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Articles Posted in Employment Law

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The decision whether to bring a case in federal court or Florida state court can have significant consequences to the disposition of non-compete litigation.  While both federal and Florida will usually apply the same substantive law, the procedure applied differs.  This is particularly pertinent in non-compete litigation.  Florida courts, when considering whether to enjoin a former employee from competing, will not consider particular categories of evidence because of a Florida statute (§ 542.335(g)(1-3).  Federal courts are free of this limitation, and may consider nearly any admissible and relevant evidence.  This distinction can ultimately mean the difference between whether an employee or an employer will prevail in non-compete litigation. Peter Mavrick is a Miami non-compete attorney, and also advocates for clients in Fort Lauderdale, Boca Raton, and Palm Beach, Florida. The Mavrick Law Firm represents clients in business litigation, trade secret litigation, employment litigationtrademark litigation, and other legal disputes in federal and state courts and in arbitration.

Non-compete litigation can be heard in both federal courts and state courts.  While a Florida court almost always has jurisdiction to hear a Florida non-compete case, there are certain requirements before a matter may be heard in federal court.  The primary method by which a federal court would have jurisdiction is that a “federal question” is raised.  This can happen when a non-compete claim is brought along with a trade secret claim under the federal Defend Trade Secrets Act.  18 U.S.C. § 1836, et seq.  While it is technically possible that a federal court can have jurisdiction over the parties because a “diversity of citizenship” between the plaintiff and defendant, this would rarely happen because both a company attempting to enforce a non-compete and the employee will usually qualify as a citizens of Florida.

Federal courts and Florida courts have their own rules of civil procedure.  While the Florida Rules of Civil Procedure were derived in significant part from the federal rules, the differences between them are substantial, and include different pleading and discovery requirements.  There are also differences between federal and Florida courts which do not arise from the differences in procedural rules.  Generally, federal courts have a greater budget and fewer cases, and so may have more time and staff to address complex and nuanced issues.  Federal courts also tend to place more time constraints which are less flexible than their Florida counterpart.

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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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Companies often hire experienced sales and business development professionals to expand their business. A non-solicitation provision in an employment contract is intended to prevent post-termination solicitation of clients with whom the business has substantial relationships. When an employee brings clients to a company, it is important to distinguish whether the employee had a prior business or personal relationship with the client, and whether it is part of the employee’s job to develop and maintain client relationships. 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.

In the case of Hilb Rogal & Hobbs of Florida, Inc. v. Grimmel, 48 So. 3d 957 (Fla. 4th DCA 2010), Hilb Rogal & Hobbs of Florida, Inc. (HRH) was an insurance broker who hired Mark Grimmel (Grimmel) as a producer to service its existing customers and to generate new customers. Grimmel signed an employment agreement with HRH, which included a non-piracy clause that prohibited Grimmel from soliciting HRH’s customers following termination of his employment. Four years after Grimmel resigned to operate his own competing insurance brokerage firm, Egis Insurance Advisors (Egis).

HRH filed a lawsuit for injunctive relief and damages against Grimmel and Egis. HRH alleged that Grimmel violated the non-piracy covenant in his employment agreement with HRH by misappropriating business from HRH to Egis. HRH also filed an emergency motion for a temporary injunction, requesting that the court prohibit Grimmel from soliciting, accepting business from, and continuing to do business with HRH’s customers. Also, HRH sought to enjoin Grimmel from using confidential or trade secret information. HRH obtained an ex-parte order (made without the other party’s awareness) granting a temporary injunction against Grimmel and posted a bond. Grimmel moved to dissolve the injunction and a hearing was held before a magistrate. The magistrate issued a Report and Recommendation proposing that the temporary injunction be dissolved. HRH filed its exceptions to the general magistrate’s report and requested a hearing. The trial court held a hearing and entered an order denying HRH’s exceptions, granting the motion to dissolve the temporary injunction, and ratifying and approving the general magistrate’s Report and Recommendation. HRH immediately appealed.

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Former employees who are accused of breaching their noncompete agreements with their former employer sometimes try to claim that the former employer engaged in illegal conduct, and thus, a noncompete agreement cannot be enforced.  While there are certain types of unlawful conduct which a court may cite to justify the denial of request for a temporary injunction, the range of illegal conduct which would justify such a denial is very narrow.  Most allegations of illegal conduct will not influence whether a restrictive covenant should be enforced, even if the allegations are true.  This article is the first of a two-part series.  This article addresses contracts which are unenforceable because they are unlawful, while the second article addresses allegations of unlawful activity within the context of a noncompete agreement.  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, employment litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

Often, parties defending against business litigation will use everything at their disposal to influence their opponent into giving up.  This can include making allegations of illegal conduct to argue that a noncompete agreement is unenforceable.  Generally, Florida companies may enforce their contracts regardless if they have also performed an “illegal” action.

A contract which is itself illegal, however, is usually unenforceable.  “[A] party generally may not seek to enforce an illegal contract.”  P.C.B. P’ship v. City of Largo, 549 So. 2d 738 (Fla. 2d DCA 1989); Harris v. Gonzalez, 789 So. 2d 405 (Fla. 4th DCA 2001) (“A contract which violates a provision of the constitution or a statute is void and illegal, and, will not be enforced in our courts”).

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A non-compete period may not be tolled because an employee is called for active military duty. While an employee may not be denied reemployment on account of a person’s performance of military duty, under the Uniformed Services Employment and Reemployment Rights Act of 1994, 38 U.S.C. § 4311, a court may consider the fact that the employee was not competing when serving his or her military duties. 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 circumstance occurred in the case of SCI Funeral Services of Florida, Inc. v. Henry, 839 So. 2d 702 (Fla. 3d DCA 2002). Anel Henry (Henry) was employed by SCI Funeral Services of Florida, Inc. (SCI) as a sales department group leader. He signed a non-compete agreement with SCI, which prohibited him from competing with SCI for a period of twelve months after his employment had been terminated for any reason, with or without cause. Henry later became the subject of SCI’s investigation of a sexual harassment claim. SCI temporarily suspended his employment while they conducted their investigation. Henry was also on reserve duty with the United States Army.  During the suspension, he was called up for military service in Panama. Henry received a phone call from a SCI employee to warn him that SCI’s sales manager was terminating his employment.

Henry received orders from the Army extended his tour of duty to total about one year. After Henry returned from service in Panama, he requested to resume employment, but SCI refused. Henry then applied for work with Woodlawn Park Cemetery Company (Woodlawn), a competitor of SCI. Woodlawn offered Henry a job, which would begin in the following month. SCI’s counsel sent a letter to the Henry, with a copy to Woodlawn, that threatened a lawsuit for violation of the non-compete agreement.  SCI contended that SCI did not formally terminate Henry until his return from military duty, therefore the twelve-month period began when he came back from Panama rather than when he left about twelve months earlier. Woodlawn terminated Henry’s employment due SCI’s threats to enforce the non-compete agreement. SCI, however, never filed suit to enforce the non-compete agreement.

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Former employees who quit their jobs will sometimes sue their former employers for retaliation based on the theory that they were “constructively” terminated.  Under federal employment law, a “constructive” termination occurs when an employee’s resignation is caused by involuntary working conditions, duress, or an employer’s misrepresentation.  However, the threshold of conduct which qualifies as a constructive termination or discharge is high.  Because the threshold is high, employers can often show that the discharge was not “constructive” and thereby defeat claims of retaliation. Peter Mavrick is a Fort Lauderdale employment attorney, who defends businesses and their owners against employment law claims. Such claims include alleged employment discrimination and retaliation as well as claims for overtime wages and other related claims.

“A plaintiff asserting a retaliation claim under Title VII must show that: (1) he engaged in statutorily protected activity; (2) he suffered a materially adverse action; and (3) there was a causal connection between the protected activity and the adverse action.”  Howard v. Walgreen Co., 605 F.3d 1239 (11th Cir. 2010).  Mavricklaw.com has published several articles exploring how employers can prevail on the element of “protected activity.”  Employers may also challenge the element as to whether an “adverse action” occurred.

In the retaliation context, an action is materially adverse when it is “harmful to the point that [it] could well dissuade a reasonable worker from making or supporting a charge of discrimination.” See Burlington N. & Santa Fe Ry. Co. v. White, 548 U.S. 53 (2006).  An employee that is fired has incurred an adverse action under retaliation law.  Normally, an employee who resigns cannot show that they have experienced an adverse action, however, an employee can claim that his or her resignation was forced by the employer.  “[W]hen an employee involuntarily resigns in order to escape intolerable and illegal employment requirements to which he or she is subjected because of race, color, religion, sex, or national origin, the employer has committed a constructive discharge.” Morgan v. Ford, 6 F.3d 750 (11th Cir. 1993).

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Discovery is a powerful tool in litigation which can be used to acquire information necessary to resolve the case.  However, the discovery process is susceptible to abuse.  Parties can request material that is not necessary, simply to increase the costs for their adversary or expose private or embarrassing information.  Whether financial discovery should be ordered is often disputed. A party who is the target of an inappropriate discovery request can block this discovery by seeking a protective order.  A party propounding discovery will often claim that the material is important for the disposition of the case while the party subject to discovery will often argue that it is irrelevant.  Florida employers will benefit from the holding in a recent case before Florida’s Fourth District Court of Appeal, which held that financial discovery may be limited in cases involving the Florida Civil Rights Act (FCRA).  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, employment litigation, trademark litigation, and other legal disputes in federal and state courts and in arbitration.

Discovery in Florida courts is limited to matters which are relevant to the resolution of the business litigation dispute or could lead to evidence concerning the resolution of the dispute.  Fla.R.Civ.P. 1.280 (describing the bounds of discovery).  In business litigation, special rules apply when financial discovery is requested, such as a party’s tax returns.  Florida recognizes “the disclosure of personal financial information may cause irreparable harm to a person forced to disclose it, in a case in which the information is not relevant.” Friedman v. Heart Inst. of Port St. Lucie, 863 So.2d 189 (Fla.2003).  But, “where materials sought by a party ‘would appear to be relevant to the subject matter of the pending action,’ the information is fully discoverable.” Bd. of Trs. of the Internal Improvement Trust Fund v. Am. Educ. Enters., LLC, 99 So.3d 450 (Fla.2012).  “[T]he general rule in Florida is that personal financial information is ordinarily discoverable only in aid of execution after judgment has been entered, [however], where materials sought by a party ‘would appear to be relevant to the subject matter of the pending action,’ the information is fully discoverable.”  Friedman v. Heart Inst. of Port St. Lucie, Inc., 863 So. 2d 189, 194 (Fla. 2003); see Woodward v. Berkery, 714 So.2d 1027 (Fla. 4th DCA 1998). (“[T]he constitutional right of privacy undoubtedly expresses a policy that compelled disclosure through discovery be limited to that which is necessary for a court to determine contested issues[…]”).

The limitations on financial discovery changes when punitive damages are at issue.  Financial discovery may be proper in business litigation where punitive damages are involved because the court or the jury is permitted to considered how much money the defendant has in its punitive damages analysis.  Under an earlier standard, savvy plaintiffs would claim punitive damages without a basis merely to justify the imposition of financial discovery.  The Florida legislature sought to curb this practice when it enacted § 768.72, Florida Statutes.  This rule requires a plaintiff to first request from the court permission to make a punitive damages claim.  If granted, the plaintiff may then seek financial discovery.

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Employees sometimes raid their employer’s trade secrets prior to quitting so that they may have an advantage starting up their own business or in their employment with a competitor.  An aggrieved employer may sue under the Florida Uniform Trade Secrets Act (FUTSA) to recover those trade secrets and for any damages arising from the theft of trade secrets.  However, FUTSA has many requirements that must be met before an employer can prevail on a misappropriation of trade secrets claim.  An important, but easily missed requirement, is that business litigation concerning theft of trade secrets must specify in the complaint what exactly are the trade secrets.  This article is a continuation of a prior article discussing the requirement for the identification of a trade secret.  Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also represents clients in business litigation in Miami, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, employment litigation, trademark litigation, and other legal disputes in federal and state courts and in arbitration.

The Florida Uniform Trade Secret Act (FUTSA) is nearly identical to the Uniform Trade Secret Act (UTSA) enacted by most states.  To prevail in business litigation concerning trade secret misappropriation, a plaintiff must sufficiently identify its trade secrets.  “The plaintiff must, as a threshold matter, establish that the trade secret exists. To do so, it must disclose the information at issue.”  Revello Med. Mgmt., Inc. v. Med-Data Infotech USA, Inc., 50 So. 3d 678 (Fla. 2d DCA 2010).  The requirement that a plaintiff identify the particular basis for a trade secret is not explicitly found in the Uniform Trade Secret Act.  Nevertheless, the UTSA necessarily requires that a plaintiff identify a trade secret with particularity, because it is impossible to evaluate whether information fulfills the basic requisite elements of trade secret law without the trade secret being identified.   Altavion, Inc. v. Konica Minolta Sys. Lab., Inc., 171 Cal. Rptr. 3d 714 (Ct. App. 2014) (“‘[U]ntil the content and nature of the claimed secret is ascertained, it will likely be impossible to intelligibly analyze the remaining’ elements that constitute the cause of action”).  Without identifying with particularity the trade secret at issue, it is impossible for the court to make to determine that each of the elements of a trade secret are met: (1) “information”; (2) “derives independent economic value” “from not being generally known”; (3) is “not readily ascertainable by proper means”; and (4) “is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”  See §688.02 (4)(a)-(b).

Failing to adequately identify a trade secret can be a fatal error for an employer in a trade secret misappropriation case.  At the pleadings stage of litigation, “[a] party proceeding under Florida’s Uniform Trade Secrets Act need only describe the misappropriated trade secrets with ‘reasonable particularity.’” Textile USA, Inc. v. Diageo N. Am., Inc., 15-24309-CIV, 2017 WL 10187642 (S.D. Fla. July 31, 2017).  “[A plaintiff] cannot state a claim for trade secret protection under UTSA by simply ‘producing long lists of general areas of information which contain unidentified trade secrets.’ Instead he must articulate protectable trade secrets with specificity or suffer dismissal of his claim.”  Nilssen v. Motorola, Inc., 963 F. Supp. 664 (N.D. Ill. 1997); GlobalTap LLC v. Elkay Mfg. Co., 13 C 632, 2015 WL 94235 (N.D. Ill. Jan. 5, 2015) (“[T]o sustain a trade secrets claim a party must do more than simply persist in the blunderbuss statement that ‘[e]verything you got from us was a trade secret’ … That view is wrong as a matter of law”).

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Arbitration is a method of dispute resolution which can provide a speedy and less costly resolution to disputes.  Arbitration is often preferred by the party who is a defendant on the belief that arbitration is better strategically.  The speedier resolution of arbitration does not come without a cost.  A party to an arbitration aggrieved by an adverse award is often stuck with that award, even if the arbitrator’s decision was wrong.  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.

The United States Supreme Court decision AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), explained that the Federal Arbitration Act (FAA) “was enacted in 1925 in response to widespread judicial hostility to arbitration agreements.”  According to the FAA, an agreement to arbitrate is “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”  9 U.S.C.A. § 2.

In business litigation, when a trial court makes an incorrect decision there are usually appellate options available to reverse the improper order.  By contrast, in arbitration there are very few options for a party aggrieved by what they believe to be the wrong decision.  This is by design.  If a court can simply reconsider a case on the merits when there is an allegation that the arbitrator was wrong, the arbitration becomes simply a stepping stone in the dispute resolution process rather than its own dispute resolution system.

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Sometimes, an employment relationship can become acrimonious.  A disgruntled employee is more likely to complain and more likely to fail to perform work.  As a result, some terminated employees try to assert that the loss of their employment was not their performance or attitude but instead because of unlawful retaliation.  In lawsuits accusing the employer of retaliation, plaintiff-employees generally must prove a retaliatory motive.  Peter Mavrick is a Fort Lauderdale employment attorney, who defends businesses and their owners against employment law claims. Such claims include alleged employment discrimination and retaliation as well as claims for overtime wages and other related claims.

There are three components to a retaliation claim.  The first is that the employee engaged in protected activity. A lot of actions can qualify as protected activity, including complaining about unlawful discrimination, participating in a discrimination lawsuit as a witness, requesting accommodations for a disability, or demanding overtime wages.  Howard v. Walgreen Co., 605 F.3d 1239 (11th Cir. 2010)  (Title VII prohibits retaliation “when an employee ‘oppos[es] any practice made an unlawful employment practice by [Title VII]’ or ‘has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing’”); 42 U.S.C. § 12203(a) (describing protected activity in relation to the ADA); 29 U.S.C. § 215(a)(3) (permitting an employee to sue for retaliation under the FLSA if the employee “filed any complaint” about unlawful overtime or minimum wage practices).

The second requirement is that there be an adverse action.  “[I]n the context of a Title VII retaliation claim, a materially adverse action ‘means it well might have dissuaded a reasonable worker from making or supporting a charge of discrimination.’”  Monaghan v. Worldpay US, Inc., 955 F.3d 855 (11th Cir. 2020).  “[I]t is for a jury to decide whether anything more than the most petty and trivial actions against an employee should be considered “materially adverse” to him and thus constitute adverse employment actions.” Crawford v. Carroll, 529 F.3d 961 (11th Cir. 2008).  An adverse action is most often the refusal to hire a person, refusal to promote an employee, or termination of an employee.

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