MIAMI NON-COMPETE AGREEMENT: AIDING AND ABETTING

Businesses can face challenges when trying to enforce a non-compete agreement against a former employee or other similar actor because that former employee may be receiving assistance from a third-party who did not sign the non-compete agreement. Enforcing the non-compete against the former employee who is unlawfully competing will not by itself stop the third-party from unlawfully competing. The business must therefore bring an action against the third-party too. But how does one file a lawsuit to enforce a contract against another who never signed that contract? This article explores that possibility. The Miami business litigation attorneys of the Mavrick Law Firm represent 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.

Several laws seemingly prevent a litigant from enforcing a non-compete against another who did not sign the agreement. The first is Florida’s restrictive covenant statute which prohibits a court from “enforcing a restrictive covenant unless it is set forth in a writing signed by the person against whom enforcement is sought.” Fla. Stat. § 542.335. Another is the contractual privity doctrine which requires direct contractual privity between the parties engaged in the lawsuit. 4 Corbin on Contracts § 772, at 2 (1951) (explaining the term “privity” is a word of art that derives from the common law of contracts and commonly used to describe the relationship of persons who are parties to a contract).

Florida created a special cause of action to enforce non-competes and other restrictive covenants against third-parties who did not sign the contract. The cause of action is called aiding and abetting. Bauer v. DILIB, Inc., 16 So. 3d 318 (Fla. 4th DCA  2009) (“Even though section 542.335(1)(a) precludes a plaintiff from enforcing a restrictive covenant against a third party, a plaintiff still may enjoin a third party who aids and abets the violation of a restrictive covenant.”). Courts have held “[t]here is no doubt that a court can enjoin others who were not parties to the non-compete agreement [as long as they] receive notice and have an opportunity to be heard.” USI Ins. Servs. of Fla. Inc. v. Pettineo, 987 So. 2d 763 (Fla. 4th DCA 2008). This legal proposition is supported by long-standing well-established law. W. Shore Rest. Corp. v. Turk, 101 So. 2d 123 (Fla. 1958) (“[T]he 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.”).

There are significant limitations to the aiding and abetting claim. The primary limitation is that the plaintiff can only obtain an injunction against the third-party. Dad’s Props., Inc. v. Lucas, 545 So. 2d 926 (Fla. 2d DCA 1989) (“Individuals and entities may be enjoined from aiding and abetting a covenantor in violating a covenant not to compete.”). It cannot obtain damages. Likewise, the plaintiff cannot recover attorney’s fees from the third-party. Bauer, 16 So. 3d 318 (“To the extent the plaintiff sought to recover its attorney’s fees under section 542.335(1)(k), no such statutory authority exists against a third party.”). Courts prevent the recovery of attorney’s fees despite the permissible wording in the restrictive covenant statute because “the power to enjoin third parties [does not] derive[ ] from section 542.335 or its predecessor, section 542.33, Florida Statutes. Instead, such power has evolved from the common law in cases.” Therefore, when Courts review the restrictive covenant statute as a whole rather than consider various subsections in isolation, the requirement that the restrictive covenant be signed by the party it is being enforced against militates against awarding attorney’s fees.

The Miami business litigation lawyers of the Mavrick Law Firm also represent clients in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.