Articles Posted in Non-Compete Agreements

Published on: January 28, 2023

MIAMI BUSINESS LITIGATION: NON-COMPETE AGREEMENT AS PART OF BUYING A BUSINESS

An important consideration when buying a business, whether via a stock purchase agreement or an asset purchase agreement, is whether the seller will take the sale proceeds and start a new, competing business. Typically, the seller would have a competitive advantage in competition with the new buyer of the business, due to such matters as customer goodwill, positive name recognition in the industry, and know-how concerning the operation of the business. Accordingly, many buyers of businesses will demand a non-compete covenant to bar the seller (or his agents) from competing against the buyer within a reasonable geographic scope and time-period. Florida law is deferential to such non-compete covenants in the context of a business purchase. 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.

Florida law, at Section 542.335(1)(d)(3), Florida Statutes, states in pertinent part:

“In the case of a restrictive covenant sought to be enforced against the seller of all or a part of:

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Published on: January 25, 2023

FORT LAUDERDALE BUSINESS LITIGATION: RECOVERY OF DAMAGES FOR TRADE SECRET MISAPPROPRIATION

By Mavrick Law Firm

Corporations typically rely on employees to handle and safeguard confidential business information, including trade secrets. Under Florida law, a business can seek protection contractually, most often a non-compete agreement, to restrict an employee or former employee from competing by joining a competitor’s business, starting a competing business, or facilitating competition by using confidential or trade secret information. Such contracts typically include an obligation to keep trade secrets and other confidential information a secret. Florida law also affords protection to businesses via the employee “duty of loyalty,” which is a judicially created doctrine that imposes a duty on employee to refrain from actions calculated to harm an employer during the period of employment, including competition. When employees violate any of these legal protections, employers have various remedies against their former employees. Employers also have remedies against businesses that benefit from the employee passing trade secrets or other confidential information to competing businesses, via claims for trade secret misappropriation against the former employee and the competing business. 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.

In a lawsuit for misappropriation of a trade secret, “[d]amages can include both the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation that is not taken into account in computing actual loss.” Florida Statutes section 688.004(1). Florida’s Second District Court of Appeal in Perdue Farms Inc. v. Hook, 777 So.2d 1047 (Fla. 2d DCA 2001), stated in pertinent part that, in such litigation, “when some damage is proven and ‘the uncertainty lies only in the amount of damages, recovery may be had if there is proof of a reasonable basis from which the amount can be inferred or approximated.'” The Perdue Farms decision explained that the plaintiff’s burden of proof as to damages caused by the misappropriation is “liberal” and is satisfied “by showing the misappropriation, the subsequent commercial use, and … evidence by which the jury can value the rights the defendant has obtained.”

Competing businesses who have unlawfully obtained trade secrets from a current or departing employees of competitors have sometimes tried to limit damages for their misappropriation. They have argued that damages be limited only to the “head-start period.” The United States District Court for the Southern District of Florida in Sensormatic Elec. Corp. v. TAG Co. US, 632 F.Supp.2d 1147 (S.D. Fla. 2008), defined the term “head-start period” as meaning “the amount of time it would have taken … [the trade secret misappropriator] to independently develop its product without the benefit of … [the trade secret owner’s] trade secrets.” In RRK Holding Co. v. Sears, Roebuck & Co., 563 F.Supp.2d 832 (N.D. Ill. 2008), the defendant business that benefited from the misappropriated trade secret argued that the plaintiff “failed to limit its damages claims to the time necessary to reverse engineer its trade secret product, i.e., the ‘head start’ period.” The jury instruction at issue read, “damages can include Plaintiff’s actual loss caused by Defendant’s misappropriation and the unjust enrichment caused by the misappropriation that is not taken into account in computing Plaintiff’s actual loss.” The court stated that “[w]hile Illinois case law requires damages be limited to a head start period for injunctive relief, it has not made such a requirement for monetary damages. The law does not support Defendant’s contention.” Similarly, CardioVention, Inc. v Medtronic, Inc., 483 F.Supp.2d 830 (D.Minn. 2007), explained that courts “have recognized that a plaintiff’s actual damages can be measured by the value of the loss of the secret to the plaintiff under the circumstances.”

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Published on: January 7, 2023

MIAMI BUSINESS LITIGATION: EMPLOYMENT NON-COMPETES WOULD BE NULLIFIED BY PROPOSED FEDERAL TRADE COMMISSION RULE

By Mavrick Law Firm

Under Florida law, non-compete agreements between employers and employees are allowed when they comply with the requirements of Florida’s restrictive covenant statute, Section 542.335, Florida Statutes. For years, Florida law has allowed non-compete agreements to protect apparent “legitimate business interests” referenced in Section 542.335(1)(b), such as, for example, protecting an employer’s interests in retaining trade secrets, goodwill with customers and referral sources, and investments in extraordinary or specialized employee training. However, much of Florida’s restrictive covenant statute would be effectively rescinded if a new rule proposed by the Federal Trade Commission (FTC) becomes effective. The FTC proposed rule would bar non-compete agreements with employees, including agreements which are not labeled as a “non-compete agreement,” but have the effect of barring an employee’s competition against his or her employer. The proposed FTC rule is set forth in a new Subchapter J, consisting of Part 910 to Chapter I in Title 16 of the Code of Federal Regulations. The proposed FTC rule has not become law at this point, and is subject to a comment period before being promulgated. In addition, the legal viability of the proposed FTC rule will likely be tested in state and federal courts. The courts will make the final decision regarding whether the final FTC rule is enforceable, or the extent to which it is enforceable. 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.

The proposed FTC rule defines a “non-compete clause” as “a contractual term between an employer and a worker that prevents the worker from seeking or accepting employment with a person, or operating a business, after the conclusion of the worker’s employment with the employer.” The proposed rule recognizes that businesses sometimes have used contractual provisions that do not explicitly bar competion, but nevertheless have the effect of barring competition. The FTC proposed rule refers to such clauses as “de facto” non-compete contractual clauses. The proposed FTC rule sets forth a “functional test” to assess whether a contractual term operates as a prohibited, de facto non-compete clause:

“(2) Functional test for whether a contractual term is a non-compete clause. The term non-compete clause includes a contractual term that is a de facto non-compete clause because it has the effect of prohibiting the worker from seeking or accepting employment with a person or operating a business after the conclusion of the worker’s employment with the employer. For example, the following types of contractual terms, among others, may be de facto non-compete clauses:

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Published on: December 21, 2022

FORT LAUDERDALE BUSINESS LITIGATON: RECOVERY OF DAMAGES FOR BREACH OF NON-COMPETE AGREEMENTS

By Mavrick Law Firm

Most litigation over restrictive covenants are resolved at the conclusion of the temporary injunction hearing. At that stage, the trial judge has made a decision whether the plaintiff is substantially likely to succeed on the merits of the case. The parties usually are motivated to settle the case at that point. However, in some cases a party seeks to recover damages at a trial on the merits. This sometimes happens in cases where a party has incurred large losses and seeks to collect damages arising from the defendant’s breach of contract. Florida law recognizes that “[t]he measure of damages for a breach of a non-competition agreement is the actual damages suffered as a result of the breach, which is generally loss of profits.” Camel Invs., Inc. v. Webber, 468 So. 2d 340 (Fla. 1st DCA 1985) (citing 54 Am.Jur.2d, Monopolies, section 579 (1971)). 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.

“Generally, the aggrieved party in a breach of noncompetition agreement case seeks lost profits as the measure of damages.” Moon v. Med. Tech. Assocs., Inc., No. 8:13-CV-02782-EAK, 2015 WL 1227499 (M.D. Fla. Mar. 17, 2015) (citing Camel Investments, Inc. v. Webber, 468 So.2d at 342). “Lost profits, however, are not the only recoverable damages; the measure of damages is ‘the actual damages suffered as a result of the breach[.]’” Moon at *2 (citing Collier v. Crane Inspection and Certification Bureau, Inc., 382 So.2d 424 (Fla.Dist.Ct.App.1980)). “There are two generally recognized methods of proving lost profits: (1) the before and after theory and (2) the yardstick test.” G.M. Brod & Co., Inc. v. U.S. Home Corp., 759 F.2d 1526 (11th Cir.1985) (quoting Lehrman v. Gulf Oil Corporation, 500 F.2d 659 (5th Cir.1974)). “The before and after theory compares the plaintiff’s profit record prior to the violation with that subsequent to it.” Lehrman. 500 F.2d at 667. The yardstick test is often employed when a plaintiff “is driven out of business before he is able to compile an earnings record sufficient to allow estimation of profits.” Id. Where a party was not driven out of business and has compiled record of earnings to allow an estimation of profits, the “before and after theory” of lost profits damages is applicable.

Under Florida law, to recover lost profits “[t]he party must prove that 1) the defendant’s action caused the damage and 2) there is some standard by which the amount of damages may be adequately determined. Katz Deli of Aventura, Inc. v. Waterways Plaza, LLC, 183 So. 3d 374 (Fla. 3d DCA 2013) (citing W.W. Gay Mech. Contractor, Inc. v. Wharfside Two, Ltd., 545 So.2d 1348 (Fla.1989). “The projected profits cannot be mere speculation or conjecture, but the inability to prove a precise damages amount will not prevent a plaintiff from recovering so long as it is clear that some loss resulting from the defendant’s actions is certain. Id. (internal citations omitted). “Lost profits must be established with a reasonable degree of certainty and must be a natural consequence of the wrong. Sostchin v. Doll Enterprises, Inc., 847 So. 2d 1123, 1128 (Fla. 3d DCA 2003). The party seeking lost profit damages must “provide competent evidence sufficient to satisfy the mind of a prudent impartial person as to the amount of profits lost as a result” of the wrongdoing. Id. (citing North Dade Community Development Corp. v. Dinner’s Place, Inc., 827 So.2d 352 (Fla. 3d DCA 2002)).

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Published on: December 17, 2022

MIAMI BUSINESS LITIGATION: NON-COMPETE AGREEMENTS AND TRADE SECRETS

By Mavrick Law Firm

Florida’s non-compete statute goes hand-in-hand with Florida law prohibiting trade secret misappropriation. Under Florida’s statute governing non-compete agreements, a trade secret is a “legitimate business interest” to restrict employees and former employees from competing against their former employers. Florida Statutes § 542.335(1)(b)(1) (legitimate business includes “trade secrets”). A restrictive covenant in Florida is given an especially long period of enforcement when it is based on a trade secret. In this regard, Florida Statutes § 542.335(1)(e), states that, “[i]n determining the reasonableness in time of a postterm restrictive covenant predicated upon the protection of trade secrets, a court shall presume reasonable in time any restraint of 5 years or less and shall presume unreasonable in time any restraint of more than 10 years. All such presumptions shall be rebuttable presumptions.” 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 “trade secret” is defined by Florida Statutes § 688.002(4), to mean “information, including a formula, pattern, compilation, program, device, method, technique, or process that” (a) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Some businesses hold trade secret processes that are used by key employees of business. To establish a trade secret process, the business must prove the following: “(a) the process is a secret, (b) the extent to which the information is known outside of the owner’s business, (c) the extent to which it is known by employees and others involved in the owner’s business, (d) the extent of measures taken by the owner to guard the secrecy of the information, (e) the value of the information to the owner and to his competitors, (f) the amount of effort or money expended by the owner in developing the information, and (g) the ease or difficulty with which the information could be properly acquired or duplicated by others.” Premier Lab Supply, Inc. v. Chemplex Industries, Inc., 10 So.3d 202 (Fla. 4th DCA 2009).

Businesses seeking to enforce and protect their trade secrets are sometimes met with the defense that the business did not have a “confidentiality agreement” with its employees. Important precedent from Florida’s Third District Court of Appeal, in the seminal case Unistar v. Child, 415 So.2d 733 (Fla. 3d DCA 1982), held that “[t]he law will import into every contract of employment a prohibition against the use of a trade secret by the employee for his own benefit, to the detriment of his employer, if the secret was acquired by the employee in the course of his employment.” The lack of any express agreement on the part of the employee not to disclose a trade secret generally is not significant. Florida’s Fourth District Court of Appeal in its Premier Lab Supply decision explained that “the lack of a confidentiality agreement does not necessarily defeat Chemplex’s argument that the machine is a trade secret.” Under Florida law, a valid cause of action exists to protect an employer’s trade secrets from disclosure or use by an employee (or former employee) even when there is no express contract restraining the employee from disclosing or using such secrets. Lee v. Cercoa, Inc., 433 So.2d 1 (Fla. 4th DCA 1983). Where an employee acquires (during the course of his employment) a trade secret such as “a special technique or process developed by his employer, the employee is under a duty, even in the absence of an express contractual provision, not to disclose such skills, techniques, or processes in his new employment for his own or another’s benefit to the detriment of his previous employer.” Id.

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Published on: December 10, 2022

MIAMI BUSINESS LITIGATION: PRESUMPTION OF IRREPARABLE INJURY IN NON-COMPETE LAWSUITS

By Mavrick Law Firm

Florida’s non-compete statute states in pertinent part, at Florida Statutes § 542.335(1)(j), that “[t]he violation of an enforceable restrictive covenant creates a presumption of irreparable injury.” There is a divergence, however, in the application of this presumption between Florida state courts and federal courts. Florida state courts routinely apply this presumption when the plaintiff proves violation of restrictive covenant (such as violations of covenants against competition, solicitation of customers, solicitation of employees, etc.). By contrast, federal courts generally take a much different approach. The United States Supreme Court in Amoco Prod. Co. v. Vill. Of Gambell, 480 U.S. 531 (1987), explained that presumptions of irreparable harm are “contrary to traditional [federal] equitable principles.” Peter Mavrick is a Miami business litigation lawyer, 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.

The United States Court of Appeals for the Eleventh Circuit, discussed application of this presumption in Vital Pharmaceuticals, Inc. v. Alfieri, 23 F.4th 1282 (11th Cir. 2022), including whether to follow Florida’s statutory presumption or follow earlier precedent barring such a presumption. The federal appellate court’s decision in Vital Pharmaceuticals referenced earlier Eleventh Circuit precedent in Proudfoot Consulting Co. v. Gordon, 567 F.3d 1223 (11^th Cir. 2009), which treated non-compete, non-solicitation, and “client non-compete” provisions, and a “clause concerning confidential information” in the same agreement as four separate restrictive covenants and permitted a universal presumption of irreparable harm because the defendant “breached all four [r]estrictive [c]ovenants.” However, the appellate court distinguished this case law because Vital Pharmaceuticals (Vital) did not prove that its former employee had breached her non-disclosure covenant by disclosing confidential information or by soliciting Vital’s clients about whom she held confidential information. In reversing a preliminary injunction that the federal trial court had previously issued against Vital’s former employee, the appellate court explained that without proof that Vital’s former employee breached the non-disclosure covenant, “[t]he district court abused its discretion when it applied the presumption of irreparable harm.”

The appellate court explained that without the benefit of that presumption, “Vital did not establish, as it was required to, that it was ‘likely to suffer irreparable harm in the absence of preliminary relief’ prohibiting [Vital’s former employee] … from disclosing or using its confidential information.” Vital failed to “identify any actually confidential and specific [Vital] information that is being or could be utilized by” by Vital’s former employee to unfairly compete against Vital.

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Published on: December 7, 2022

FORT LAUDERDALE BUSINESS LITIGATION: ENFORCEMENT OF NON-COMPETE INJUNCTION AGAINST NON-PARTIES FOR “AIDING AND ABETTING”

By Mavrick Law Firm

Under Florida’s non-compete statute, Florida Statutes section 542.335(1(a), a court “shall not enforce a restrictive covenant unless it is set forth in a writing signed by the person against whom enforcement is sought.” The most common method of enforcing restrictive covenants is an injunction, i.e., a court order barring a particular act such as operating a competing business. Sometimes, however, an enjoined party seeks to evade the requirements of a non-compete covenant or an injunction by using a nominee, such as a spouse, family members, or a shell corporation. The legal doctrine of “aiding and abetting” liability is designed to address such a situation. Aiding and abetting liability can extend the reach of an injunction to non-parties, i.e., strangers, to a non-compete contract, where they are assisting the real party in interest who signed the restrictive covenant and is trying to avoid compliance with contractual obligations. 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.

The Supreme Court of Florida in West Shore Restaurant Corp. v. Turk, 101 So.2d 123 (Fla. 1958), stated that the “rule that a stranger to a covenant may be enjoined from aiding and assisting the covenanter in violating his covenant is supported by an overwhelming weight of authority.” Non-parties to a restrictive covenant may be enjoined from aiding and abetting a party who is directly obligated to abide by the restrictive covenant. In other words, Florida courts will not allow a party to use or conspire with another person as an indirect method of evading a direct contractual obligation. In West Shore, the plaintiff had paid a substantial sum of money to buy a restaurant. One of the material terms of the deal was that the seller would refrain from competition. The seller, however, used a relative (his father) and another person to evade the non-compete covenant by operating a competing business. The Supreme Court explained that: “Covenants not to compete are in the best of circumstances difficult to enforce. If the covenantor wishes to avoid the agreement[,] the covenantee is required to become a policeman and a detective to catch him. When the covenantee is able to prove a breach[,] he finds it most difficult to prove, with the certainty required by law, the damages which he has suffered. For these reasons, there are few types of contracts which require greater attention by the courts in their enforcement, an in so doing the moral obligation of the covenantor, the obligation to observe the spirit as well as the letter of the agreement must be considered and enforced.” In ruling in favor of the buyer of the business, the Supreme Court added that: “‘Where one is so lost to a sense of moral obligation as to accept full consideration for his stock in trade and good-will, upon express condition that he refrain from again entering that business for a limited time, within a certain territory, and then immediately, having pocketed the fruits of the agreement, deliberately and wilfully [sic] ignores the controlling condition thereof, courts should certainly not hunt for legal excuse to uphold him in such moral delinquency.'”

Subsequent case law has held that courts can enjoin non-parties to the restrictive covenant, such as a family member of the signator or an alter ego corporation, where the nonparty is either under the signator’s control or otherwise being used to aid or abet the signator in violating the non-compete clause. For example, in Leighton v. First Universal Lending, LLC, 925 So.2d 462 (Fla. 4th DCA 2006), Florida’s Fourth District Court of Appeal explained that “[t]here is no doubt that a court can enjoin others who were not parties to the non-compete agreement.” However, before non-parties to a contract can be enjoined, they must be given notice of the allegations and have right to be heard and defend themselves. Sheoah Highlands, Inc. v. Daugherty, 837 So.2d 539 (Fla. 5th DCA 2003).

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Published on: December 3, 2022

MIAMI BUSINESS LITIGATION: FLORIDA LAW CONCERNING DISCOVERY OF TRADE SECRETS

By Mavrick Law Firm

Florida law contains an explicit privilege against disclosure of alleged trade secrets. This trade secret privilege is set forth in Florida Statutes Section 90.506, which states in pertinent part: “A person has a privilege to refuse to disclose, and to prevent other persons from disclosing, a trade secret owned by that person if the allowance of the privilege will not conceal fraud or otherwise work injustice. When the court directs disclosure, it shall take protective measures that the interests holder of the privilege, the interests of the parties, and the furtherance of justice require.” To ensure that this privilege is properly protected, courts have set forth a three-step analysis for trial courts to undertake when faced with a claim that a discovery request seeks production of protected trade secret information. Trade secrets often are asserted in lawsuits, including lawsuits involving non-compete agreements, claims of unfair competition, and employment law. 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.

The first step requires the trial court determine whether the information requested constitutes or contains trade secret information. This step will usually, but not always, require the trial court to conduct an “in camera review” of the documents to determine whether, in fact, they contain trade secret information. The legal term “in camera review” means that the Judge reviews documents outside of the view of the public, to retain confidentiality of the information the Judge is reviewing. Generally, if the parties agree that the documents contain trade secret information, then no in camera review would be needed. Where the parties disagree on whether the requested documents contain trade secret information, an in camera review or evidentiary hearing will be needed. Florida’s Third District Court of Appeal explained in Coast Fire, Inc. v. Triangle Fire, Inc., 170 So.3d 804 (3d DCA 2014), that “[s]uch a hearing may include expert testimony … Expert testimony may be particularly useful in cases where the trial court does not have requisite experience in examining the subject information.” Revello Med. Mgmt., Inc. v. Med-Data Infotech USA, Inc., 50 So.3d 678 (Fla. 2d DCA 2010), also explained that “if the circuit judge does not have the requisite experience in examining [computer source] code, he may wish to appoint a neutral computer expert to review [the party’s] program.”

If the Judge determines in this first step that the discovery request seeks information subject to the trade secret privilege, the second step of the analysis requires the Judge to determine “whether the party seeking production can show reasonable necessity for the requested information.” Ameritrust Ins. Corp. v. O’Donnell Landscapes, Inc., 899 So.2d 1205 (2d DCA 2005). This step usually requires the trial court to decide whether the need for producing the documents outweighs the interest in maintaining their confidentiality. This is a fact-intensive analysis.

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Published on: November 23, 2022

FORT LAUDERDALE BUSINESS LITIGATION: NON-COMPETE COVENANT INJUNCTIONS AND IRREPARABLE INJURY

By Mavrick Law Firm

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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Published on: November 19, 2022

MIAMI NON-COMPETE AGREEMENTS: EX PARTE MOTION FOR TEMPORARY RESTRAINING ORDER

By Mavrick Law Firm

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 (11^th 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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