Section (1)(j) of Florida's Non-Compete statute provides that "the violation of an enforceable restrictive covenant creates a presumption of irreparable injury to the person seeking enforcement of a restrictive covenant." See Fla. Stat. § 542.335(1)(j). This presumption of irreparable injury is important in non-compete litigation as most parties seeking to enforce a non-compete agreement seek a temporary or permanent injunction. Under Florida law, a party seeking a temporary injunction must plead and prove: "(1) the likelihood of irreparable [injury], (2) the unavailability of an adequate remedy at law, (3) a substantial likelihood of success on the merits, and (4) that a temporary injunction will serve the public interest." DePuy Orthopaedics, Inc., v. Waxman, 95 So.3d 928 (Fla. 1st DCA 2012), citing Envtl. Servs., Inc. v. Carter, 9 So.3d 1258, 1261 (Fla 5th DCA 2009); see also, Masters Freight, Inc. v. Servco, Inc., 915 So.2d 666, 666 (Fla. 2d DCA 2005). Section 542.335(1)(j) creates a rebuttable presumption of irreparable injury, which makes the road to enforcing a non-compete agreement easier for litigants.
A party seeking to enforce a non-compete agreement through injunctive relief must establish irreparable injury. As one court noted, "[i]n the absence of irreparable injury, no preliminary injunction would lie, even if the other three elements ... were found." Nutrasweet Co. v. Vit-Mar Enter. Inc, 176 F.3d 151, 153 (3d Cir. 1999). What are some of the factors, then, that a court will consider in deciding whether a party has established the existence of an irreparable injury? This issue was considered by the United States District Court for the Western District of Michigan recently in Stryker Corp., et al. v. Bruty, et al., No. 1:13-cv-288 (W.D. Mich. May 10, 2013). In Stryker, an employer sought to enforce a non-compete agreement against a former senior manager. In considering the employer's motion for preliminary injunction, the court looked at whether the employer established, among other things, the existence of irreparable injury. Stryker at *7.
The Stryker court first noted that in the Sixth Circuit "an injury is not fully compensable by money damages if the nature of the plaintiff's loss would make damages difficult to calculate." Id. at *7, citing Basicomputer Corp. v. Scott, 973 F.2d 507, 511 (6th Cir. 1992)(holding that the loss of customer goodwill or fair competition often result in an irreparable injury because the damages flowing from such losses are difficult to compute). The court in Stryker found it relevant that the terms of the non-compete agreement which the employer sought to enforce contained an acknowledgement of irreparable harm. Stryker at *7. By that, the non-compete provided that "[the employer] will suffer irreparable injury, loss, harm and damage if [the employee] engage[s] in conduct prohibited by this Agreement." Id. at *5. The court in Stryker also found it relevant that some of the employer's existing customers were targeted by the former employee's sales and marketing efforts and that the employer operated in a highly competitive market. Stryker at *7. These factors, considered together, established that the employer would suffer irreparable harm without the court granting injunctive relief. Id. at *8.
Certain types of harm are more likely to fall in the category of "irreparable harm" when compared to others. See Curves Int'l, Inc. v. Fox, C.A. No. 12-12250-RGS at *3 (D. Mass. May 9, 2013), citing K-Mart Corp. v. Oriental Plaza, Inc., 875 F.2d 907, 915 (1st Cir. 1989)(finding that the "harm to goodwill, like harm to reputation, is the type of harm not readily measurable or fully compensable in damages – and for that reason, more likely to be found 'irreparable.'"). In Curves, the court granted an injunction enforcing a non-compete against a franchisee. Id. In doing so, the court found that the franchisor had shown a likelihood of success establishing trademark infringement by the franchisee. Having shown trademark infringement, the court presumed that the franchisee's operation of a "rogue Curves fitness facility will cause irreparable harm to Curves unless injunctive relief is granted." Id. at *2, citing I.P. Lund Trading ApS v. Kohler Co., 163 F.3d 27, 33 (1st Cir. 1998)(holding that irreparable harm may be assumed if trademark holder shows an infringement claim is likely to succeed).
Florida's non-compete statute provides an avenue for a party enforcing a non-compete agreement to receive a presumption of irreparable injury. While this may be helpful to an employer, or any other party seeking to enforce a non-compete, it is important to remember that the presumption is rebuttable by the party opposing injunctive relief. The above decisions show some of the factors courts consider before finding the existence of an irreparable injury. It is helpful if a party can show that damages are difficult to compute. For example, how does a party calculate a dollar amount for the loss to goodwill due to the actions of a competitor? Similarly, how does someone calculate damages following trademark infringement? These are some of the issues to consider when litigating over the enforcement of a non-compete agreement.
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