claims against another company was most prominently recognized in Caribbean Cruise Line, Inc. v. Better Bus. Bureau of Palm Beach County, Inc., 169 So. 3d 164 (Fla. 4th DCA 2015).  There, the plaintiff brought suit against the consumer information company, the Better Business Bureau, on allegations that it based its ratings on payments for “accreditation” and kept this information from its customers.  Caribbean held that changes made to the statute permitted non-consumers to bring claims.  Since Caribbean, companies have used FDUTPA to combat unscrupulous business tactics of competitors and other companies whose conduct was harmful to both consumers and other companies.  This was discussed in greater detail in a previous article.

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Florida employers who seek to protect their client lists from misappropriation by former employees will often need to show that the client list was a trade secret.  This is important even when the former employee is subject to a non-compete agreement.  This is because non-compete agreements cannot be enforced without a “legitimate business interest,” and the existence of a trade secret qualifies as a “legitimate business interest.”  Peter Mavrick is a Fort Lauderdale non-compete attorney, and also advocates for clients in Palm Beach, Boca Raton, and Miami, Florida. The Mavrick Law Firm represents clients in breach of contract litigation, trade secret litigation, non-compete agreement litigation, employment litigation, trademark litigation, and other legal disputes in federal and state courts and in arbitration.

A non-compete agreement cannot be enforced without a court finding that the agreement is supported by a “legitimate business interest” in the non-compete agreement.  Importantly, the existence of a trade secret can qualify as a legitimate business interest pursuant to Florida’s noncompete law.  Trade secrets are specifically delineated as legitimate business interests in Section 542.335(1)(b)(1), Florida Statutes.

The term “trade secret” is often associated with secret formulas like the ingredients of Coca-Cola or WD-40.  However, nearly any type of information can qualify as a trade secret as long as it qualifies as one under either the Florida Uniform Trade Secrets Act (FUTSA) or the federal Defend Trade Secrets Act (DTSA).  Particularly, FUTSA defines trade secrets as:

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Misappropriation of a trade secret can occur when there is an acquisition of another’s trade secret by improper means or through disclosure or use of a trade secret without consent by a person who used improper means to acquire the trade secret or knew that the trade secret was improperly acquired. Section 688.002, Florida Statutes. Improper means occurs not only when a person breaches a duty of confidentiality but also by inducing someone else to breach a duty of confidentiality. Peter Mavrick is a Miami business litigation lawyer, and also represents clients in business litigation in Fort Lauderdale, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

An example of both of these circumstances occurred in the case of Sensormatic Elecs. Corp. v. TAG Co. US, LLC, 632 F. Supp. 2d 1147 (S.D. Fla. 2008). Mark Krom (Krom) worked for Sensormatic Electronics Corp. (Sensormatic) and entered an employment agreement which, among other things, obliged him to return all documents to Sensormatic upon leaving the company; and (2) prevented him from disclosing or using Sensormatic’s confidential and proprietary information. To protect a trade secret, parties in business litigation must show that they took reasonable steps to secure the confidential information. Krom later terminated his employment with Sensormatic and founded TAG Company U.S. LLC (TAG). Krom hired other former Sensormatic employees. Krom investigated opportunities for TAG to develop its own security label, similar to Sensormatic’s security label. Its goal was to create a label that “met the performance of the Sensormatic label.”

Sensormatic filed a lawsuit against Krom and other defendants for, among other things, misappropriation of trade secrets. Krom testified at his deposition that he did not know where he obtained the Sensormatic specifications that he gave to his employee. Another witness testified that while he worked at Sensormatic’s manufacturer, he received a request from Krom for the Sensormatic specifications and faxed them to Krom at TAG.  Krom gave conflicting testimony but essentially testified that he had no personal knowledge of where he got the specifications he gave to his employee. Krom’s employee substantially copied Sensormatic’s specifications into a new document with TAG’s logo on it. Many of the numbers in the TAG specification were identical to those in the Sensormatic. Krom admitted that many of the “numbers for key characteristics are the same in the Sensormatic specification and the TAG specification.” TAG then disclosed the TAG specifications to multiple prospective materials suppliers.

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