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Articles Posted in Non-Compete Agreements

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A prevalent issue in business litigation is whether an injunction is needed to enforce a restrictive covenant and protect a party’s legitimate business interest. In Florida, Section 542.335, Florida Statutes, governs the enforcement of restrictive covenants. Under section 542.335, “[a] trial court may grant a temporary injunction if the complainant proves ‘(1) the likelihood of irreparable [injury], (2) the unavailability of an adequate remedy at law, (3) a substantial likelihood of success on the merits, and (4) that a temporary injunction will serve the public interest.’” TransUnion Risk & Alternative Data Sols., Inc. v. Reilly, 181 So. 3d 548 (Fla. 4th DCA 2015). 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 showing of irreparable injury is required for a temporary injunction to issue. Surgery Ctr. Holdings, Inc. v. Guirguis, 318 So. 3d 1274 (Fla. 2d DCA 2021). With respect to the likelihood of irreparable injury, Section 542.335(1)(j) provides that “[t]he violation of an enforceable restrictive covenant creates a presumption of irreparable injury to the person seeking enforcement of a restrictive covenant.” Thus, “a party seeking to enforce a restrictive covenant by injunction need not directly prove that the defendant’s specific activities will cause irreparable injury if not enjoined.” Am. II Elecs., Inc. v. Smith, 830 So. 2d 906 (Fla. 2d DCA 2002). A party only needs to prove a violation of an enforceable restrictive covenant to be entitled to the presumption. Surgery Ctr. Holdings, Inc. v. Guirguis, 318 So. 3d 1274 (Fla. 2d DCA 2021).

An enforceable restrictive covenant is one in which “the contractually specified restraint is reasonably necessary to protect [a] legitimate business interest.” Section 542.335(1)(c). “Therefore, to benefit from the presumption of irreparable injury, the party seeking to enforce a covenant not to compete must show that the covenant protects a legitimate business interest as defined by section 542.335(1)(b) and that the covenant was violated.” Walsh v. Paw Trucking, Inc., 942 So. 2d 446 (Fla. 2d DCA 2006). Fla. Stat.

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In Florida business litigation, a non-compete restriction may not exist solely as a tool to eliminate competition or merely to prevent an employee from working with a competing employer in any capacity. Crom, LLC v. Preload, LLC, 380 F. Supp. 3d 1190 (N.D. Fla. 2019). When a breach-of-contract action is based upon enforcement of a restrictive covenant, the plaintiff must plead and prove specific elements to establish that the restrictive covenant is a valid restraint of trade. Rauch, Weaver, Norfleet, Kurtz & Co., Inc. v. AJP Pine Island Warehouses, Inc., 313 So. 3d 625 (Fla. 4th DCA 2021). “[T]he term ‘restrictive covenants’ includes all contractual restrictions upon competition, such as noncompetition/nonsolicitation agreements, confidentiality agreements, exclusive dealing agreements, and all other contractual restraints of trade.” Henao v. Prof’l Shoe Repair, Inc., 929 So. 2d 723 (Fla. 5th DCA 2006). 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 law, and other legal disputes in federal and state courts and in arbitration.

“Section 542.335 contains a comprehensive framework for analyzing, evaluating and enforcing restrictive covenants in Florida based on an ‘unfair competition’ analysis.” Henao v. Prof’l Shoe Repair, Inc., 929 So. 2d 723 (Fla. 5th DCA 2006). Under Section 542.335, three requirements must be satisfied for a restrictive covenant to be enforceable: (1) the restrictive covenant must be “set forth in writing signed by the person against whom enforcement is sought”; (2) the party seeking to enforce the restrictive covenant “shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant”; and (3) the party seeking to enforce the restrictive covenant “shall plead and prove that the contractually specified restraint is reasonably necessary to protect the legitimate business interest or interests justifying the restriction.” § 542.335, Fla. Stat.

Any restrictive covenant that is not supported by a legitimate business interest is unlawful, void, and unenforceable. § 542.335, Fla. Stat. “[T]he determination of whether an activity qualifies as a protected legitimate business interest under [section 542.335] is inherently a factual injury, which is heavily industry – and context-specific.” White v. Mederi Caretenders Visiting Servs. of Se. Fla., LLC, 226 So. 3d 774 (Fla. 2017). “Section 542.335 provides a list of ‘legitimate business interests,’ but it specifically states that the list is not exclusive.” Infinity Home Care, L.L.C. v. Amedisys Holding, LLC, 180 So. 3d 1060 (Fla. 4th DCA 2015). This list includes, but is not limited to the following: trade secrets; valuable confidential business or professional information that otherwise does not qualify as trade secrets; substantial relationships with specific or existing customers, patients, or clients; customer, patient, or client goodwill associated with an ongoing business or professional practice, a specific geographic location, or a specific marketing or trade area; and extraordinary or specialized training. § 542.335, Fla. Stat.

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Under Florida law, non-compete agreements are enforceable to protect a company’s customer, patient, or client goodwill. In business litigation, a business’ goodwill qualifies as a legitimate business interest under Section 542.335, Florida’s non-compete statute. “Florida statutory law (as a matter of public policy) does not allow a party to enforce a restrictive covenant unless it proves that enforcement is necessary to protect its legitimate business interests.” Evans v. Generic Sol. Eng’g, LLC, 178 So. 3d 114 (Fla. 5th DCA 2015). Section 542.335 includes a non-exhaustive list of examples of legitimate business interests, one of which is a party’s “customer, patient, or client goodwill” associated with “a specific geographic location” or “a specific marketing or trade area.” Ansaarie v. First Coast Cardiovascular Inst., P.A., 252 So. 3d 287 (Fla. 1st DCA 2018). 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.

In business litigation, some Florida courts have viewed a company’s purported goodwill as an asset that generates a reasonable expectation of greater-than-usual business or revenue. Held v. Held, 912 So. 2d 637 (Fla. 4th DCA 2005). Customer goodwill also typically qualifies as a “legitimate business interest” if it “represent[s] an investment by the employer” and “enable[s] unfair competition if misappropriated.” IDMWORKS, LLC v. Pophaly, 192 F. Supp. 3d 1335 (S.D. Fla. 2016). In Swann v. Mitchell, Florida’s Supreme Court defined goodwill as “the advantage or benefit the business has beyond the mere value of its property and capital.” Swann v. Mitchell, 435 So. 2d 797 (Fla. 1983). “Black’s Law Dictionary defines goodwill as ‘the ability of a business to generate in excess of a normal rate on assets due to superior managerial skills, a market position, [or] new product technology.’” Nelson v. Nelson, 795 So. 2d 977 (Fla. 5th DCA 2001).

“Courts are statutorily required to construe a restrictive covenant in favor of providing reasonable protection to all legitimate business interests established by the person seeking enforcement.” SC Maint., Inc. v. Martin, 2021 WL 4948183 (M.D. Fla. Aug. 22, 2021). To determine whether a business’ customer goodwill exists, Florida courts analyze the scope and nature of the business’ customer relationships. Florida courts typically focus on the geographic regions where the customers are located. For example, in Surgery Center Holdings, Inc. v. Guirguis, Florida’s Second District Court of Appeal held that the business “established patient goodwill within a specific geographic location and substantial relationships with existing patients, proving legitimate business interests that are reasonably related to the restrictive covenants.” 318 So. 3d 1274 (Fla. 2d DCA 2021). Guirguis relied upon documentation, testimony, and other testimony demonstrating that the business “invest[ed] in physicians, geographies, and markets to best serve their patient population.” Surgery Ctr. Holdings, Inc. v. Guirguis, 318 So. 3d 1274 (Fla. 2d DCA 2021).

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Businesses can use non-compete agreements to protect their substantial business relationships with prospective and current customers, patients, or clients. A common issue in business litigation seeking to enforce non-compete agreements is whether a business has a trade secret that qualifies as a legitimate business interest. 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.

A non-compete agreement cannot be enforced without a court finding that the agreement is supported by a “legitimate business interest” in the non-compete agreement. “Section 542.335 contains a comprehensive framework for analyzing, evaluating and enforcing restrictive covenants in Florida based on an ‘unfair competition’ analysis.” Henao v. Prof’l Shoe Repair, Inc., 929 So. 2d 723 (Fla. 5th DCA 2006). Under Section 542.335, a plaintiff must satify three requirements to enforce a restrictive covenant: (1) the restrictive covenant must be “set forth in writing signed by the person against whom enforcement is sought”; (2) the party seeking to enforce the restrictive covenant “shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant”; and (3) the party seeking to enforce the restrictive covenant “shall plead and prove that the contractually specified restraint is reasonably necessary to protect the legitimate business interest or interests justifying the restriction.” Section 542.335, Florida Statutes.

A business’ trade secret can qualify as a legitimate business interest pursuant to Florida law.  Trade secrets are specifically delineated as legitimate business interests in Section 542.335(1)(b)(1), Florida Statutes. The Florida Uniform Trade Secrets Act (“FUTSA”) defines trade secrets as “information, including a formula, pattern, compilation, program, device, method, technique, or process” that:

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Business litigation often involves contractual disputes between employers and employees concerning the enforceability of non-compete agreements or other restrictive covenants. Under Florida law, a contractual non-compete restriction cannot be used solely as a tool to eliminate competition or merely to prevent an employee from working with a competing employer in any capacity. When a breach-of-contract action is based upon enforcement of a restrictive covenant, the plaintiff must plead and prove specific elements to establish that the restrictive covenant is a valid restraint of trade. Rauch, Weaver, Norfleet, Kurtz & Co., Inc. v. AJP Pine Island Warehouses, Inc., 313 So. 3d 625 (Fla. 4th DCA 2021). “[T]he term ‘restrictive covenants’ includes all contractual restrictions upon competition, such as noncompetition/nonsolicitation agreements, confidentiality agreements, exclusive dealing agreements, and all other contractual restraints of trade.” Henao v. Prof’l Shoe Repair, Inc., 929 So. 2d 723 (Fla. 5th DCA 2006). 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.

“Section 542.335 contains a comprehensive framework for analyzing, evaluating and enforcing restrictive covenants in Florida based on an ‘unfair competition’ analysis.” Henao v. Prof’l Shoe Repair, Inc., 929 So. 2d 723 (Fla. 5th DCA 2006). Under Section 542.335, a plaintiff must satify three requirements to enforce a restrictive covenant: (1) the restrictive covenant must be “set forth in writing signed by the person against whom enforcement is sought”; (2) the party seeking to enforce the restrictive covenant “shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant”; and (3) the party seeking to enforce the restrictive covenant “shall plead and prove that the contractually specified restraint is reasonably necessary to protect the legitimate business interest or interests justifying the restriction.” § 542.335, Fla. Stat.

Restrictive covenants are unlawful, void, and unenforceable if they are not supported by a legitimate business. “[T]he determination of whether an activity qualifies as a protected legitimate business interest under [Section 542.335] is inherently a factual injury, which is heavily industry – and context-specific.” White v. Mederi Caretenders Visiting Servs. of Se. Fla., LLC, 226 So. 3d 774 (Fla. 2017). “Section 542.335 provides a list of ‘legitimate business interests,’ but it specifically states that the list is not exclusive.” Infinity Home Care, L.L.C. v. Amedisys Holding, LLC, 180 So. 3d 1060, 1063 (Fla. 4th DCA 2015). Section 542.335 protects the following legitimate business interests: trade secrets; valuable confidential business or professional information that otherwise does not qualify as trade secrets; substantial relationships with specific or existing customers, patients, or clients; customer, patient, or client goodwill associated with an ongoing business or professional practice, a specific geographic location, or a specific marketing or trade area; and extraordinary or specialized training.

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Florida Courts routinely enforce non-compete agreements to prevent a former or current employees’ improper solicitation of the business’ current and prospective employees and customers.  Such restrictive covenants, also commonly referred to as non-solicitation provision, are governed by Section 542.335, Florida Statutes. The non-solicitation provisions must be: (1) reasonable in time, area, and line of business, (2) supported by a legitimate business interest, and (3) reasonably necessary to protect such interest. Non-solicitation clauses are useful to protect a business’ substantial business relationships with its existing or prospective customers. As with other contractual covenants, Florida courts will interpreted interpret non-solicitation provisions under Florida law in business litigation. Peter Mavrick is a Fort Lauderdale non-compete 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.

“Generally, the intentions of the parties to a contract govern its construction and interpretation.” Waverly 1 & 2, LLC v. Waverly at Las Olas Condo. Ass’n, 242 So. 3d 425 (Fla. 4th DCA 2018). Where contractual terms are clear and unambiguous, the court is bound by the plain meaning of those terms. The intent of the parties by their use of such terms must be discerned from within the ‘four corners of the document.’”  Emerald Pointe Prop. Owners’ Ass’n, Inc. v. Commercial Const. Indus., Inc., 978 So. 2d 873 (Fla. 4th DCA 2008). ”Furthermore, the language being interpreted must be read in conjunction with the other provisions in the contract.”  Waverly 1 & 2, LLC v. Waverly at Las Olas Condo. Ass’n, Inc., 242 So. 3d 425 (Fla. 4th DCA 2018). ”In construing the language of a contract, courts are to be mindful that ‘the goal is to arrive at a reasonable interpretation of the text of the entire agreement to accomplish its stated meaning and purpose.’”  Silver Shells Corp. v. St. Maarten at Silver Shells Condo. Ass’n, 169 So. 3d 197 (Fla. 1st DCA 2015).  ”To that end, a cardinal principle of contract interpretation is that the conduct must be interpreted in a manner that does not render any provision of the contract meaningless.” Silver Shells Corp. v. St. Maarten at Silver Shells Condo. Ass’n, 169 So. 3d 197 (Fla. 1st DCA 2015).

Florida courts that interpret a “solicitation” term in a non-compete agreements typically find found that the offending “solicitation” must be active, rather than passive. In Scarbrough v. Liberty Nat’l Life Ins. Co., the Florida’s First District Court of Appeal held “that the term ‘solicit’ in an agreement prohibited the employee from being ‘proactive’ in such efforts”. 872 So. 2d 283 (Fla. 1st DCA 2004). In this sense, an employee’s mere suggestion or statement to coworkers that they are starting their own business likely will not, on its own, qualify as a “solicitation” under Florida law.

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A prevalent issue in non-compete litigation is whether a company’s non-compete agreement is enforceable to protect a company’s customer, patient, or client goodwill. In certain sitations, a company’s goodwill qualifies as a legitimate business interest under Section 542.335, Florida’s non-compete statute. “Florida statutory law (as a matter of public policy) does not allow a party to enforce a restrictive covenant unless it proves that enforcement is necessary to protect its legitimate business interests.” Evans v. Generic Sol. Eng’g, LLC, 178 So. 3d 114 (Fla. 5th DCA 2015). Section 542.335 includes a non-exhaustive list of examples of legitimate business interests, one of which is a party’s “customer, patient, or client goodwill” associated with “a specific geographic location” or “a specific marketing or trade area.” Ansaarie v. First Coast Cardiovascular Inst., P.A., 252 So. 3d 287 (Fla. 1st DCA 2018). 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.

Goodwill typically qualifies as a “legitimate business interest” if it “represent[s] an investment by the employer” and “enable[s] unfair competition if misappropriated.” IDMWORKS, LLC v. Pophaly, 192 F. Supp. 3d 1335 (S.D. Fla. 2016). “Courts are statutorily required to construe a restrictive covenant in favor of providing reasonable protection to all legitimate business interests established by the person seeking enforcement.” SC Maint., Inc. v. Martin, 2021 WL 4948183 (M.D. Fla. Aug. 22, 2021). In business litigation, some Florida courts have viewed a company’s purported goodwill as an asset that generates a reasonable expectation of greater-than-usual business or revenue. Held v. Held, 912 So. 2d 637 (Fla. 4th DCA 2005). In Swann v. Mitchell, Florida’s Supreme Court defined goodwill as “the advantage or benefit the business has beyond the mere value of its property and capital.” Swann v. Mitchell, 435 So. 2d 797 (Fla. 1983). “Black’s Law Dictionary defines goodwill as ‘the ability of a business to generate in excess of a normal rate on assets due to superior managerial skills, a market position, [or] new product technology.’” Nelson v. Nelson, 795 So. 2d 977 (Fla. 5th DCA 2001).

When determining whether goodwill exists in business litigation, Florida courts often must also analyze the scope and nature of the business’ customer relationships. To this end, Florida courts typically focus on the geographic regions where the customers are located. For example, in Surgery Center Holdings, Inc. v. Guirguis, Florida’s Second District Court of Appeal held that the business “established patient goodwill within a specific geographic location and substantial relationships with existing patients, proving legitimate business interests that are reasonably related to the restrictive covenants.” 318 So. 3d 1274 (Fla. 2d DCA 2021). Guirguis relied upon documentation, testimony, and other testimony demonstrating that the business “invest[ed] in physicians, geographies, and markets to best serve their patient population.” Surgery Ctr. Holdings, Inc. v. Guirguis, 318 So. 3d 1274 (Fla. 2d DCA 2021).

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Businesses can use non-compete agreements to protect their substantial business relationships with prospective and current customers, patients, or clients. A common issue in business litigation seeking to enforce non-compete agreements is whether the business sufficiently demonstrates that it has substantial business relationships to protect. Such business relationships are typically based on the contractual agreements between the business and customer. However, a business can establish a “prospective” substantial relationship when the customers are specific and identifiable. 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.

To “enforce restrictive covenants under Florida law, a plaintiff must plead and prove the existence of one or more legitimate business interests justifying a restrictive covenant; generally, a legitimate business interest takes the form of confidential information, substantial customer relationships, or extraordinary training and education, and a restrictive covenant may be no broader than is necessary to protect the legitimate business interest at issue.” Lucky Cousins Trucking, Inc. v. QC Energy Resources Texas, LLC, 223 F. Supp. 3d 1221 (M.D. Fla. 2016). Under Florida law, “to have protectable interest in specific prospective or existing customer relationships, employer seeking to enforce restrictive covenant in employment agreement need not prove that its former employee himself had a substantial relationship with any particular customer; proper inquiry focuses on relationship between employer and its prospective and existing customers.” Milner Voice and Data, Inc. v. Tassy, 377 F. Supp. 2d 1209 (S.D. Fla. 2005).

A business’ customer relationships are protected as legitimate business interests under Section 542.335, Florida Statutes, because such relationships are often the lifeblood of a business. Indeed, “[a]s with many sales positions, regardless of the industry, forming relationships with prospective and existing customers is invaluable and often vital for success.” Allied Universal Corp. v. Given, 223 So. 3d 1040 (Fla. 3d DCA 2017). This is one example of why “the harm presumed under the statute includes the potential damages to [the plaintiff’s] longstanding relationships with its customers and the protection of confidential client information.” Variable Annuity Life Ins. Co. v. Hausinger, 927 So. 2d 243 (Fla. 2d DCA 2006).

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A frequent issue in business litigation is whether restrictive covenants in an employment contract are enforceable. “Florida statutory law (as a matter of public policy) does not allow a party to enforce a restrictive covenant unless it proves that enforcement is necessary to protect its legitimate business interests.” Evans v. Generic Sol. Eng’g, LLC, 178 So. 3d 114 (Fla. 5th DCA 2015). Generally, a “legitimate business interest must represent an investment by the employer and must enable unfair competition if misappropriated.” IDMWORKS, LLC v. Pophaly, 192 F. Supp. 3d 1335 (S.D. Fla. 2016). Florida’s non-compete statute, Section 542.335, includes a non-exhaustive list of examples of legitimate business interests, one of which is a party’s “extraordinary or specialized training.” 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.

Under Florida law, “a ‘legitimate business interest’ is an identifiable business asset that constitutes or represents an investment by the proponent of the restriction such that, if that asset were misappropriated by a competitor (i.e., taken without compensation), its use in competition against its former owner would be “unfair competition.” White v. Mederi Caretenders Visiting Servs. Of Se. Fla, LLC, 226 So. 3d 774 (Fla. 2017). Indeed, the Supreme Court of Florida has held that a “legitimate business interest is a business asset that, if misappropriated, would give its new owner an unfair competitive advantage over its former owner.” White v. Mederi Caretenders Visiting Servs. Of Se. Fla, LLC, 226 So. 3d 774 (Fla. 2017). An employer can enforce a non-compete agreement if “there [are] special facts present over and above ordinary competition such that, absent a non-competition agreement, ‘the employee would gain an unfair advantage in future competition with the employer.’” Passalacqua v. Naviant, Inc., 844 So.2d 792 (Fla. 4th DCA 2003).

Training an employee constitutes a legitimate business interest protectable by Florida law when the training rises to the level of being specialized or extraordinary. Training is classified as extraordinary when it exceeds ‘what is usual, regular, common, or customary in the industry in which the employee is employed.’” Dyer v. Pioneer Concepts Inc., 667 So. 2d 961 (Fla. 2d DCA 1996). The special training must go above and beyond “what would be common or typical in the industry.” Autonation Inc. v. O’Brien, 347 F. Supp. 2d 1299 (S.D. Fla. 2004). A business’ optional training will “not constitute a legitimate business interest sufficient to justify injunctive relief.” Austin v. Mid State Fire Equip. of Cent. Florida, Inc., 727 So. 2d 1097 (Fla. 5th DCA 1999). As such, Florida courts have found no legitimate business interest where an employee “was not required to attend the various training seminars and only ‘popped in and out’ of the meetings.” Autonation Inc. v. O’Brien, 347 F. Supp. 2d 1299 (S.D. Fla. 2004).

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The “first to breach” or “prior breach” doctrine is a commonly raised defense by employees in actions brought by their former employers to enforce restrictive covenants. Under Florida law, an employer’s prior breach of its employment contract may prohibit the employer from enforcing restrictive covenants under the same agreement. Employees typically raise the “prior breach” defense based on allegations that the former employer failed to pay wages due under their employment contract. This alleged failure to pay could constitute a material breach of the entire employment agreement and render the non-compete unenforceable. In the non-compete and trade-secret context, employers seek injunctions to stop their former employees from unlawfully competing and/or exposing confidential, trade secret information. In these situations, employers are generally barred from enforcing covenants (such as non-compete agreements or confidentiality provisions) against the employee if the material breach was based on a “dependent” covenant in the contract and the non-compete covenants are not “independent” covenants. 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.

When the “prior breach” doctrine is raised as a defense, Florida courts are tasked with reviewing the subject non-compete agreements to determine whether the relevant contract provisions are dependent or independent covenants. Florida courts must construe the subject contract according to its plain language and “consider the provisions at issue in the context of the entire agreement in order to achieve ‘a reasonable construction to accomplish the intent and purpose of the parties.’” Hand v. Grow Constr., Inc., 983 So. 2d 684 (Fla. 1st DCA 2008). Whether the payment obligations under the employment agreements were dependent or independent covenants is an issue of law that turns on the proper interpretation of the contracts. Morgan v. Herff Jones, Inc., 883 So. 2d 309 (Fla. 2d DCA 2004). “Florida law limits [the] defense [of a prior breach] to ‘dependent covenants.” Reliance Wholesale, Inc. v. Godfrey, 51 So. 3d 561 (Fla. 3d DCA 2010).

The general rule in Florida is that a “material breach of [a contract] allows the non-breaching party to treat the breach as a discharge of his contractual liability.” In re Walter M. Thomas, Debtor, 51 B.R. 653 (M.D. Fla. 1985). Indeed, the Supreme Court of Florida explained that “the nonbreaching party is relieved of its duty to tender performance and has an immediate cause of action against the breaching party.” Hospital Mortg. Grp. v. First Prudential Dev. Corp., 411 So. 2d 181 (Fla. 1982). “Whether contractual provisions are considered dependent or independent is generally determined by the intent of the parties based on a reading of their entire contract.” Richland Towers, Inc. v. Denton, 139 So. 3d 318 (Fla. 2d DCA 2014). In Florida, covenants are generally considered dependent unless contrary language appears in the contract.

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