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Franchisors will often include non-compete provisions in their Franchise Agreements to protect their ability to sell new franchises in a geographic region that was formerly served by a terminated franchisee. A party seeking to enforce a non-compete agreement must plead and prove the existence of one or more legitimate business interests justifying the non-compete covenant and that the restriction is reasonably necessary to protect those legitimate business interests. Fla. Stat. § 542335(1)(b) and (c). Legitimate business interests under section 542.335(1)(b) include, among other things, client goodwill associated with a specific geographic location or specific marketing or trade area.  Peter Mavrick is a Miami business litigation lawyer who has substantial experience with non-compete litigation, including injunction proceedings.

An example of this circumstance is the case of Peterbrooke Franchising of America, LLC v. Miami Chocolates, LLC, et al, 312 F.Supp.3d 1325 (S.D. Fla. 2018), where Peterbrooke Franchising of America, LLC (hereinafter “PFA”) was assigned a franchise agreement with Miami Chocolates, LLC (“Miami Chocolates”) and its owners (the “Franchise Agreement”). The Franchise Agreement contained a non-compete provision that prohibits a former franchisee from operating a competing business within twenty-five miles of its former location or at other franchise locations for two years. During the term of the Franchise Agreement, Miami Chocolates refused PFA’s requirement to change its point-of-sale system (used to record all sales). PFA terminated the Franchise Agreement. Miami Chocolates continued operating after the termination. The parties disputed whether Miami Chocolates took sufficient measures to disassociate itself from PFA and its trademarks. It was undisputed, however, that Miami Chocolates operated a competing business at the former franchise location after termination of the Franchise Agreement.

PFA filed a lawsuit against Miami Chocolates and its owners (the “former franchisees”). PFA moved for summary judgment, in part, based on its contention that the former franchisees breached the non-compete provision. Section 542.335(1)(c) states that “[i]f a person seeking enforcement of the restrictive covenant establishes prima facie that the restraint is reasonably necessary, the person opposing enforcement has the burden of establishing that the contractually specified restraint is overbroad, overlong, or otherwise not reasonably necessary to protect the established legitimate business interest or interests.”

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Tortious interference is the intentional and unjustified interference with a relationship or contract that results in damages. However, tortious interference does not occur every time a contract or business relationship is consequentially affected. Direct interference is a necessary element of the tort (a wrongful act or an infringement of a right). Peter Mavrick is a Miami business litigation lawyer who has substantial experience representing the interests of businesses and business owners in commercial litigation and non-compete litigation.

Competition for business is not per se (by itself) an actionable interference, even if intentional. An example of this circumstance occurred in the case of Wackenhut Corp. v. Maimone, 389 So. 2d 656 (Fla. 4th DCA 1980), where plaintiff left his employment in the defendant’s security business and formed his own security company. Plaintiff solicited defendant’s supermarket client in violation of his non-compete and non-solicitation agreement with Defendant. Plaintiff’s contract with the supermarket was terminable by either party upon 30 days’ notice. Defendant, however, did not sue plaintiff, but instead it persuaded the supermarket client to come back under contract with it. Plaintiff sued defendant for tortious interference. Wackenhut Corp. v. Maimone held that defendant’s solicitation for the supermarket’s business did not constitute tortious interference with plaintiff’s contractual or business relationships. The evidence only showed that defendant persuaded the supermarket to lawfully terminate its “at-will” contract with plaintiff and re-establish its business relationship with defendant. The appellate court found that irrespective of defendant’s motives, there was no showing that defendant interfered with the supermarket’s payment to plaintiff during any 30-day period of plaintiff’s contract.  As Florida’s Fifth District Court of Appeal explained in the case Heavener, Ogier Services, Inc. v. R. W. Florida Region, Inc., 418 So. 2d 1074 (Fla. 5th DCA 1982), “[e]ven if the contract is terminable at will, the interferer’s actions are tortious… if the motive is purely malicious and not coupled with any legitimate competitive economic interest.”  In other words, a claim for tortious interference can stand only when there is malicious conduct devoid of any legitimate economic interest.

A tortious interference claim can also fail whern there is a lack of proof of direct interference with the agreement or relationship. “The law in Florida is clear that there is no such thing as a cause of action for interference with a contractual or advantageous business relationship which is only consequentially effected.” Florida Power & Light Co. v. Fleitas, 488 So. 2d 148 (Fla. 3d DCA 1986). Fleitas held that Florida law does not recognize a cause of action for negligent interference with a contractual or business relationship. In Fleitas, the plaintiff alleged that he was dismissed from his job with IRM because Florida Power & Light Co. (FP&L) negligently investigated an illegal drug complaint against him and barred him from FP&L’s Turkey Point Power Plant.  Plaintiff’s complaint was that he was fired by his employer as a result of FP&L’s negligent conduct. The trial court entered judgment in favor of plaintiff. FP&L immediately appealed. The appellate court reversed the ruling because plaintiff’s claim was only that FP&L negligently investigated the drug accusation and caused, albeit unintentionally, plaintiff to lose his job. Florida Power & Light Co. v. Fleitas held that this was not a cognizable cause of action in Florida or anywhere else in the country.

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To qualify as sexual harassment under Florida and Federal antidiscrimination laws, sexual conduct between employees must be so severe and pervasive that it alters the “terms and conditions” of employment.  While it may be prudent for an employer to discourage sexual relationships between supervisors and employees, the mere fact that an employee has been the subject of sexual conduct involving her supervisor does not necessarily mean that the employer will be found to have violated Title VII of the Civil Rights Act of 1964 (“Title VII”) or the Florida Civil Rights Act of 1992 (“FCRA”).  Peter Mavrick is Fort Lauderdale employment lawyer who has extensive experience in defending businesses and business owners accused of a sexual harassment.

The law barring sexual harassment in the workplace was derived from cases interpreting Title VII, which prohibits discrimination on the basis of sex.  In Meritor Sav. Bank, FSB v. Vinson, 477 U.S. 57 (1986), the United States Supreme Court decided that “unwelcome sexual advances that create an offensive or hostile working environment violate Title VII.”

“In order to prevail on a claim of sexual harassment when no adverse ‘tangible employment action’ is taken, a plaintiff must present sufficient evidence to show that the harassment she suffered, objectively and subjectively, was severe or pervasive.”  Frederick v. Sprint/United Management Co., 246 F. 3d 1305 (11th Cir. 2001).  In Frederick, the plaintiff failed to present sufficient evidence to establish any causal link between the adverse “tangible employment action”, i.e., that she was denied a promotion, and the alleged harassment.

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The Florida Uniform Trade Secrets Act (“FUTSA”) requires courts to take reasonable steps to preserve the secrecy of trade secrets. Fla. Stat. § 688.006. Injunctive relief may be ordered to preserve trade secrets based on actual or threatened misappropriation, as well as, compelling parties to perform specific acts. Fla. Stat. § 688.003.  FUTSA, however, may not be used as a vehicle to restrict competition. In Hatfield v. AutoNation, Inc., 939 So.2d 155 (Fla. 4th DCA 2006), the Florida’s Fourth District Court of Appeal held that FUTSA deals with misappropriation, but not with alleged violations of non-competion agreements. Peter Mavrick is a Fort Lauderdale non-compete lawyer and trade secret lawyer who has extensive experience in trade secret litigation.

An example of this circumstance is the case of Norton v. American LED Technology, Inc., 245 So.3d 968 (Fla. 1st DCA 2018), where American LED Technology, Inc. (“American”) filed a lawsuit against Steve Norton (“Norton”), its former employee.  American filed a motion for a temporary injunction based on an alleged violations of FUTSA and of a non-compete agreement. After a hearing on the motion for temporary injunction, the trial court entered an order granting American’s motion based only on the alleged FUTSA violation. The trial court’s order stated that its findings were “separate and independent from any breach of contract claim” and did not make any other reference to the non-compete agreement. The temporary injunction required, among other things, that Norton could not compete with American. Norton immediately appealed.

American contended that Hatfield v. AutoNation, Inc. demonstrated that courts have discretion to restrain competition when granting injunctive relief under FUTSA. In Hatfield, the appellate court affirmed an order granting a temporary injunction that “included a brief respite from employment as part of the court’s fashioning a remedy that would aid [the plaintiff] in minimizing the potential damage by disclosure of time sensitive trade secrets.”

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Under Florida and federal law, whether a legal dispute is subject to the requirement that the parties submit to arbitration (what courts refer to as the “arbitrability” of the dispute) depends on what the wording of the arbitration agreement itself states. The parties’ intent as to what issues are to be arbitrated is typically evident from the plain language of the arbitration provision and contract. Courts generally favor arbitration provisions and will try to resolve an ambiguity in the wording of an arbitration provision in favor of arbitration.  Jackson v. Shakespeare Found., Inc., 108 So. 3d 587 (Fla. 2013).  Courts therefore usually apply the broadest possible interpretation of an arbitration provision and contract to determine whether a dispute is subject to arbitration.  Peter Mavrick is a business litigation attorney, practicing in Fort Lauderdale and Miami, who has extensive experience with arbitration proceedings and representing the interests of businesses and business owners.

Contracts containing arbitration clauses often limit the scope of “arbitrable issues” (i.e., the types of disputes encompassed in the arbitration provision) to those that are “related to” or “arise from” the contract. There are cases where courts analyzed the causes of action alleged in the complaint to determine whether the controversy at issue was arbitrable under the contract. For example, in Xerox Corp. v. Smartech Document Mgmt. Inc., 979 So.2d 957 (Fla. 3d DCA 2007), Miami’s Third District Court of Appeal held that the causes of action of defamation, intentional infliction of emotional distress, injunctive relief, respondeat superior (vicarious liability for agent’s actions), and intentional interference with an advantageous business relationship—constituted a “Covered Dispute” under the contract.  The appellate court reasoned that each cause of action arose out of or was related to the parties’ relationship under the parties’ contract.  In the case of BKD Twenty-One Mgmt. Co., Inc. v. Delsordo, 127 So.3d 527 (Fla. 4th DCA 2012), Florida’s Fourth District Court of Appeal determined that the arbitration provision in the subject lease agreement applied to the tenant’s action for negligence against the retirement facility.  The appellate court in Delsordo based is decision on the court’s interpretation of the word “Establishment” used in the parties’ contract.  The appellate court held that the negligence claims based on a trip and fall on the defendants’ premises arose out of or related to the defendants’ “Establishment.”

This type of analysis is unnecessary when an arbitration provision is so broad as to encompass all potential claims.  For example, in the federal appellate decision Doe v. Princess Cruise Lines, Ltd., 657 F.3d 1204 (11th Cir. 2011), the United States Court of Appeals for the Eleventh Circuit considered a broadly worded contract stating that the parties’ dispute had to relate to, arise from, or be connected with employee’s crew agreement or the employment services that she performed for the cruise line.  A broadly worded arbitration covenant will sweep most controversies between the parties into private arbitration.

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An undefined term in a non-compete agreement creates an ambiguity in the contract, and therefore uncertainty in a court’s interpretation of the term. When a term is left undefined, Florida law requires courts to give the term its ordinary meaning.  Although the terms “compete” and “line of business” may seem self-explanatory, the context in which they are to apply may require further definition.  Peter Mavrick is a Miami non-compete attorney and business litigation attorney who has substantial experience with non-compete litigation, including injunction proceedings.

In the case of Circuitronix, LLC v. Kapoor, 748 Fed.Appx. 242 (11th Cir. 2018), Sunny Kapoor (“Kapoor”) was the Assistant CEO of Circuitronix, LLC (“Circuitronix”) from October 2012 until his termination in March 2015. Kapoor’s employment was subject to a series of employment agreements. After his termination, Circuitronix filed a lawsuit against Kapoor and alleged that he violated the terms of the parties’ non-compete agreement. Kapoor counterclaimed against employer and Rishi Kukreja (“Kukreja”), its chief executive officer, and alleged breach of employment contract, unlawful retaliation, civil theft and unpaid wages.

The parties resolved their claims in mediation and on December 1, 2015 signed a mediated settlement agreement (“Settlement Agreement”). The Settlement Agreement incorporated the Mediated Settlement Term Sheet by reference and prohibited Kapoor from competing “with Circuitronix, anywhere in the world, for a period of 3 years starting from September 15, 2015.” The non-compete agreement explicitly applied “to all lines of business in which Circuitronix engaged” during the time of Kapoor’s employment. The Settlement Agreement was formally approved by the district court two days later.

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Certain types of employee complaints to an employer qualify as “protected activity.”  An employer that responds to a protected complaint by terminating, demoting, or otherwise taking an adverse employment action against the employee risks being sued for retaliation under Title VII of the Civil Rights Act of 1964 or the Florida Civil Rights Act of 1992.  For a complaint to qualify as protected activity, the employee must have a good faith and objectively reasonable belief that the complained of conduct was in fact unlawful discrimination.  Peter Mavrick is Fort Lauderdale employment lawyer who has extensive experience in defending businesses and business owners against claims of discrimination.

To establish a prima facie case of retaliation under Title VII of the Civil Rights Act of 1964, an allegedly aggrieved employee must demonstrate: (1) that he or she engaged in statutorily protected activity; (2) that he or she suffered adverse employment action; and (3) that the adverse employment action was causally related to the protected activity. Coutu v. Martin County Bd. of County Comm’rs, 47 F.3d 1068 (11th Cir.1995)

The conduct complained of need not actually constitute unlawful discrimination to qualify as “protected activity.”  An employee’s erroneous complaint concerning lawful conduct can still constitute protected activity when that employee has “a good faith, reasonable belief that the employer was engaged in unlawful employment practices.” Little v. United Technologies, Carrier Transicold Division, 103 F.3d 956 (11th Cir.1997).  However, it is insufficient for a plaintiff “to allege his belief in this regard was honest and bona fide; the allegations and record must also indicate that the belief, though perhaps mistaken, was objectively reasonable.” Id. The reasonableness of a plaintiff’s belief that his or her employer “engaged in an unlawful employment practice must be measured against existing substantive law.” Howard v. Walgreen Co., 605 F.3d 1239 (11th Cir.2010).

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For a business to be to protect its confidential information as a protectable trade secrets under the Florida Uniform Trade Secret Act, the business must preserve the secrecy of its confidential information.  There are no hard and fast rules that must be followed for a business to protect its confidential information as a trade secret.  “No single ‘step’ taken to maintain the secrecy of the information secrecy will be determinative; but if the claimant can establish a consistent approach to keeping the information ‘secret’ it will go along way to satisfying this element of the statutory definition.” Gary S. Gaffney and Maria E. Ellison, A Primer on Florida Trade Secret Law: Unlocking the “Secrets” to “Trade Secret” Litigation, 11 U. Miami Bus. L. Rev. 1 (2003). Peter Mavrick is a Fort Lauderdale trade secret attorney, non-compete attorney, and business litigation attorney who represents businesses in trade secret litigation, non-compete agreement litigation, and other business litigation.

A recurring issue in non-compete covenant litigation is whether a trade secret exists and justifies the restrictive covenant.  Under Florida Statutes § 542.335(b)2), a non-compete can be based on a legitimate business interest of a trade secret.  If a trade secret is a proven legitimate business interest under Florida’s non-compete statute, the consequences are severe for the opposing party due to the expanded time-frame the statute allows to enforce a non-compete.  Section 542.335(e), Florida Statutes, provides that “In 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 5 years or less and shall presume unreasonable in time any restraint of more than 10 years.  All such presumptions shall be rebuttable presumptions.”  Because Florida law accords protection to genuine trade secrets and because of the potentially lengthy period of a non-compete based on trade secrets, parties in litigation will often scrutinize whether the alleged trade secrets were closely guarded to ensure and maintain their status as protectible trade secrets.

Trade secrets are defined under § 688.002(4), Florida Statutes, as:

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It is a fundamental premise that ownership of a corporation is evidenced by stock certificates.  However, this is not always the case with small, closely held corporations that do not sell stock on a market.  Sometimes those corporations do not issue certificates.  To accommodate that realty, Florida law allows for the equitable or beneficial ownership of stocks.  Indeed, Florida statute section 607.0626 allows issuance of shares of stock without certificates, provided that the articles of incorporation and bylaws do not provide otherwise.  The law regarding equitable and beneficial ownership of stocks, however, is grounded in case law.  Peter Mavrick is a Fort Lauderdale business litigation attorney who has extensive experience in representing the interests of businesses and business owners.

This concept of stock ownership is an important factor when someone believes that he or she has an ownership interest in a corporation but was not issued shares, and he or she wants to sue the corporation.   By showing that the person is an equitable owner of stock, that person may acquire standing to sue the corporation in a derivative action or an action to dissolve the corporation.  As Florida’s Third District Court of Appeal explained in Kaplus v. First Continental Corporation, 711 So. 2d 108 (Fla. 3d DCA 1998), “Florida courts have, to date, apparently aligned themselves with these jurisdictions which recognize that strict record ownership is not necessary and that holders of equitable or beneficial interest in shares have standing to sue.”

The determination of whether someone owns stock that was not transferred by certificate is an issue of fact and can become quite complicated.  An example is Acoustic Innovations, Inc. v. Schafer, 976 So. 2d 1139 (Fla. 4th DCA 2008).  The company Acoustic Innovations was owned by Mr. Miller.  One of his employees was Mr. Schafer.  While Mr. Schafer was an employee of Acoustic Innovations, Mr. Miller sent him a letter promising to give him thirty percent interest in the corporation upon sale or merger of the company.  Mr. Schafer signed the letter.  Mr. Miller later terminated Mr. Schafer’s employment and paid him a severance that Mr. Schafer deemed insufficient, due to the letter agreement.

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Protection of trade secrets and proprietary information from a business’ competitors can be a critical part of owning a company. An injunction may become necessary to stop a competing company from possessing or using those trade secrets for their own benefit. The injunction, however, must be specific enough for the enjoined party to understand what they are no longer allowed to do. Peter Mavrick is a Fort Lauderdale trade secret attorney who represents businesses in trade secret litigation and other business litigation.

In American Red Cross v. Palm Beach Blood Bank, Inc., 143 F. 3d 1407 (11th Cir. 1998), Palm Beach Blood Bank, Inc. (“Palm Beach”) opened a branch in Miami. Palm Beach hired a person for the Miami Branch, who previously worked for the American Red Cross (“Red Cross”). Palm Beach and Red Cross competed for sponsors and donors. The former employee took a donor list from Red Cross and provided it to Palm Beach.  Palm Beach then contacted the persons on Red Cross’ list to recruit its blood donors.

Red Cross filed a lawsuit against Palm Beach and alleged that its donor lists were trade secrets that Palm Beach illegally misappropriated.  The district court granted Red Cross’ motion for a temporary restraining order (“TRO”) against Palm Beach. The TRO prohibited Palm Beach from, among other things, “soliciting donations from any Red Cross donor” or “in any way adversely affecting Red Cross’s reputation or goodwill.” The district court held evidentiary hearings on Red Cross’s motion to convert the TRO into a preliminary injunction. Palm Beach moved to modify the TRO to allow Palm Beach to accept donations from persons whom it had not solicited from any Red Cross list. The district court denied the motion to modify the TRO, without explanation. The district court entered a broad preliminary injunction against Palm Beach.

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