The Mavrick Law Firm has successfully represented clients in many non-competition covenant cases. Most cases involved representing the new business, employer, and former employee threatened with a lawsuit. Non-competition covenants often can be successfully challenged on the grounds that they are invalid or overbroad.
Non-compete contracts contravene Florida’s general public and statutory policy encouraging free enterprise and competition. They are allowed as an exception to that policy under certain circumstances. They can be enforced lawfully and bar former employees from competing or working for a competitor. Whether a particular non-compete covenant is enforceable requires examination of the wording of the non-compete contract, the background and details of the employment relationship leading to the departure of the employee, and the legal basis for the non-competition contract under Florida statutory and case law. To learn about developments in Florida non-compete law, please click here.
Non-compete cases arise in several contexts. Former employers often file cases against former employees and their new employers alleging breach of non-competition covenants, and the Mavrick Law Firm has successfully defended the new business or new employer. These cases are often on short-notice and require a rapid understanding of the case facts and legal analysis and an appearance in court at a temporary injunction hearing on whether the court should order immediate closure of the new business or termination of the former employee by his or her new employer. Cases arise in other contexts too. Sometimes former employees have started their own business in competition with the former employer, and then they receive a threatening letter from a law firm demanding that the new business stop competing. Sometimes the former employer interferes with the business relationships of the new business formed by the former employees. The Mavrick Law Firm has successfully represented many start-up businesses by initiating litigation against the former employer and asking the court to determine that the non-competition contract is invalid and stop the interference with business relationships of the new business. Finally, The Mavrick Law Firm also has successfully represented employers by preparing non-competition contracts and enforcing non-competition contracts.
HOW NON-COMPETE CASES ARE HANDLED
Legal representation begins fundamentally with listening to the client. It is the client’s objective that needs to be satisfied. Attorney Peter Mavrick begins by reviewing the non-compete contract carefully along with any other related employment or business contracts. Mr. Mavrick meets with the client to ascertain all case facts and determine what further additional documents and witnesses will be needed or helpful to the representation. It is critical to the representation to understand the statutory and case law governing enforcement of non-competition contracts. Non-compete cases present mixed questions of facts and law. In many cases, non-compete contracts can be invalidated because other laws have been violated. For example, in a recent case in the health-care industry, Mr. Mavrick was able to prove violations of health-care and insurance statutes that invalidated the non-compete contract. In other cases, Mr. Mavrick was able to prove highly relevant violations of labor laws that invalidated the non-compete contract and formed the basis of a counterclaim. For this same reason, when Mr. Mavrick represents clients seeking to enforce non-compete contracts, he carefully examines the facts to ensure enforceability and then prepares the case to stop the unlawful competition.
Non-compete covenant cases often move quickly, and trial court Judges need to make decisions without the benefit of full discovery. In order to obtain a temporary injunction, the plaintiff is required to establish (1) the likelihood of irreparable harm, (2) the unavailability of an adequate remedy at law, (3) substantial likelihood of success on the merits, and (4) that the injunction will serve the public interest.
In a great deal of non-compete litigation, the battle is over whether the plaintiff has a “substantial likelihood of success on the merits.” The Mavrick Law Firm has successfully challenged non-compete contracts because the contract is itself invalid or has been rendered invalid due to conduct of the plaintiff after the covenant was signed. Businesses violate various laws that can invalidate the non-competes. Often the non-competes are not worded in a manner that will allow enforcement. Sometimes there is no legitimate business interest in the non-compete and therefore there can be no injunction to enforce the non-compete contract.
AN EMPLOYER'S BREACH MAY RELEASE THE COVENANT NOT TO COMPETE
When an employer seeks a temporary injunction to enforce a noncompete provision of an employment agreement, it is asking the court to force its former employee stop engaging in the alleged harmful conduct for a specified period. The injunction will be granted if it is determined that the former employee breached the valid non-compete agreement. However, the court can deny that injunction if the employer committed the first breach of the employment agreement. This legal principle is called “material breach” and means that a party who failed to perform its own contractual obligations is not entitled to enjoin a breach of the same contract by another. Peter Mavrick has successfully represented clients in Fort Lauderdale, Miami, and Palm Beach based on prior material breach by a former employer.
Florida Statute § 542.335(1)(g)(3) provides that, “[i]n determining the enforceability of a restrictive covenant, a court…[s]hall consider all other pertinent legal and equitable defenses.” In the case of Benemerito & Flores, M.D.’s, P.A. v. Roche, 751 So. 2d 91 (Fla. 4th DCA 1999), a medical professional association sought a temporary and permanent injunction enjoining Dr. Roche, its former employee, from practicing in the St. Lucie areas as well as liquidated damages for her alleged breach of a noncompete covenant.
At the hearing on the employer’s petition for temporary injunction, Dr. Roche asserted that she was relieved of her obligations under the agreement with the association because the association breached the employment agreement first by failing to pay her the contractually agreed upon bonuses. Her evidence showed that her employer failed to fully compensate her pursuant to the bonus structure in her employment agreement, which was to be calculated from all of the dialysis services she performed for the association. The employer maintained that her bonus would be calculated only on her services to patients that she personally admitted into the hospital. Dr. Roche testified that she would not have agreed to the contract had she known that was the condition to her earning the bonus. Since it is the party seeking a temporary injunction that has the burden to prove that they have a clear right to the relief requested, the trial court denied the employer’s motion for failing to meet that burden. The employer made a material breach of the employment agreement when it failed to correctly calculate Dr. Roche’s bonus, so the employer was not entitled to a temporary injunction.
The association appealed the ruling, but the appellate court affirmed the trial court’s decision. The appellate court held that because the employer materially breached the employment agreement first, Dr. Roche was relieved from the obligation of non-compete contract. The employer had refused to credit Dr. Roche for all dialysis services that she performed, and therefore the employer committed the first breach of the employment agreement. Therefore no injunction would be entered.
It is important to note that a former employer’s failure to make payments under an employment agreement is not always a complete defense to an action to enforce a noncompete provision. To reach this conclusion, the court must determine that the parties’ obligations under the agreements were “dependent” covenants. Breach of a dependent covenant renders the entire contract unenforceable. By contrast, an independent covenant does not have such an impact. Whether the payment obligations under the employment agreements were dependent or independent covenants is an issue of law that turns on the proper interpretation of the contract. Courts will analyze the plain wording of a contract and consider the issue in the context of the entire agreement in order to achieve a reasonable construction to accomplish the intent and purpose of the parties. For example, in Richland Towers, Inc. v. Denton, 139 So. 3d 318, 321 (Fla. 2d DCA 2014), the contract specified that each restrictive covenant on the part of the employee in that agreement shall be construed as a covenant independent of any other covenant or provision of the agreement or any other agreement that the corporation may have. The appellate court held that the plain wording of the contract made the employer’s breach an independent breach. It therefore was not a defense to enforcement of the agreement.
CHALLENGES TO NON-COMPETE INJUNCTIONS BY SHOWING THERE IS NEITHER IRREPARABLE HARM NOR INADEQUATE REMEDIES AT LAW
However, even if a plaintiff establishes it is likely to succeed at trial that it has a valid non-compete contract that was breached, challenges are often made as to the issues of irreparable harm and inadequate remedies at law.
Florida’s non-compete statute states in pertinent part that “[t]he violation of an enforceable restrictive covenant creates a presumption of irreparable injury to the person seeking enforcement of a restrictive covenant.” § 542.335(1)(j). To rebut the presumption, the defendant must establish “the absence of injury,” as a Florida appellate court explained in DePuy Orthopaedics, Inc. v. Waxman, 95 So.3d 928, 939 (Fla. 1st DCA 2012). Lack of injury is not always the same as absence of monetary loss. The Supreme Court of Florida in Miller Mech., Inc. v. Ruth, 300 So.2d 11, 12 (Fla. 1974), explained that in cases involving a violation of a covenant not to compete, “the normal remedy is to grant an injunction … because of the inherently difficult, although not impossible, task of determining just what damage actually is caused by the employee’s breach of the agreement.”
Sometimes plaintiffs can establish lost business, and then defendants argue that this proves there is an “adequate remedy at law” and therefore there should be no injunction. However, courts have held that there can still be an injunction even when monetary damages are ascertainable. Courts have explained that plaintiffs do not have an adequate remedy at law for the irreparable harm they suffered and may continue to suffer where monetary damages are difficult to prove with any certainty or, even if provable, would not adequately compensate for all aspects of the violation of the covenant not to compete. In Variable Annuity Life Ins. Co. v. Hausinger, 927 So.2d 243, 245 (Fla. 2d DCA 2006), the appellate court reversed a trial judge’s denial of a temporary injunction even though “monetary damages were ascertainable to some clients that ‘the former employee] admittedly solicited.” The appellate court explained that “the harm presumed under the [non-compete] statute includes the potential damages to [the plaintiff’s] longstanding relationships with its customers and the protection of confidential client information.” By contrast, the Fourth District Court of Appeal reached a much different result in First Miami Securities, Inc. v. Bell, 758 So.2d 1229 (Fla. 4th DCA 2000). There the trial court denied the former employer’s motion for a temporary injunction because it was unable to establish a presumption of irreparable harm as actual damages could be proven. The appellate court affirmed the trial court’s decision to deny the temporary injunction.
Sometimes challenges are made to the lack of a public interest in supporting an injunction. Under Florida’s non-compete statute, the existence of a statutory “legitimate business interest” usually will satisfy the public interest prong to obtain a temporary injunction. In Atomic Tattoos, LLC v. Morgan, 45 So.3d 63, 66 (Fla. 2d DCA 2010), the court explained that “[a] finding that a covenant ‘protects a legitimate business interest is also important to public interest considerations.’” However, a public interest can override enforcement of a non-compete agreement. Under Florida’s non-compete statute, § 542.223(1)(i), a court must specify the public policy requirements that “substantially outweigh the need to protect the legitimate business interest or interests established by the person seeking enforcement of the restraint.” An example might be a patient’s right to see the physician of his or her choosing irrespective of the existence of a non-compete covenant because there may be serious medical issues at stake that could affect other public policies concerning patient health.
The Mavrick Law Firm engages every aspect of the law and the facts to present it persuasively to the court.
Sample Case Results
- Mr. Mavrick successfully defended a business and its owner in a lawsuit alleging breach of a non-competition covenant. At the end of the case, the non-competition covenant was invalidated and Mr. Mavrick’s client was reimbursed its legal expense.
- Represented company and its owners sued by former employer corporation for breach of non-competition contract and hiring an employee of the former employer. At end of the emergency hearing the former employer set with the Judge to obtain a temporary injunction against my clients, the Judge indicated that he would rule in favor of my clients and invalidate the non-competition contract. The case later settled where the former employer corporation paid my clients’ fees and costs and an additional amount as damages.
- Represented company and its owner who were sued by former employer corporation for breach of non-competition contract and theft of trade secrets. My client counterclaimed. While motions were pending with the Judge, the former employer corporation settled by dismissing its case, agreeing in writing that its non-competition contact was invalid and that no trade secrets were ever stolen by my clients, and reimbursing the attorney’s fees and costs of my clients.
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