Friday, July 31, 2009

Eleventh Circuit Analyzes Non-Compete Agreement in Florida

In Proudfoot Consulting Co. v. Derrick Gordon (08-14075), the Eleventh Circuit issued a published 48 page opinion relating to a non-compete agreement and Fla. Stat. § 542.335. The court provided a comprehensive analysis of Florida's non-compete law, one portion of which is quoted below:

In 1996, Florida adopted Fla. Stat. § 542.335, which "contains a comprehensive framework for analyzing, evaluating and enforcing restrictive covenants contained in employment contracts." Envtl. Servs., Inc. v. Carter, 9 So.3d 1258, 1262 (Fla. Dist. Ct. App. 2009). For a restrictive covenant to be valid, "[t]he person seeking enforcement of [the] restrictive covenant shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant." Fla. Stat. § 542.335(1)(b). Section (1)(b) of the statute enumerates a non-exhaustive list of "legitimate business interest[s]." Among these are: (1) "[v]aluable confidential business or professional information that otherwise does not qualify as trade secrets"; (2) "[s]ubstantial relationships with specific prospective or existing customers, patients, or clients"; and (3) "[e]xtraordinary or specialized training."

In addition, to be enforceable, restrictive covenants must be reasonable with regard to time, area and line of business. Fla. Stat. § 542.335(1). Once an employer establishes a prima facie case that the contractually specified restraint is "reasonably necessary to protect the legitimate business interest[s] . . . justifying the restriction," the burden of proof shifts to the employee to show that "the contractually specified restraint is overbroad, overlong, or otherwise not reasonably necessary to protect the established legitimate business interest[s]." Fla. Stat. § 542.335(1)(c). If the court finds that the "contractually specified restraint is overbroad, overlong, or otherwise not reasonably necessary to protect the legitimate business interest[s]," the court is required to "modify the restraint and grant only the relief reasonably necessary to protect such interest or interests." Id.

"The violation of an enforceable restrictive covenant creates a presumption of irreparable injury to the person seeking enforcement of a restrictive covenant." Fla. Stat. § 542.335(1)(j). This presumption, however, is rebuttable. JonJuan Salon, Inc. v. Acosta, 922 So. 2d 1081, 1084 (Fla. Dist. Ct. App. 2006).


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