Depending on your business and the nature of your employees’ responsibilities, you may consider using non-competition agreements to prevent your employees from going to work for a competing business nearby. When I suggest this to clients, I am almost always asked whether these agreements are really enforceable. There seems to be a widespread belief that these agreements aren’t worth the paper they’re written on because courts simply won’t enforce them. While this may be true in some states, a recent decision from Florida’s Third District Court of Appeal reaffirms that non-competition agreements are enforceable in Florida. In fact, Florida law creates certain presumptions making it easier to enforce such agreements.
In Data Payment Systems, Inc. v. Caso, 43 Fla. L. Weekly D1725, 2018 WL 3636522 (Fla. 3d DCA Aug. 1, 2018), Data Payment Systems provided credit card and payment processing services to merchants in Florida and throughout the United States. The defendants were several individuals and companies that signed non-competition agreements as sub-contractors to market and provide the payment processing services on behalf of Data Payment Services. After these contractors had worked for Data Payment Services for several months, the company discovered that the defendants had opened a separate business directly competing with Data Payment Services, had stolen its trade secrets and were soliciting its customers.
Data Payment Systems sued the defendants asserting multiple claims, including for theft of trade secrets, breach of contract, and tortious interference with its contracts with customers. It also sought temporary and permanent injunctions to stop the defendants from: (i) keeping and using the trade secrets they stole, (ii) soliciting their customers, and (iii) aiding and abetting anyone else to violate the non-competition and confidentiality agreements they signed.
The trial court, after holding an evidentiary hearing, denied Data Payment System’s request for injunctive relief because it failed to quantify the “irreparable harm” it claimed it would suffer without the injunction and because it also sought monetary relief, which the trial court determined was proof that it had an adequate remedy at law.
The Third DCA reversed the trial court’s decision. The Court acknowledged that to be entitled to a temporary injunction, a plaintiff must prove there is a likelihood that it will suffer irreparable harm. Data Payment Sys., Inc., 2018 WL 3636522 at *3. However, the appellate court held that the trial court failed to account for Florida Statute §542.335 which creates a “presumption of irreparable harm to the person seeking to enjoin a violation of a non-compete clause.” Id. at *4. Put simply, under Florida law, if a non-competition agreement is lawful and in compliance with Florida Statute §542.335, it is presumed that the party seeking to enforce the agreement will suffer irreparable harm if the agreement is not enforced.
The appellate court also concluded that the trial court was wrong to deny an injunction simply because Data Payment Services sued for monetary damages in addition to seeking injunctive relief. The Court held that “whether Data Payment may prevail at trial for damages on any of its underlying causes of action against the defendants . . . does not ipso facto, preclude a temporary injunction in this case.” Id.
The Third DCA therefore reversed the trial court’s decision and sent the case back to the trial court for a new hearing to determine if an injunction was proper based on the correct legal standards applicable to enforcement of non-competition agreements. While the Court expressed no opinion on the ultimate merits of whether an injunction was proper, the Court nevertheless confirmed that non-competition and confidentiality agreements are very much enforceable in Florida and that the law actually gives such agreements certain presumptions favoring their enforcement.
The Court’s full opinion can be found here: Data Payment Systems, Inc. v. Caso:
If you would like more information about this decision, or if you have questions about drafting or enforcing non-competition, non-solicitation and confidentiality agreements for your business, please contact me by email at firstname.lastname@example.org, by calling my office at 305.459.3033, or by visiting my website at www.llambertlaw.com.