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The plain terms of a contract control the parties’ course of conduct for all matters subject to that contract’s terms. See Maher v. Schumacher, 605 So.2d 481 (Fla. 3d DCA 1992) (holding that the plain meaning of the contractual language used by the parties controls). The Court is prohibited from rewriting contract terms. Pol v. Pol, 705 So. 2d 51, 53 (Fla. 3d DCA 1997) (“It is well established that a court cannot rewrite the clear and unambiguous terms of a voluntary contract.”). However, non-complete law contains a powerful exception allowing courts to disregard the well- pronounced prohibition against rewriting contracts. Courts can “blue-pencil” (i.e., Judicially modify) provisions of non-compete agreements when they do not conform to the requirements of Florida’s restrictive covenant statute, Section 542.335, Florida Statutes. In doing so, blue pencil laws breathe life into an otherwise invalid contractual provision. The blue pencil exception can be an important tool for those attempting to obtain relief under a contractual provision that violates the restrictive covenant statute.  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 court’s ability to “blue-pencil” a restrictive covenant is limited to modifying the scope of the provision to bring it within the ambit of non-compete law. See White v. Mederi Caretenders Visiting Services of Se. Florida, LLC, 226 So. 3d 774 (Fla. 2017) (Courts are commanded to “modify, or blue pencil, a non-competition agreement that is overbroad, overlong, or otherwise not reasonably necessary to protect the legitimate business interest.”). The court can only narrow a restrictive covenant to the extent needed to protect the plaintiff’s established legitimate business interests. Id. (noting that courts can modify overbroad restrictive covenants to “grant only the relief reasonably necessary to protect such interest”). Courts can shorten a restrictive covenant that is too long in duration, may curtail the geographical scope to a more limited area, or may constrain the subject matter to particular legitimate business interests. Id.

Blue penciling laws can create perverse incentives for employers and similarly situated parties to draft overbroad provisions they know have little chance of being enforceable. Employers may force their employees to agree to overbroad restrictive covenants to intimidate employees and make them believe they cannot compete in any respect. Employers may believe there is little risk in drafting an overbroad restrictive provision because a court will probably blue-pencil the provision if enforcement is necessary. Therefore, employers could face little risk in purposefully drafting an onerous overbroad restrictive covenant.

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Someone misappropriated your trade secrets and you can prove it. But how were you damaged? This is an important question you must ask before commencing a lawsuit because the answer could influence a significant portion of your litigation strategy. Below we provide insights into some of the categories of damages you may be entitled to recover along with some of the impediments to recovering those damages.  Peter Mavrick is a Miami business litigation attorney, and represents clients 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.

Lost profits are a common form of trade secret misappropriation damages.  Under Florida Statutes 688.001(4), Florida’s trade secrets act permits recovery of damages “for the actual loss caused by misappropriation.”  These damages are calculated by determining the revenue the trade secret owner lost due to the defendant’s conduct less the costs the trade secret owner saved due to the defendant’s conduct.  An example could be a manufacturing plant that loses several customers and millions in revenue because a former employee stole the plant’s trade secret and started a competing business. The plant could recover its lost customer revenues minus the costs it saved by manufacturing less products due to the lost customers. However, determining which costs are deductible from revenue can be tricky and vary case by case.  A court may refuse to deduct fixed costs from the lost profit analysis because the plant would have incurred those fixed costs regardless of whether it retained all customers.  For example, in Fin. Info. Techs., LLC v. iControl Sys., USA, LLC, 21 F.4th 1267 (11th Cir. 2021), the United States Court of Appeals for the Eleventh Circuit agreed with the federal trial court’s decision that “the jury was not required to deduct Fintech’s fixed costs from its revenues to arrive at a proper ‘actual loss’ measure.”  See also N. Gregory Mankiw, Principles of Microeconomics 266–68 (6th ed. 2011) (defining fixed costs as those that do not directly vary based on output volume).  By contrast, courts may deduct marginal costs from the lost profit analysis because the plant saved money by producing less products.  See N. Gregory Mankiw, Principles of Microeconomics 266–68 (6th ed. 2011) (defining marginal costs as the measure of change in cost associated with a change in output).  In the iControl Sys., USA, LLC decision, the Eleventh Circuit assessed the plaintiff’s proof at trial vaguely articulated its marginal costs as “minimal” without specifying what were the actual marginal costs or that they were zero.  The Eleventh Circuit explained in pertinent part that, “[m]issing from the trial record is any evidence that Fintech’s marginal costs were actually zero. Had Fintech clearly presented that evidence, it might have been entitled to an award that didn’t account for those costs.”

Disgorgement is a lesser-known remedy in trade secret litigation.  Disgorgement in essence requires a defendant to give-up certain profits to the plaintiff as an equitable remedy for ill-gotten gains.  In Sensormatic Elecs. Corp. v. TAG Co. US, LLC, 632 F. Supp. 2d 1147 (S.D. Fla. 2008), the federal district court held that “[d]isgorgement of a defendant’s profits is an appropriate remedy where the disgorgement is limited to the amount of time it would have taken the defendant to independently develop its product without the benefit of the plaintiff’s trade secrets—in other words, the ‘head start’ period.”  The remedy is intended to prevent the defendant’s unjust enrichment and is measured by a defendant’s improper acquisition of money rather than the plaintiff’s losses. S.E.C. v. Monterosso, 756 F.3d 1326, 1337 (11th Cir. 2014).

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Corporations routinely require their employees to enter restrictive covenants (including non-solicition and non-compete agreements) protecting the business from unfair competition. However, employees often live and reside in states that are different from the company’s place of incorporation and principal place of business. This trend has grown in recent years as some companies have moved toward a fully remote work environment. The corporation’s ability to enforce its restrictive covenants may be hampered or become more complicated where state laws governing enforcement of restrictive covenants vary.  This article explores a sampling of contradictory restrictive covenant laws and how one might address those contradictions upfront to help ensure a restrictive covenant agreement remains enforceable.  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.

Some states, like Florida, have strong restrictive covenant laws codified by statute. Florida permits non-compete agreements when they are supported by one or more “legitimate business interests” and reasonable in time and scope to protect the business. See Fla. Stat. § 542.335 (“The person seeking enforcement of a restrictive covenant shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant.”). Other states, like Pennsylvania, rely on caselaw to enforce restrictive covenants. See, e.g., Socko v. Mid-Atl. Sys. of CPA, Inc., 2014 PA Super 103, 99 A.3d 928, 935 (2014), aff’d, 633 Pa. 555, 126 A.3d 1266 (Penn. 2015) (permitting enforcement of a restrictive convent when the employee “receive[s] actual valuable consideration” and the restriction is reasonably limited in time and territory). Application of case law can be amorphous thereby making it more difficult to enforce the covenant or predict outcomes. See Insulation Corp. of Am. v. Brobston, 446 Pa. Super. 520, 529, 667 A.2d 729, 733 (Penn. 1995) (adding more stringent requirements to enforce a post-employment restrictive covenant). Yet other states like Minnesota prohibit enforcement of most restrictive covenant agreements. Minn. Stat. Ann. § 181.988 (“Any covenant not to compete contained in a contract or agreement is void and unenforceable”).

Companies can insert choice of law provisions in their restrictive covenant agreements to provide some definiteness as to which state’s laws apply. These provisions pre-select the application of a particular state’s laws, usually to the exclusion of all other state laws.  Choice of law provisions, however, are not always enforceable. For example, in Florida, a choice of law provision will not be enforced when its application would violate Florida’s public policy.  In Snelling & Snelling, Inc. v. Reynolds, 140 F. Supp. 2d 1314 (M.D. Fla. 2001), the United States District Court for the Middle District of Florida analyzed a restrictive covenant that selected Pennsylvania as the governing law.  The court explained that, “[s]ince Snelling has indicated its intention for the governing law, Pennsylvania law will govern the dispute between the parties, as long as that law is not against the public policy of the forum state.”   Florida courts analyze the laws of the chosen state as contrasted against Florida law, to determine whether the laws of both states contradict each other.  Snelling explained that the court “must determine whether Pennsylvania law governing non-compete covenants is contrary to Florida’s public policy.”  If a contradiction exists, further analysis would be conducted to determine whether there is a violation of Florida’s public policy.  Other states may construe choice of law provisions differently or enforce them differently.

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Florida Statutes Section 95.11(2)(b) states in pertinent part that, “[a] legal action on an action on a contract, obligation, or liability founded on a written instrument” is five years.  This statute of limitations governs breach of written contracts in business litigation.  Florida law imposes a type of “statute of frauds” in cases involving non-compete contracts, because Florida Statutes Section 542.335(1)(a) states that “[a] court shall not enforce a restrictive covenant unless it is set forth in a writing signed by the person against whom enforcement is sought.”  Issues concerning statutes of limitations sometimes arise in arbitration proceedings, which are legally sanctioned proceedings involving private judges with the consent of the parties.  In such proceedings, arbitrators sometimes do not follow the law.  Unlike the decisions made by state and federal trial courts, decisions made in arbitration often are not reviewable in appellate courts.  Indeed, some arbitration companies have expanded “private” statutes of limitation that exceed the limits of Florida law.  The question arises, when Florida law governs the parties’ contract, can an arbitrator lawfully refuse to abide by the statute of limitations concerning cases of breach of a written contract, including a non-compete contract?  Peter Mavrick is a Miami business litigation attorney, and represents clients 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.

Precedent from the Supreme Court of Florida, in Raymond James Financial Services, Inc. v. Phillips, 126 So.3d 186 (Fla. 2013), has addressed this question in the context of a tort claim before the National Association of Securities Dealers.  In Raymond James, an investment firm required its clients (the investors) to sign an agreement to arbitrate all disputes arising out of the handling of their investments.  The issue in the case was not the validity of the arbitration agreement, but rather whether Florida’s statute of limitations that is applicable to a “civil action or proceeding” applies to arbitration proceedings.  The investors asserted that the statute of limitations applied only to judicial actions and thus did not limit the time in which to assert their arbitration claims.  The Supreme Court of Florida held that the term “proceeding” as used in the statutory provision that barred any proceeding unless begun within the applicable statute of limitations, was a broad term that encompassed arbitration proceedings.

The Supreme Court’s Raymond James decision imposed an important check on arbitration proceedings, which are usually given leeway to make decisions without significant judicial review.  The Raymond James decision relied on Black’s Law Dictionary, which defines a “tribunal” as a “[c]ourt or other  adjudicatory body.”  The Supreme Court explained in pertinent part: “The term adjudicatory refers back to adjudication, which is defined as both ‘[t]he legal process of resolving a dispute,’ as well as ‘the process of judicially deciding a case’…In addition, an arbitrator would fall under the definition of an adjudicator, which Black’s Law Dictionary defines as ‘[a] person whose job is to render binding decisions’…Arbitration is clearly within the meaning of the term adjudication since the parties to an arbitration are engaging ‘[t]he legal process of resolving a dispute’ by seeking redress from an ‘adjudicatory body.’  Moreover, an arbitrator is an adjudicator who has the authority and obligation to render a binding decision and resolve the parties’ dispute.  Accordingly, a review of the common usage of the terms uses…supports our conclusion that the term ‘proceeding’ as used in section 95.011 [Florida Statutes], is a broad term that includes arbitration.”

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Time is not always on your side because the law imposes many deadlines. Some can be moved or extended. Others cannot. The statute of limitations is one deadline that cannot be moved or extended as a general matter because it is fixed by the state legislature. Most, if not all, states prescribe the maximum duration a litigant must file its lawsuit. The maximum duration depends on the type of claim asserted and each state’s decision on the maximum duration that type of claim should expire. For example, a contractor has five years to bring a lawsuit against a counterparty for breach of contract in Florida but has six years to bring that same lawsuit in Nevada. Compare, for example, Fla. Stat. § 95.11 (providing 5 years to bring and action for breaching a written contract) with Nev. Stat. § 11.190 (providing 6 years to bring and action for breaching a written contract).  If you do not bring the lawsuit within the applicable limitations period, you could be forever barred from bringing the claim. See Hinds v. Credigy Receivables, Inc., 2008 WL 11435771, at *2 (M.D. Fla. Apr. 29, 2008) (dismissing claim based on the statute of limitations).  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.

One of the first questions to ask when analyzing a statute of limitations issue is when did the statute begin to run? Florida law dictates that the limitations period begins running when “a cause of action accrues.” Fla. Stat. § 95.031. In a breach of contract case, a cause of action accrues “when the last element constituting the cause of action occurs”.  This means, the date the contract is breached. State Farm Mut. Auto. Ins. Co. v. Lee, 678 So. 2d 818, 821 (Fla. 1996) (A “cause of action on a contract accrues and the statute of limitations begins to run from the time of the breach of contract.”). In a fraud case, however, a cause of action accrues when the plaintiff knew or should have known about the defendant’s misrepresentations.  Goodwin v. Sphatt, 114 So. 3d 1092, 1094–95 (Fla. 2d DCA 2013) (“The fraud statute of limitations begins to run when the plaintiff knew or should have known of the defendant’s misrepresentations.”). Distinguishing between the two standards can be important because the contract claim does not include a mens rea component while the fraud claim does. This means the limitations period in a contract case begins running even if the contractor does not know the breach occurred.

The issue can be further complicated because it is possible to toll the running of a limitations period under certain circumstances. Statutory law usually articulates most grounds for tolling. See, e.g., Fla. Stat. 95.051. Therefore, one must review the statutory scheme to determine whether any statutory tolling applies. Tolling can also apply as a matter of equity. See Woods v. United States, 700 F. App’x 982, 983–84 (11th Cir. 2017). (“Equitable tolling is appropriate when a movant untimely files because of extraordinary circumstances that are both beyond his control and unavoidable even with diligence.”). However, the party seeking to equitably toll a statute of limitations faces a high bar.  In Echemendia v. United States, 710 Fed. Appx. 823, 827 (11th Cir. 2017), the United States Court of Appeals for the Eleventh Circuit explained that, “[e]quitable tolling is an extraordinary remedy that should be used sparingly.”

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Courts in Florida and most other jurisdictions award attorney’s fees to prevailing parties based on the American Rule. MV Senior Mgmt., LLC v. Redus Florida Hous., LLC, 319 So. 3d 66, 67 (Fla. 1st DCA 2020) (“Florida courts follow the ‘American rule.’”). This rule limits fee awards to instances where attorney’s “fees are expressly provided for by statute, rule, or contract.” Bane v. Bane, 775 So. 2d 938 (Fla. 2000). Therefore, a statute, rule, or contract must contain a provision allowing the prevailing party to recover attorney’s fees or he/she will be precluded from recovering such fees. Friedman v. Friedman, 144 So. 2d 866 (Fla. 3d DCA 1962) (holding that in the absence of statute or contract, a former spouse was not entitled to attorney’s fees even though the opposing party’s motion was frivolous).  Peter Mavrick a Miami business litigation attorney, and represents clients 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.

Parties suing under a contract are often entitled to recover attorney’s fees assuming they prevail because contracts frequently contain a prevailing party attorney’s fee provision. However, some contractual attorney’s fee provisions are unilateral. These provisions allow one contracting party to recover attorney’s fees, but not the other. For example, a contract may state that a landlord can recover fees from the tenant in an action brought to enforce the lease. This type of provision prevents the tenant from recovering attorney’s fees against the landlord even when the tenant prevails. Florida statutory law corrects the imbalance by transforming unilateral attorney’s fee provisions into bilateral provisions regardless of the contract language. See Fla. Stat. § 57.105 (“If a contract contains a provision allowing attorney’s fees to a party when he or she is required to take any action to enforce the contract, the court may also allow reasonable attorney’s fees to the other party when that party prevails in any action, whether as plaintiff or defendant, with respect to the contract.”); Mediplex Constr. of Fla., Inc. v. Schaub, 856 So. 2d 13 (Fla. 4th DCA 2003) (“[T]he purpose behind section 57.105(7) is to provide mutuality of attorney’s fees as a remedy in contract cases.”); Florida Hurricane Prot. & Awning, Inc. v. Pastina, 43 So. 3d 893 (Fla. 4th DCA 2010) (“The statute renders bilateral a unilateral  contractual clause for prevailing party attorney’s fees”).

Florida’s Supreme Court used the same statutory scheme in recent years to expand attorney’s fee liability to non-contract-based claims if a relevant contract contains an attorney’s fee provision. In Ham v. Portfolio Recovery Associates, LLC, 308 So. 3d 942 (Fla. 2020), Florida’s Supreme Court determined that a prevailing party in an action for common law account stated could recover his attorney’s fees because a contract (which was not sued upon) permitted the recovery of attorney’s fees for “any action to enforce the contract.”  The Supreme Court premised its decision on the plain wording of Fla. Stat. § 57.105, which states that “[i]f a contract contains a provision allowing attorney’s fees to a party when he or she is required to take any action to enforce the contract, the court may also allow reasonable attorney’s fees to the other party.” Id. (citing Fla. Stat. § 57.105) (emphasis in original).

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“Arbitration is a preferred method of dispute resolution.” Obolensky v. Chatsworth as Wellington Green, 240 So. 3d 6 (quoting BallenIsles Country Club, Inc. v. Dexter Realty, 24 So. 3d 649, 652 (Fla. 4th DCA 2009)). Therefore, “[c]ourts generally favor [arbitration] provisions, and [ ] try to resolve ambiguity… in favor of arbitration.” Jackson v. Shakespeare Found., Inc., 108 So. 3d 587 (Fla. 2013). But this favorability does not always force unwilling participants to arbitrate. Courts can, and do, refuse to mandate arbitration despite the existence of an arbitration provision seemingly requiring arbitration. See, e.g., Apartment Inv. & Mgmt. Co. v. Flamingo/S. Beach 1 Condo. Ass’n, Inc., 84 So. 3d 1090 (Fla. 3d DCA 2012) (upholding the denial of movant’s motion to compel arbitration because the parties amended their contract to exclude certain legal issues from arbitration).  This article explores the circumstances obligating contracting parties to arbitrate and when they can avoid arbitration.  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.

Florida courts must consider three elements when faced with a motion to compel arbitration: “(1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitration was waived.” Seifert v. U.S. Home Corp., 750 So. 2d 633 (Fla. 1999). The first two steps rest on contract interpretation, thereby requiring courts to construe the contracting parties’ intent.

The first factor requires a careful framing of the issue for consideration because it will dictate the presiding tribunal. Challenges to contract validity are resolved by arbitrators, while challenges to contract formation or the existence of a contract are resolved by courts. HHH Motors, LLP v. Holt, 152 So. 3d 745, 747 (Fla. 1st DCA 2014) (citing Granite Rock Co. v. International Brotherhood of Teamsters, 561 U.S. 287 (2010)). Sometimes, it is easy to determine when a party challenges validity rather than contract formation. See, e.g., Airbnb, Inc. v. Doe, 336 So. 3d 698 (Fla. 2022) (explaining that “because Airbnb’s Terms of Service incorporate by reference the AAA Rules that expressly delegate arbitrability determinations to an arbitrator, the agreement clearly and unmistakably evidences the parties’ intent to empower an arbitrator, rather than a court, to resolve questions of arbitrability.”). Other times it is less obvious. See, e.g., Duval Motors Co. v. Rogers, 73 So. 3d 261 (Fla. 1st DCA 2011) (the court considered the issue of arbitrability because it had to determine whether a contract containing an arbitration provision was superseded by another contract entered contemporaneously that contained a merger clause negating all prior writings).

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For certain business, their trade secrets and are their most valuable assets.  Accordingly, businesses will often seek to protect their trade secrets in various ways, including the use of a non-disclosure agreement (commonly referred to as an “NDA”).  An NDA is a contract that typically binds current and former employees and independent contractors to maintain the confidentiality of disclosed information.  To succeed in business litigation alleging misappropriation of a trade secret, a company must take reasonable measures to protect the secrecy of its information.  This requirement is codified within the Defend Trade Secrets Act (18 U.S.C. section 1839(3)(A)) as part of the definition of “trade secret.”  The United States Court of Appeals for the Seventh Circuit in Tax Track Sys. Corp. v. New Inv. World, Inc., 478 F.3d 783 (7th Cir. 2007), explained that courts evaluate the question of whether efforts to keep information confidential were sufficient “on a case-by-case basis, considering the efforts taken, the costs, benefits, and practicalities of the circumstances.”  The Tax Track decision further stated that, in some circumstances, judgment as a matter of law is appropriate because it is “readily apparent that reasonable measures were not taken.”  Peter Mavrick a Miami business litigation attorney, and represents clients 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.

Under the Defend Trade Secrets Act, 18 U.S.C. section 1839(5)(B)(ii)-(iii), a trade secret is “misappropriated” by, among other means, “disclosure or use of a trade secret of another without the express or implied consent by a parson who…at the time of disclosure or use, knew or had reason to know that the knowledge of the trade secret was…acquired under circumstances giving rise to a duty to maintain the secrecy of the trade secret or limit the use of the trade secret; or…derived from or through a person who owed a duty to the person seeking relief to maintain the secrecy of the trade secret or limit the use of the trade secret.”  Although an NDA is not a necessary condition to demonstrate reasonable protection for a business’ trade secrets, it nevertheless can serve as persuasive evidence in demonstrating the business took reasonable measures to protect its intellectual property.  The United States Court of Appeals for the Eleventh Circuit in Penalty Kick Management Ltd. v. Coca Cola Co., 318 F.3d 1284 (11th Cir. 2003), stated in pertinent part that, “[i]n this case, the surrounding circumstances, namely the Non–Disclosure Agreement, clearly gave rise to a duty on the part of Coca–Cola to maintain the secrecy of any Magic Windows trade secrets.”

Requiring that employees and independent contractors sign NDAs is generally not, by itself, sufficient to prove the employer took reasonable measures to protect its trade secrets.  As with any valuable asset, common sense is needed to determine what measures are appropriate under the relevant circumstances.  For example, the business may need to limit access to the trade secrets to only those employees who “need to know” the information, limit access to information via separate computer database that is password protected, and limit employee access to certain parts of the business premises to prevent inadvertent dissemination of trade secret information.  Such measures may deter or prevent trade secret information.  In the event of actual misappropriation, such prudent measures would help the business protect its trade secrets in litigation seeking an injunction and damages.

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Some businesses have experienced loss of customer relationships due to former employees taking customer relationships to competitors.  The most obvious way to protect against such a situation is to ensure employees sign a restrictive covenant under Florida Statutes Section 542.335, commonly referred to as a non-compete agreement, prohibiting solicitation of customers and competition that diverts the employer’s customers to a competitor.  Sometimes, however, businesses do not have a non-compete agreement with their employees.  The law of trade secrets can be used, under certain circumstances, to bar use of confidential information, including customer lists, to divert customers to competitors.  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.

Florida’s Second District Court of Appeal, in East v. Aqua Gaming, 805 So.2d 932 (Fla. 2d DCA 2001), explained what is required to prove a customer list is a trade secret.  To qualify as a trade secret, there must be evidence that a customer list “was the product of great expense and effort, that it included information that was confidential and not available from public sources, and that it was distilled from larger lists of potential customers into a list of viable customers for [a] unique business.”  Customer lists can constitute trade secrets where the lists are acquired or complied through the industry of the owner of the lists and are not just a compilation of information commonly available to the public.

In trade secret litigation, it is often a major issue whether the alleged trade secret owner took appropriate measures to keep the the subject information a secret.  Under Florida’s trade secret statute, section 688.002(4)(b), a trade secret owner must make “efforts that are reasonable under the circumstances to maintain its secrecy.”  As to this issue, Florida and federal courts will often look at whether the alleged trade secret owner had signed agreements with its employees to protect the company information.  In My Energy Monster, Inc. v. Gawrych, 2020 WL 8224616 (M.D. Fla. 12/18/2020), the federal court faulted the business that owned the alleged trade secret for not taking better measures to protect its trade secrets, and stated in pertinent part: “However, the record demonstrates that Gawrych was not required to sign a non-compete agreement, non-solicitation agreement, nor a confidentiality agreement and that non existed for other Energy Monster employees.  According to Defendants, all employees at Energy Monster had access to the customer list…Defendants, further state that [t]here [were] no ‘need to know’ employees and Energy Monster never obtained nondisclosure agreements or confidentiality agreements–even after the parties parted ways and Gawrych offered  to sign an NDA…Yet Energy Monster seeks to prevent the very action that such agreements are typically designed to prevent.”

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Under Florida’s offer of judgment statute, Section 768.79, Florida Statutes, “if a defendant serves an offer which is not accepted by a plaintiff, and if the judgment obtained by the plaintiff is at least 25 percent less than the amount of the offer, the defendant shall be awarded reasonable costs, including investigative expenses, and attorney’s fees” incurred from the date the proposal was served.  Precedent from the Supreme Court of Florida in Anderson v. Hilton Hotels Corp., 202 So.3d 846 (Fla. 2016), determined that, “an offer [of judgment] that complies with section 768.79 and Rule 1.442 creates a ‘mandatory right’ to collect attorneys’ fees.”  Offers of judgment, however, are limited by a “bad faith” exception that can nullify the offer of judgment when the court determines the offering party conveyed the offer in bad faith.  “[O]nce an offer of judgment has been made and rejected and a judgment of no liability has been entered, the defendant has a right to an award of attorney’s fees unless the offer was found to have been made in bad faith.”  Transmission Co. v. Lauderdale Sand & Fill, Inc., 813 So.2d 1013 Fla. 4th DCA 2002).  Peter Mavrick a Miami business litigation attorney, and represents clients 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.

Under Section 768.79(2), Florida Statutes, an offer of judgment must:

(1) Be in writing and state that it is being made pursuant to this section;

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