Wednesday, September 16, 2009

Fees Cannot Be Awarded Against Employer Who Assists Employee In Violating Restrictive Covenant - Conflict Certified

In Bauer v. Dilib, Inc. (4D08-3787), the Fourth District addressed an appeal of whether attorneys fee could be awarded against an employer who assists an employee in breaching a restrictive covenant.  The Fourth District held they cannot and certified conflict with Sun Group Enterprises, Inc. v. DeWitte, 890 So. 2d 410 (Fla. 5th DCA 2004).  The court stated:
whether an employer who has a restrictive covenant with employees can recover its attorney’s fees from a third party who knowingly aids and abets the employees’ violation of the restrictive covenant. We hold that the employer cannot recover its attorney’s fees from the third party in that situation.
The plaintiff below and two employees entered into confidentiality agreements containing a restrictive covenant stating that, for two years after the employees’ last date of employment, they would not compete with the plaintiff’s business. The employees later left the plaintiff’s business. Within a few months, the plaintiff’s owner received a phone call from a competitor, Denise Bauer, asking whether a non-compete agreement bound one of the employees. The plaintiff’s owner allegedly told Bauer that the employee was bound, although Bauer claimed that the owner refused to respond. In any event, Bauer hired the employees.
The trial court entered an order awarding attorneys fees to the plaintiff and against the defendants - both the former employee and the former employee's new employer.
We hold that the plaintiff was not entitled to recover its attorney’s fees from Bauer. To the extent the circuit court awarded attorney’s fees as a matter of equity, the court erred. “Attorney’s fees cannot be awarded as a matter of equity.”...“The fundamental rule in Florida is that attorneys’ fees are in derogation of the common law and will only be granted pursuant to a contractual agreement or statutory authority.”
To the extent the plaintiff sought to recover its attorney’s fees under section 542.335(1)(k), no such statutory authority exists against a third party like Bauer...“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.” § 542.335(1)(a), Fla. Stat. (2007) (emphasis added). If a plaintiff cannot enforce a restrictive covenant against a person who did not sign it, then it follows that a plaintiff cannot recover its attorney’s fees from that person either.
Even though section 542.335(1)(a) precludes a plaintiff from enforcing a restrictive covenant against a third party, a plaintiff still may enjoin a third party who aids and abets the violation of a restrictive covenant. As we have said in the past, “‘There is no doubt that a court can enjoin others who were not parties to the non-compete agreement’ as long as they ‘receive notice and have an opportunity to be heard.’”
The court then certified conflict with the Fifth District's decision in Sun Group Enterprises, Inc. v. DeWitte, 890 So. 2d 410 (Fla. 5th DCA 2004) as quoted below:
In their briefs, the parties have identified one decision which facially contains a contrary result. In Sun Group Enterprises, Inc. v. DeWitte, 890 So. 2d 410 (Fla. 5th DCA 2004), a plaintiff unsuccessfully sought to enforce a restrictive covenant against defecting employees and their subsequent employer. Id. at 412. The Fifth District granted appellate attorney’s fees under section 542.335(1)(k) to the employees and the subsequent employer, even though the subsequent employer did not sign the restrictive covenant. Id. The Fifth District did not provide any reasoning to support its decision or indicate whether the plaintiff contested the issue. We certify conflict with Sun Group. Reversed as to judgment for attorney’s fees against appellant.


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