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Parties to a contract with an arbitration agreement will often litigate the issue of whether the arbitration provision covers the parties’ dispute.  Because arbitration is a different method of dispute resolution than court litigation, the distinguishing traits of arbitration can tactically benefit one party more than the other.  Parties will often have the incentive to challenge whether arbitration is proper.  Whether a dispute should be arbitrated is generally governed by the particular wording of the arbitration agreement.  Accordingly, the scope of the arbitration agreement can have a significant impact on the ultimate resolution of the case.  Peter Mavrick is a Miami business litigation lawyer, and also represents clients in business litigation in Fort Lauderdale, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

Parties involved in business litigation often challenge whether the dispute is properly arbitrable.  While federal and state law governs the interpretation and enforcement of arbitration agreements, arbitration is fundamentally a creature of contract.  Which disputes are arbitrable is ultimately controlled by the provisions found in the parties’ contract.  “The intent of the parties to a contract, as manifested in the plain language of the arbitration provision and contract itself, determines whether a dispute is subject to arbitration.  Courts generally favor such provisions, and will try to resolve an ambiguity in an arbitration provision in favor of arbitration.”  Jackson v. Shakespeare Found., Inc., 108 So. 3d 587 (Fla. 2013).  A previous article explored how courts will evaluate contract provisions that agree to arbitrate disputes “arising out of” or “related to” the agreement.  Another article described how third-party beneficiaries to a contract may seek to compel arbitration of a dispute.

“Disputes arise in many and varied contexts and the mere coincidence that the parties in dispute have a contractual relationship will ordinarily not be enough to mandate arbitration of the dispute.” Seifert v. U.S. Home Corp., 750 So. 2d 633 (Fla. 1999).  “An agreement to arbitrate, arising out of a contractual obligation, is essentially a question of law regarding the construction of that contract.”  Steritech Group, Inc. v. MacKenzie, 970 So. 2d 895 (Fla. 5th DCA 2007).  “[T]he determination of whether an arbitration clause requires arbitration of a particular dispute necessarily ‘rests on the intent of the parties.’” Seifert v. U.S. Home Corp., 750 So. 2d 633 (Fla. 1999). “The general rule is that where an arbitration agreement exists between the parties, arbitration is required only of those controversies or disputes which the parties have agreed to submit to arbitration.” Miller v. Roberts, 682 So.2d 691 (Fla. 5th DCA 1996).   “Only those claims which the parties have agreed are arbitrable may be subject to arbitration.”  Regency Group, Inc. v. McDaniels, 647 So. 2d 192 (Fla. 1st DCA 1994).

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Consumers who receive an inferior product or service than what was advertised are certainly harmed by false advertising, but they may not have the incentive to sue or take action against the company issuing false advertisements.  False advertising can have a far greater impact on competitors.  A business that engages in false advertising can damage its competitors by using false advertising to portray itself as a better value.  An aggrieved business can initiate business litigation against its competitor for false advertising under the Lanham Act, common law unfair competition, and the Florida Deceptive and Unfair Trade Practices Act (FDUTPA).  Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also represents clients in business litigation in Miami, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

Advertising can be an effective method for companies to show potential consumers the qualities of their products.  Businesses have the incentive to present their products in the best possible light and may exaggerate the traits of their product. In business litigation over the legal effect of “opinion statements,” such as the qualifier that something is the “best value,” “finest,” and “high quality,” Florida courts generally consider such terminology as being lawful puffery.  A previous Mavrick Law Firm article discussed lawful puffery in greater detail.  By contrast, statements about specific qualities of a product which are demonstrably false can be unlawful.

Each of these laws requires that the plaintiff show a deceptive act by a competitor.  Specifically, to prevail on a Lanham Act claim for false advertising, an aggrieved business must show that “(1) the ads of the opposing party were false or misleading, (2) the ads deceived, or had the capacity to deceive, consumers, (3) the deception had a material effect on purchasing decisions, (4) the misrepresented product or service affects interstate commerce, and (5) the movant has been—or is likely to be—injured as a result of the false advertising.”  Johnson & Johnson Vision Care, Inc. v. 1-800 Contacts, Inc., 299 F.3d 1242 (11th Cir. 2002).  “Unfair competition under Florida common law requires ‘deceptive or fraudulent conduct of a competitor and likelihood of consumer confusion.’”  Webster v. Dean Guitars, 955 F.3d 1270 (11th Cir. 2020).  To prevail in business litigation under FDUTPA, a plaintiff must also show that a “deceptive act or unfair practice” caused damages.  City First Mortg. Corp. v. Barton, 988 So. 2d 82 (Fla. 4th DCA 2008).

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It is a common mistake in trade secret litigation for the company seeking protection for its trade secrets to fail to explain what trade secrets it wishes to protect.  Courts require that plaintiffs describe their trade secret with a certain degree of particularity.  Failing to do that can be fatal to trade secret claims. Peter Mavrick is a Miami business litigation lawyer, and also represents clients in business litigation in Fort Lauderdale, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

In business litigation alleging trade secret misappropriation, plaintiffs often focus on how a trade secret was misappropriated rather than what was misappropriated.  A trade secret  case is not like a regular civil theft or other misappropriation case.  How a party lost its trade secret is less important than what was taken.  Unlike other theft-related torts, “misappropriation” under the Florida Uniform Trade Secret Act also includes circumstances when a party simply possesses the trade secret material.  § 688.002(2) (defining trade secrets misappropriation to include possession of the material in certain circumstances).  A plaintiff does not merely have to prove that confidential information was stolen, it must also prove that what was stolen qualifies as a trade secret under Florida or federal law.  Particularly, trade secret is defined under Florida law as “information, including a formula, pattern, compilation, program, device, method, technique, or process that [d]erives 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 [i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”  § 688.002 (4), Florida Statutes.

Plaintiffs in business litigation asserting theft of a trade secret must be able to show that what was taken is valuable because it is secret.  The plaintiff must also show acted reasonably in trying to keep its information secret.  A litigant that fails to adequately explain what its trade secret is will inherently fail to prove that what was misappropriated qualifies as a trade secret.  “In order to ascertain whether trade secrets exist, the information at issue must be disclosed.”  Lovell Farms, Inc. v. Levy, 641 So. 2d 103 (Fla. 3d DCA 1994); Revello Med. Mgmt., Inc. v. Med-Data Infotech USA, Inc., 50 So. 3d 678 (Fla. 2d DCA 2010) (“The plaintiff must, as a threshold matter, establish that the trade secret exists. To do so, it must disclose the information at issue”).  “[I]t is insufficient to describe the trade secrets by generic category, such as the components of the night vision devices to which the alleged trade secrets relate. Rather, [plaintiff] must identify the specific characteristics of each trade secret, such as a particular drawing, process, procedure or cost/pricing data. It must also describe with reasonable particularity all of its trade secrets, including those involving “business methods, know-how, machines, manufacturing process and procedure, marketing information, pricing data, product designs and manufacturing information […].”  Knights Armament Co. v. Optical Sys. Tech., Inc., 254 F.R.D. 463, (M.D. Fla. 2008).

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The Families First Coronavirus Response Act (Coronavirus Response Act) was enacted to allow employees to take paid leave in certain qualifying conditions in relation to the COVID-19 pandemic.  Generally, an employee may take 2 weeks of medical leave and be paid 100% of his or her salary when he or she is unable to work for the following purposes: to diagnose a COVID-19 infection, a government mandated quarantine of the individual because of COVID-19, sickness due to a COVID-19 infection as diagnosed by a medical provider, or care for a person who is infected with COVID-19.  Additionally, FFCRA permits an employee to take up to 12 weeks of leave at 2/3 his or her wages to take care of a child when day-cares or other facilities are closed because of COVID-19.  The employer’s burden is offset because the employer may take a dollar-for-dollar tax credit for all payments made pursuant to this section.  A recent federal case in New York struck two common sense requirements in the FFCRA to the detriment of employers.  Employers may be burdened by the change in law until the law is ultimately reversed on appeal or the Department of Labor enacts corrective rules.  Peter Mavrick is a Fort Lauderdale employment attorney, who defends businesses and their owners against employment law claims.  Peter Mavrick is a Fort Lauderdale employment attorney, who defends businesses and their owners against employment law claims. Such claims in include alleged employment discrimination and retaliation as well as claims for overtime wages and other related claims.

A previous article described the recent changes in law arising from COVID-19 related legislation.  The FFCRA modified the Family and Medical Leave Act (FMLA) to require all employers of less than 500 employees to provide paid leave when an employee cannot work because of certain qualifying COVID-19 situations.  Generally, Coronavirus Response Act leave falls into two categories.  The first is two weeks of leave related to the actual treatment of COVID-19.  The second is up to 12 weeks of leave which an employee may take because the employee’s children need care and the daycare or school which the child would normally go to is closed because of COVID-19.

This article is concerned with two rules which were stricken by the recent case, New York v. United States Dep’t of Labor, 20-CV-3020 (JPO), 2020 WL 4462260 (S.D.N.Y. Aug. 3, 2020).  Before New York’s holding, it was generally believed that an employee who was furloughed because there was no work for him or her would not qualify for any leave.  Logically, one cannot take leave from something that one is not employed to do.  Additionally, the Department of Labor rules specifically required that the employee have work, but become unable to do the work, for three out of six qualifying conditions.  29 C.F.R. § 826.20(a)(2) (subject to a quarantine order), (6) (to take care of a person with COVID-16), (9) (to take care of a child when no childcare is available because of COVID-19).

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When a company purchases the assets of another company, the circumstances in which the sale takes place could impact the enforceability of the seller’s non-compete agreements with its employees. For example, a 100 percent stock purchase of an active corporation will generally entitle the buyer to enforce the seller’s non-compete agreements. However, if the buyer is merely purchasing corporate assets from a dissolved corporation, the buyer may not be entitled to enforce the dissolved corporation’s non-compete agreements. Even if an employee bound by a non-compete agreement worked for the seller throughout the dissolution of the company and then continued to work for the buyer thereafter, this fact alone does not constitute consent by the employee to be bound by the non-compete agreement with the purchasing company. Peter Mavrick is a Miami non-compete lawyer, and also represents clients in non-compete litigation in Fort Lauderdale, Boca Raton, and Palm Beach. Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

In the case of Sears Termite & Pest Control, Inc. v. Arnold, 745 So. 2d 485 (Fla. 1st DCA 1999), All America Termite & Pest Control, Inc. (All America) entered non-compete agreements with its employees David Arnold (Arnold) and Gary Atchey (Atchey). A few years later, Sears Roebuck and Co. purchased 100 percent of the stock of All America and changed the company’s name to Sears Termite and Pest Control, Inc. (Sears).  Arnold and Atchey continued their employment with All America and Sears during this period of transition. Arnold left his employment with Sears and began a competing company, called Diamond Termite & Pest Control (Diamond). Atchey also left his employment with Sears and went to work for Diamond.

Sears filed a lawsuit for damages against Arnold, Diamond, and Atchey (Defendants) and filed a motion for temporary injunction. After an evidentiary hearing, the court denied the motion for temporary injunction. Sears immediately appealed.  Defendants contended that the non-compete agreements were unenforceable, because All America did not assign the contracts to Sears. Under Section 542.335(1)(f) of the Florida Statutes, non-compete agreements are enforceable by a successor company, provided that the non-compete agreement expressly authorizes enforcement by the successor company.

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Often, a member of a limited liability company can sue another member for a breach of an operating agreement in a corporate “derivative action” rather than in a “direct action” against the other member.  This is because the victim is often the limited liability company, not the individual member.  Aggrieved members of limited liability companies sometimes try to sue directly because the remedies allow them to recover from the wrongdoing instead of the corporation.  Thus, whether a lawsuit is properly a “direct action” or “derivative action” can be a critical strategic issue.  Peter Mavrick is a Miami business litigation lawyer, and also represents clients in business litigation in Fort Lauderdale, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

Whether the business litigation is a “direct action” or “derivative action” can have significant repercussions as to the recovery.  A member of an LLC who successfully sues the company directly can generally recover all their damages.  By contrast, a member suing derivatively generally can benefit only from the proportionate increase in value that the derivative lawsuit brings.  This is because the company is the real plaintiff in a derivative lawsuit, even though it may be controlled by an individual member.  Miami’s Third District Court of Appeal explained in pertinent part: “[w]hether a particular action may be brought as a direct suit or must be maintained as a derivative suit can be a confusing inquiry. After all, a member or shareholder with a personal stake in a company or corporation necessarily sustains a loss when the company loses value, and determining which types of loss are directly compensable by direct suit requires fine lines to be drawn. These distinctions are even more difficult to draw for closely held corporations and LLCs, which typically have fewer individuals that possess an ownership interest, because claims of mismanagement or self-dealing become a zero-sum game in which one party profits from the company’s loss, while the other is harmed due to the company’s reduced value.”  Dinuro Investments, LLC v. Camacho, 141 So. 3d 731 (Fla. 3d DCA 2014).

A previous article discussed how the law governing whether the lawsuit properly qualifies as a “derivative action” or a “direct action” is usually based on the law of the state of incorporation. In the State of Florida, whether a member of a limited liability company can sue directly is determined under the Florida Revised Limited Liability Company Act.  A member can directly sue a LLC for “[a]n actual or threatened injury that is not solely the result of an injury suffered or threatened to be suffered by the limited liability company” § 605.0801(2)(a), Fla. Stat.  Additionally, a member can sue for “[a]n actual or threatened injury resulting from a violation of a separate statutory or contractual duty owed by the alleged wrongdoer to the member, even if the injury is in whole or in part the same as the injury suffered or threatened to be suffered by the limited liability company.”  § 605.0801(2)(b), Fla. Stat.

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A shareholder wishing to file a derivative suit must generally present that dispute to the board of directors with a demand prior to filing a shareholder’s derivative suit.  The way that this demand process works can vary between the states and can ultimately determine whether a shareholder is able to proceed with a lawsuit.  A recent decision from United States Court of Appeals for the Eleventh Circuit resolved this question by determining that law of the state of incorporation controls the demand requirements on a corporation even in disputes concerning federal law.  Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also represents clients in business litigation in Miami, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

When a disgruntled shareholder for a corporation believes that the corporation should have taken legal action against another entity (including directors, officers, or employees of the company as well as any third-party), that shareholder can initiate a demand that the corporation take action.  The board of directors of that corporation has the opportunity to exercise its business judgment as to whether to take the requested action or to ignore it.  If the corporation refuses to act, the shareholder can sometimes file a derivative lawsuit, which is a type of business litigation where the shareholder steps into the shoes of a corporation and sues on the corporation’s behalf.  The derivative lawsuit can be dismissed if the court finds that the board of directors properly exercised their business judgment.  “The purpose of requiring a precomplaint demand is to protect the directors’ prerogative to take over the litigation or to oppose it.” Kamen v. Kemper Fin. Services, Inc., 500 U.S. 90 (1991).  Under many states’ laws, a shareholder can bypass this demand requirement by showing that the demand would have been futile.  “To the extent that a jurisdiction recognizes the futility exception to demand, the jurisdiction places a limit upon the directors’ usual power to control the initiation of corporate litigation […]. By permitting the shareholder to circumvent the board’s business judgment on the desirability of corporate litigation, the ‘futility’ exception defines the circumstances in which the shareholder may exercise this particular incident of managerial authority.”  Kamen v. Kemper Fin. Services, Inc., 500 U.S. 90 (1991).  Demand futility can usually be found when the decisionmakers are themselves personally interested in the outcome of the subject dispute.

Alternatively, in certain circumstances a shareholder who holds a claim can directly file a lawsuit against the corporation for a right that he himself owns, as opposed to the corporation.  This avenue of business litigation bypasses the requirement to make a demand.  The law concerning whether a board of directors properly exercises its business judgment after receiving a demand as well as the law concerning whether a cause of action should be “direct” or “derivative” varies between the states.  Accordingly, the question as to whether a shareholder will have an opportunity to seek relief in court will depend on which law applies in questions as to the board’s business judgment and whether the shareholder has a direct cause of action.

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Businesses seeking to enforce their non-compete agreements often need to seek a temporary injunction to prevent irreparable harm. Non-compete law is unique because the moving party does not need to provide evidence quantifying the amount of possible damages in order to show irreparable harm.  Under Florida law, the  business instead needs to allege that immeasurable damages would result without a temporary injunction.  Peter Mavrick is a Palm Beach non-compete attorney, and also advocates for clients in Boca Raton, Fort Lauderdale, and Miami, Florida.  Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

An example of this occurred in the case of Data Payment Sys., Inc. v. Caso, 253 So. 3d 53 (Fla. 3d DCA 2018). Data Payment Systems, Inc. (Data Payment), a payment processing company, entered a written sub-office agreement with Ignite Payments, Inc. (“Ignite”), an independent contractor. The sub-office agreement contained a non-compete clause and a confidentiality clause. Juan Marcos Batista (Batista) executed this agreement on behalf of Ignite. Batista and Christopher Caso (Caso) created Onepay LLC (Onepay). Data Payment then entered a sub-office agreement with One-pay with nearly identical non-compete and confidentiality clauses.

During the course of Ignite and Onepay’s work for Data Payment, Caso and Batista were provided access to Data Payment’s confidential information and trade secrets. Caso and Batista allegedly created Ireland Pay LLC (Ireland Pay), a payment processing service in direct competition with Data Payment in violation of the non-compete clause. Data Payment terminated its agreements with Ignite and Onepay because Caso and Bastista allegedly misappropriated Data Payment’s trade secrets to solicit its customers. Caso also allegedly threatened a Data Payment employee with violence.

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A company that successfully has its mark registered with the USPTO does not have immunity from other trademark owners claiming infringement.  A trademark owner with a higher priority may nevertheless sue under the Lanham act if it can show that there is a “likelihood of confusion” between the two marks.  Peter Mavrick is a Miami business litigation lawyer, and also represents clients in business litigation in Fort Lauderdale and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

The Lanham Act permits trademark owners to sue other companies for violating their trademark rights.  15 U.S.C.A. § 1114(1) (“Any person who shall, without the consent of the registrant use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive […] shall be liable in a civil action [however] the registrant shall not be entitled to recover profits or damages unless the acts have been committed with knowledge that such imitation is intended to be used to cause confusion, or to cause mistake, or to deceive”).  To prevail on such a claim, “a plaintiff must demonstrate (1) that its mark has priority and (2) that the defendant’s mark is likely to cause consumer confusion.”  Frehling Enterprises, Inc. v. Int’l Select Group, Inc., 192 F.3d 1330 (11th Cir. 1999).

In business litigation concerning the issue of whether there is sufficient “likelihood of confusion” between two marks to support a claim of trademark infringement, federal courts analyze seven factors.  These factors include the“(1) type of mark, (2) similarity of mark, (3) similarity of the products the marks represent, (4) similarity of the parties’ retail outlets and customers, (5) similarity of advertising media used, (6) defendant’s intent and (7) actual confusion.”  Lone Star Steakhouse & Saloon, Inc. v. Longhorn Steaks, Inc., 122 F.3d 1379 (11th Cir. 1997).  “Of these factors, the type of mark and the evidence of actual confusion are the most important in this circuit.”  Dieter v. B & H Indus. of Sw. Florida, Inc., 880 F.2d 322 (11th Cir. 1989).  There is no “bright line” test setting forth the quantum of evidence of confusion to warrant a finding of trademark infringement.  Rather, the court “must take into consideration the circumstances surrounding each particular case.”  Lone Star Steakhouse & Saloon, Inc. v. Longhorn Steaks, Inc., 122 F.3d 1379 (11th Cir. 1997).

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The Families First Coronavirus Response Act (CARES Act) requires that employers permit their employees to have paid leave in certain circumstances related to the COVID-19 pandemic.  While the FFCRA is mandatory for qualifying businesses, the burden of this law is offset because employers receive a dollar-for-dollar tax credit for the wages paid pursuant to the act. Peter Mavrick is a Fort Lauderdale employment attorney, who defends businesses and their owners against employment law claims in South Florida. Such claims in include alleged employment discrimination and retaliation as well as claims for overtime wages and other related claims.

The CARES Act amended the Family Medical Leave Act (FMLA) to require employers to permit their employees to take paid leave in certain situations.  While the FMLA normally only applies to employers of at least 50 employees, the CARES Act applies to employers of “fewer than 500 employees.”  29 U.S.C. § 2620(a)(1)(B).  Employers of fewer than 50 employees may be exempt “when the imposition of such requirements would jeopardize the viability of the business as a going concern.”  29 U.S.C. § 2620 (a)(3)(B).  Such an employer may be exempt if the enforcement of the act would cause a business to no longer have positive cash flow or there are not sufficient workers to operate the business at a minimal capacity.  29 C.F.R. § 826.40.  The requirements for paid leave expire December 31, 2020, though the statute may be amended depending on the state of the pandemic as this deadline approaches.  29 U.S.C. § 2612 (a)(1)(F).

Generally, under this employment law, employers must provide paid leave to covered employees who are unable to work for particular COVID-19 related reasons.  To qualify, an employee must be employed for at least the previous 30 calendar days.  29 U.S.C. § 2620(a)(1)(A)(i).  There are two types of paid leave under the FFCRA.  The first is for employees that cannot work because he or she actually has or may have COVID-19.  This leave is limited to two weeks.  The second is for employees that cannot work because childcare facilities are not open.  These employees are permitted up to twelve weeks of paid leave.

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