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Miami’s Third District Court of Appeal, in Agritrade, LP v. Quercia, 253 So.3d 28 (Fla. 3d DCA 2017), explained the elements of a Florida law cause of action for unjust enrichment: “(1) plaintiff has conferred a benefit on the defendant, who has knowledge thereof; (2) defendant voluntarily accepts and retains the benefit conferred; and (3) the circumstances are such that it would be inequitable for the defendant to retain the benefit without first paying the value thereof to the plaintiff.”    The basis of the remedy of unjust enrichment is to provide restitution where one person has been unjustly enriched at the expense of another.  Peter Mavrick is a Miami business litigation attorney, and represents clients in business litigation 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.

Important issues have arisen under Florida law regarding whether courts consider claims of unjust enrichment to be “legal” or “equitable” claims, and what the term “equitable” means.   Florida appellate courts and federal courts interpreting Florida law have repeatedly indicated that unjust enrichment claims are “equitable.”  Florida’s Third District Court of Appeal in Bowleg v. Bowe, 502 So.2d 71 (Fla 3d DCA 1987), stated that “the theory of unjust enrichment is equitable in nature.”  Similarly, the United States Court of Appeals for the Eleventh Circuit in Tooltrend, Inc. v. CMT Utensili, SRL, 198 F.3d 802 (11th Cir. 1999), explained that “[a] claim for unjust enrichment is an equitable claim.”  Following this line, the United States District Court for the Middle District of Florida in  CEMEX Constr. Materials Fla., LLC v. Armstrong World Indus., Inc., 2018 WL 905752 (M.D. Fla. Feb. 15, 2018), stated that “[a] claim for unjust enrichment is equitable in nature.”

Confusion in case law concerning the term “equitable” arises from the distinction that courts sometimes act “in equity” and in other times act as courts “of law.”  Although the term equitable can refer to this distinction between courts acting in equity versus law, “equitable” can instead mean, in context, “fairness” and have nothing to do with a court’s decision- making process.  This principle was explained in by Florida’s Fourth District Court of Appeal, in an en banc decision (i.e., a decision heard by the entire appellate court as opposed to a decision of typical three-judge panel), in the case Commerce Partnership 808 Ltd. Partnership v. Equity Contracting Co., Inc., 695 So.2d 383 (Fla. 4th DCA 1997).  The appellate court determined that cases from other states that “rely on the principle that there can be no remedy in equity when the [construction] line statute provides an adequate remedy at law” do not apply under Florida law because: “[t]hese cases turn on the determination that unjust enrichment is an equitable cause of action.  However, in Florida, … all implied contract actions were part of the action of assumpsit, which was an action at law under common law.  Although some Florida courts have described quasi contracts as being ‘equitable in nature,’ the term has been used in the sense of ‘fairness,’ to describe the quality which makes an enrichment unjust, and not as a reference to the equity side of the court.”  Subsequent Florida appellate case law is in accord.  For example, in American Safety Ins. Serv., Inc. v. Griggs, 959 So.2d 322 (Fla. 5th DCA 2007), Florida’s Fifth District Court of Appeal stated that compensatory damages under a claim for quasi contract cannot be awarded via the court’s equitable authority and that “an action for unjust enrichment is an action at law, not in equity.”

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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.’”

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Federal courts in Florida allow a part to obtain a temporary restraining order, commonly referred to as a “TRO,” by proving the following elements set forth by the United States Court of Appeals for the Eleventh Circuit in Schiavo ex. rel Schindler v. Schiavo, 403 F.3d 1223 (11th Cir. 2005): “(1) [there is] a substantial likelihood of success on the merits; (2) that irreparable injury will be suffered if the relief is not granted; (3) that the threatened injury outweighs the harm the relief would inflict on the non-movant; and (4) that the entry of the relief would serve the public interest.”   Peter Mavrick is a Miami non-compete attorney, and represents clients in Fort Lauderdale, Boca Raton, and Palm Beach. The Mavrick Law Firm also represents businesses and their owners in business litigation (including claims of breach of contract and related claims of fraud and other business torts), trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state trial courts, appeals, and in arbitration.

When a motion for a TRO is sought without ntice to the adverse party (which courts refer to as “ex parte”), the Judge may issue the TRO only if the following requirements of Federal Rule of Civil Procedure 65(1)(b)(1) are proven: “(A) specific facts in an affidavit or verified complaint clearly show that immediate and irreparable injury, loss, or damage will result to the movant before the adverse party can be heard in opposition; and (B) the movant certifies in writing any efforts made to give notice and the reasons why it should not be required.”  Federal courts have explained that because of extraordinary nature of such orders, ex parte temporary restraining orders “should be restricted to serving their underlying purposes of preserving the status quo and preventing irreparable harm just so long as is necessary to hold a hearing and no longer.”  Gucci Am., Inc. v. BGAADB, Case No. 18-cv-62227-UU, 2018 WL 6261548 (S.D. Fla. September 20, 2018).

For example, in WhiteSource Software, Inc. v. Coscina, 2021 WL 1259215 (S.D. Fla. April 2, 2021), WhiteSource Software, Inc. (Whitesource) sought an ex parte TRO against its former employee who remained in possession of, and intended to access, his company-issued laptop after his employment was terminated.  Additionally, during his employment, he exceeded his authorization  when he made copies of WhiteSource’s confidential and trade secret information for non-employment related purposes.  WhiteSource alleged that as a result of these actions, it incurred losses in excess of $5,000.

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The tort of “tortious interference with business relationship” is phrased in various ways, including “tortious interference with contractual relationship,” “intentional interference with prospective economic advantage,” and “tortious interference with advantageous business relationship.”  However nominally titled, the tortious interference tort is defined by its four basic elements that a party must prove: (1) the existence of a business relationship under which the plaintiff has legal rights, (2) the defendant’s knowledge of the relationship, (3) the defendant’s intentional and unjustified interference with the relationship, and (4) damages resulting from breach of the relationship.  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 business torts, including 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.

To prosecute or defend against this tort, it is helpful to understand the underlying policy tensions that have justified this tort and its affirmative defenses.  In Jay v. Mobley, 783 So.2d 297 (Fla. 4th DCA 2001), Florida’s Fourth District Court of Appeal explained that, “[t]he tort of tortious interference teeters between two competing values—the desire to protect the reasonable expectations of the parties to a business relationship on the one hand, and the need to avoid excessive restrictions on freedom of competition on the other.”   Competitors sometimes file lawsuits wherein they use the tortious interference tort to inappropriately gain a competitive advantage.  Accordingly, Florida law recognizes two affirmative defenses where a defendant’s actions are deemed “privileged” and therefore immune from liability.

The first privilege is the competition privilege, which generally applies where two companies compete over a contract or business.  Jay v. Mobly, supra, explained that, “Florida ‘recognizes competition between competitors, and if there is an interference with a non-exclusive right[,] this is a privileged interference.’”  To defend against a tortious interference claim using this “competition privilege,” the defendant must prove four distinct elements set forth in the Restatement (Second) of Torts(1979), which provides that: “(1) One who intentionally causes a third person not to enter into a prospective contractual relation with another who is his competitor … does not interfere improperly with the other’s relation if[:]

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Physicians have sometimes challenged their non-compete agreements on the grounds that continuity of patient care is an “overriding public policy reason.”  Physicians have argued that public policy allows the physician to care for his patients after termination of his employment, even when the wording of the restrictive covenant bars the physician from continuing to treat those patients.  Over the years, Florida courts have wrestled with this issue.  Florida non-compete covenant law has changed over the years based on various statutes that were re-written and amended.  Florida’s statutory scheme governing restraints on competition significantly changed on July 1, 1996, the effective date of Florida’s current non-compete statute.   Peter Mavrick is a Miami non-compete attorney, and represents clients in Fort Lauderdale, Boca Raton, and Palm Beach. The Mavrick Law Firm also represents businesses and their owners in business litigation (including claims of breach of contract and related claims of fraud and other business torts), trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state trial courts, appeals, and in arbitration.

Under Florida law, a trial court that refuses to enforce a restrictive covenant based on public policy must specify in its findings the compelling reasons why enforcement is not in the public interest.  In TransUnion Risk and Alt. Data Sols., Inc. v. Reilly, 181 So.2d 548 (Fla. 4th DCA 2015), Florida’s Fourth District Court of Appeal explained  that “[u]nder section 542.335(1)(i)[Florida Statutes], a trial court must specifically articulate an overriding public policy reason if it refuses to enforce a non-compete covenant based on public policy grounds.”

In the recent case Joseph Spine, P.A. v. Moulton, M.D., 346 So.3d 154 (Fla. 2d DCA 2022), a physician, Dr. Moulton, sought to avoid compliance with his non-compete contract on the grounds that the non-compete violates public policy.  Dr. Moulton, had been employed by a Joseph Spine, P.A. and argued he should be released from his non-compete covenant, at least with respect to his right to continue to serve patients to whom he had provided medical services before ending his employment with Joseph Spine, P.A.  Dr. Moulton, argued that “continuity of care is an ‘overriding public policy reason’” and used as an example a particular patient “who was dissatisfied with his care at Joseph Spine and elected to leave that practice.”  The appellate court referenced the fact that the the trial court Judge had “expressed concern at the [court] hearings … that enforcing the restrictive covenants would adversely affect patients’ continuity of care, freedom in choosing physicians, the bearing of risk between physicians after surgery, and the proximity of follow-up care for patients relative to where their procedures were performed.”  The appellate court did not agree with the trial Judge, explaining that “despite the trial court’s findings that its public policy concerns were limited to ‘this case, with these facts,’ the record does not indicate any unique or special circumstances distinguishing continuity of care with the patients affected here from other patients who are generally affected by restrictive covenants enforced against physicians practicing in Florida.”  Section 542.335(1)(i), Florida Statutes requires a trial court to explain why a patient’s continuity of care “substantially outweighs” Florida’s long-established precedent of protecting legitimate business interests.  The appellate court’s decision in Moulton relied on its observation that “the trial court’s brief mention of protecting patients’ continuity of care does not explain why this concern substantially outweighs enforcement of the restrictions against Dr. Moulton.”  Accordingly, the appellate court in Moulton reversed the trial Judge’s decision and entered a temporary injunction barring Dr. Moulton from competing against his former employer.

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Florida law sets forth the requirements for entry of a non-compete injunction, i.e., a court order barring competition under specified circumstances and duration.  Relevant here, section 542.335(1)(j), Florida Statutes, provides that a court shall enforce a valid “restrictive covenant by any appropriate and effective remedy, including but not limited to, temporary and permanent injunctions.”   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 litigation, and other legal disputes in federal and state courts and in arbitration.

To obtain a temporary injunction, a party must establish “(1) a substantial likelihood of success on the merits, (2) the unavailability of an adequate remedy of law, (3) irreparable harm absent entry of an injunction, and (4) that the injunction would serve the public interest.”  Florida Department of Health v. Florigrown, LLC, 317 So.3d 1101 (Fla. 2021).  Under Florida’s restrictive covenant statute, section 542.335(1)(a), to be enforceable a non-compete covenant must be reasonable as to “time, area, and line of business” and “set forth in a writing signed by the person against whom enforcement is sought.  In addition, Florida law requires that a contractual provision restricting competition must involve a legitimate business interest as defined by statute to be enforceable. Section 542.335(1)(b), Florida Statutes, states that “[t]he person seeking enforcement of a restrictive covenant shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant.”  Florida’s non-compete covenant statute provides a non-exhaustive list of legitimate business interests.  The Supreme Court of Florida has explained that “the determination of whether an activity qualifies as a protected legitimate business interest under the statute is inherently a factual inquiry, which is heavily industry and context specific.”  White v. Mederi, 226 So.3d 774 (Fla. 2017).  A party seeking a temporary injunction “must plead and prove that the contractually specified restrain is reasonably necessary to protect the legitimate business interest or interests justifying the restriction.”  § 542.335(1)(c).  Once a party establishes a prima facie case that the restriction is reasonably necessary, the statute explains that “the person opposing enforcement has the burden of establishing that the contractually specified restrain is overbroad, overlong, or otherwise not reasonably necessary to protect the established legitimate business interest or interests.”  Importantly, Florida’s restrictive covenant statute, at section 542.335(1)(h), requires that courts construe restrictive covenants “in favor of providing reasonable protection to all legitimate business interests established by the person seeking enforcement,” and without application of  “any rule of contract construction that requires the court to construe a restrictive covenant narrowly, against the restraint, or against the drafter of the contract.”

To issue an injunction, Florida courts are required to follow Florida Rule of Civil Procedure 1.610(c), setting forth the act or acts restrained by the injunction.  In other words, the Judge must specify exactly what is prohibited by the injunction.  Concerning the specificity of what conduct is prohibited by an injunction, Florida’s Fifth District Court of Appeal in Clark v. Allied Assocs., Inc., 477 so.2d 656 (Fla. 5th DCA 1985), explained that, “[o]ne against whom an injunction is directed should not be left in doubt as to what he is required to do.”  Rule 1.610(c) provides that an injunction “shall describe in reasonable detail the act or acts restrained without reference to a pleading or another document.”  “A temporary injunction requires strict compliance with Florida Rule of Civil Procedure 1.610.” Coscia v. Old Fla. Plantation, Ltd., 828 So.2d 488 (Fla 2d DCA 2002).

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“In an action for breach of contract, the goal is to place the injured party in the position it would have been in had the other party not breached the contract so as to give the aggrieved party the benefit of its bargain.” Katz Deli of Aventura, Inc. v. Waterways Plaza, LLC, 183 So. 3d 374 (Fla. 3d DCA 2013). “A damage award for breach of contract for the sale of goods is typically covered by section 672.713 of Florida’s version of the Uniform Commercial Code” (“Florida’s UCC”). HGI Associates, Inc. v. Wetmore Printing Co., 427 F.3d 867 (11th Cir. 2005). Under Florida’s UCC, “the measure of damages for nondelivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages . . ., but less expenses saved in consequence of the seller’s breach.” § 672.713, Fla. Stat. 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 litigation, and other legal disputes in federal and state courts and in arbitration.

Consequential damages consist of “[a]ny loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise.” § 672.715, Fla. Stat. The Eleventh Circuit in Nyquist v. Randall, 819 F.2d 1014 (11th Cir. 1987), interpreted section 672.715, Florida Statutes, to mean “that (1) ‘consequential damages’ are those damages ‘resulting from general or particular needs’ of the purchaser, (2) such damages are not recoverable unless ‘the seller at the time of contracting had reason to know’ of the possibility that they would occur, and (3) such damages are not recoverable unless they ‘could not reasonably be prevented by cover or otherwise.’” Incidental damages include “any commercially reasonable charges, expenses or commissions . . . resulting from the breach.” § 672.710, Fla. Stat. The purpose of incidental damages is “[t]o authorize reimbursement of the seller for expenses reasonably incurred by him as a result of the buyer’s breach.” Florida Recycling Servs., Inc. v. Peterson Indus., Inc., 858 So. 2d 1114 (Fla. 2d DCA 2003).

Lost profits fall under the category of consequential damages. Nyquist v. Randall, 819 F.2d 1014 (11th Cir. 1987). The general rule in Florida, however, is to avoid lost profit damages because they can be too speculative and conjectural. Levitt-Ansca Towne Park P’ship v. Smith & Co., 873 So. 2d 392 (Fla. 4th DCA 2004). Lost profits can nevertheless be recovered if (1) the breaching party caused the loss; and (2) the amount of such damages can be adequately determined by some standard. W.W. Gay Mech. Contractor, Inc. v. Wharfside Two, Ltd., 545 So. 2d 1348 (Fla. 1989). “Lost profits must be established with some reasonable degree of certainty and must be the natural consequence of the wrong.” Sostchin v. Doll Enterprises, Inc., 847 So. 2d 1123 (Fla. 3d  DCA 2003). Thus, to permit recovery of lost profits, the court will consider whether “(1) the seller’s breach naturally caused (2) the buyer to suffer damages arising from the buyer’s general or particular needs that (3) the seller had reason to have known at the time of contracting, and (4) those damages can be proven to a reasonable certainty, but (5) the buyer could not have prevented them by cover or otherwise.” HGI Associates, Inc. v. Wetmore Printing Co., 427 F.3d 867 (11th Cir. 2005) (applying Florida law).

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“A general principle of corporate law is that a corporation is a separate legal entity, distinct from the individual persons comprising them, and, absent some basis to pierce the corporate veil, there is no basis for imposing liability for corporate debts and obligations under the individuals.” Beltran v. Vincent P. Miraglia, M.D., P.A., 125 So. 3d 855 (Fla. 4th DCA 2013). “[T]he Florida Supreme Court has imposed a strict standard upon those wishing to pierce the corporate veil.” Seminole Boatyard, inc. v. Christoph, 715 So. 2d 987 (Fla. 4th DCA 1998). Generally, so long as a business entity is operated as a distinct and separate entity for a legitimate business purpose, the plaintiff cannot pierce the corporate veil and render the individual(s) liable for the company’s debts. Peter Mavrick is a Miami  business litigation attorney, and represents clients in business litigation 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.

A plaintiff can pierce the corporate veil and hold an individual liable for the debts of the business entity only if it can prove three factors by a preponderance of the evidence. Seminole Boatyard, inc. v. Christoph, 715 So. 2d 987 (Fla. 4th DCA 1998). Those three factors are as follows: “(1) the shareholder dominated and controlled the corporation to such an extent that the corporation’s independent existence was in fact non-existent and the shareholders were in fact alter egos of the corporation; (2) the corporate form must have been used fraudulently or for an improper purpose; and (3) the fraudulent or improper use of the corporate form caused injury to the claimant.” Gasparini v. Pordomingo, 972 So. 2d 1053 (Fla. 3d DCA 2008). When all three factors are established, the corporate entity may be disregarded to hold a shareholder personally liable for corporate obligations and for the additional purpose of exercising long-arm jurisdiction over a dominating shareholder residing out-of-state. Woods v. Jorgensen, 522 So. 2d 935 (Fla. 1st DCA 1988).

To establish the first factor, “the personal affairs of the shareholder [must] become confused with the business affairs of the corporation. Individual liability under this theory rests in part on the fact that a shareholder has taken it upon himself to disregard the corporate entity.” Solomon v. Betras Plastics, Inc., 550 So. 2d 1182 (Fla. 5th DCA 1989). This determination often focuses on whether the shareholder has maintained the corporation’s separate corporate identity. Lipsig v. Ramlawi, 760 So. 2d 170 (Fla. 3d DCA 2000). “[T]he mere ownership of a corporation by a handful of shareholders is an insufficient reason to pierce the corporate veil and hold shareholders individually liable for a corporate employee’s errors.” Lipsig v. Ramlawi, 760 So. 2d 170 (Fla. 3d DCA 2000). Moreover, “even if a corporation is merely an alter ego of its dominant shareholder or shareholders, the corporate veil cannot be pierced so long as the corporation’s separate identity was lawfully maintained.” Lipsig v. Ramlawi, 760 So. 2d 170 (Fla. 3d DCA 2003).

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The Defend Trade Secret Act of 2016 (DTSA) provides civil remedies in federal courts for trade secret misappropriation. 18 U.S.C. §§ 1836 et. seq. Before the DTSA was enacted, trade secret holders were required to protect against and remedy trade secret misappropriation in state court. Most states have adopted some version of the Uniform Trade Secrets Act (UTSA). While the DTSA is similar to the UTSA, some substantial differences exist between the DTSA and a state law UTSA claim. There are also advantages to asserting one claim over the other. 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 litigation, and other legal disputes in federal and state courts and in arbitration.

A trade secret holder may choose to assert a DTSA claim because it ensures the case will be subject to federal court jurisdiction. In federal court, a state law UTSA claim could be asserted in addition to a DTSA claim. However, a DTSA claim can never be asserted in a state court. Another difference between DTSA and a state law UTSA claim. Another difference between the DTSA and UTSA is that the DTSA generally does not preempt state trade secret laws. Trade secret holders therefore can seek civil remedies for trade secret misappropriation under either state or federal law, or both. For example, a trade secret holder can assert both a DSTA and Florida UTSA (FUSTA) claim. A Florida trade secret holder, however, may decide not to assert both because the FUTSA contains a preemption clause preempting common law claims based on trade secret misappropriation.

The FUTSA provides that it displaces “conflicting tort, restitutory, and other law of this state providing civil remedies for misappropriation of a trade secret.” § 688.008, Fla. Stat. The FUTSA specifies that this preemption does not apply to “[o]ther civil remedies that are not based upon misappropriation of a trade secret.” § 688.008, Fla. Stat. “In determining whether common law claims are preempted by FUTSA, courts consider whether the allegations supporting the common law claims are distinguishable from the allegations of trade secret misappropriation.” Coihue, LLC v. PayAnyBiz, LLC, 2018 WL 7376908 (S.D. Fla. Feb. 6, 2018). 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 Sys., Inc. v. CVS Health, 361 F. Supp. 3d 1279 (S.D. Fla. 2018). Thus, where misappropriation of trade secrets forms the basis of the common law claims, the FUTSA preempts the common law claims. Coihue, LLC v. PayAnyBiz, LLC, 2018 WL 7376908 (S.D. Fla. Feb. 6, 2018).

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Under Florida law where fraud is alleged and proven, courts calculate damages using a a doctrine called the “flexibility theory” of damages.  Totale, Inc., v. Smith, 877 So. 2d 813 (Fla. 4th DCA 2004). Under this doctrine, the plaintiff in a fraud action may seek recovery of “out-of-pocket” expenses or “benefit-of-the-bargain” damages, but not both. Beefy Trail, Inc. v. Beefy King Intern., Inc., 267 So. 2d 853 (Fla. 4th DCA 1972). The doctrine permits the plaintiff to choose, and the trial court to instruct the jury on, the measure of damages that is more likely to compensate the plaintiff for its injury. Nordyne, Inc. v. Fla. Mobile Home, Supply, Inc., 625 So. 2d 1283 (Fla. 1st DCA 1993). Peter Mavrick is a Miami business litigation attorney, and represents clients in business litigation 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.

While Florida law does not explicitly state that recovery of lost profits is permitted in fraud cases, Florida courts have allowed evidence of lost profit damages in fraud cases where such evidence is relevant to calculation of “benefit-of-the-bargain” damages. In Nordyne, Inc. v. Florida Mobile Home Supply, Inc., 625 So. 2d 1283 (Fla. 1st DCA 1993), the First District Court of Appeal held that evidence of lost profits was properly admitted as relevant to the plaintiff’s fraud claim because “but for [defendant’s] fraudulent misrepresentations, [the plaintiff business] would have continued, for at least five years, to enjoy annual profits, as it had for many years.” The court explained “evidence of profits that [the plaintiff business] would have realized in the ensuing five years but for [defendant’s] fraudulent representations was relevant under the ‘out-of-pocket rule,’ because it tended to prove the position that [the plaintiff business] would have been in but for [defendant’s] wrongful acts.” The court further held such evidence was also relevant to the benefit-of-the-bargain rule to the extent “evidence of such damages was necessary to achieve justice.”

The Fourth District Court of Appeal subsequently recognized that lost profits can be relevant to establish damages in a case involving fraudulent misrepresentations. In Teca, Inc. v. WM-TAB, Inc., 726 So. 2d 828 (Fla. 4th DCA 1999), the buyer alleged that had the true status of pending litigation been disclosed, the buyer would not have closed or would have reduced its offer to take into consideration the impact of the new construction on future business. However, the buyer failed to set forth “testimony fixing the actual value of the business on the date of the sale, a crucial element in the damage equation.” The court explained, “[t]he expert testified that he had not analyzed the value of the business at the time of the sale and that such an evaluation would take four or five days. Although the lost profits would have been relevant to establish the value of the business on the date of the sale, they are not the proper measure of damages in this case.”

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