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.
The “proof of a legitimate business interest is ‘the threshold for a presumption of irreparable harm on breach of [the] contract.’” Colucci v. Kar Kare Auto. Group, 918 So.2d 431, 438 (Fla. 4th DCA 2006) Section 542.335(1)(b) sets forth a non-exhaustive list of “legitimate business interests.” TransUnion Risk & Alternative Data Sols., Inc. v. Reilly, 181 So. 3d 548 (Fla. 4th DCA 2015). Once the party seeking to enforce the covenant establishes that it is entitled to the presumption of irreparable injury, “the statute shifts the burden to the respondent to establish the absence of injury.” DePuy Orthopaedics, Inc. v. Waxman, 95 So. 3d 928 (Fla. 1st DCA 2012).
Parties seeking to enforce a restrictive covenant through an injunction must also show that they do not have an adequate remedy law. From an employer’s perspective, for example, this may be shown when a “continued breach of a non-compete agreement threatens a former employer’s goodwill and relationships with its customers, and nothing short of an injunction would prevent this loss.” DePuy Orthopaedics, Inc. v. Waxman, 95 So. 3d 928 (Fla. 1st DCA 2012). Florida courts have also held that the ability to demonstrate actual monetary damages does not preclude a finding of irreparable harm to support injunctive relief. Variable Annuity Life Ins. Co. v. Hausinger, 927 So. 2d 243 (Fla. 2d DCA 2006).
In business litigation involving non-compete convenants, “[e]vidence that an enforceable covenant not to compete was breached will support a trial court’s finding of the likelihood of success on the merits.” Walsh v. Paw Trucking, Inc., 942 So. 2d 446 (Fla. 2d DCA 2006). However, the party against whom the injunction is sought may offer “pertinent legal and equitable defenses” to the claimed breach. Lotenfoe v. Pahk, 747 So. 2d 422 (Fla. 2d DCA 1999).
Additionally, under Section 542.335(1)(i), Courts must specifically articulate an overriding public policy reason if it refuses to enforce a non-compete covenant based on public policy grounds. TransUnion Risk & Alternative Data Sols., Inc. v. Reilly, 181 So. 3d 548 (Fla. 4th DCA 2015).
Peter Mavrick is a Fort Lauderdale non-compete lawyer, and represents clients in Miami, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.