United States: Defenses to Enforcement of a Florida Non-Compete Agreement

In a recent post, we discussed Avalon Legal Information Services, Inc. v. Keating, a March decision issued by the Fifth District enforcing certain provisions of a non-compete agreement.    The employer in Keating filed a complaint and motion seeking injunctive relief enforcing the non-compete agreement against a former employee.  The trial court granted the injunction and the employee appealed.  On appeal, the Fifth District sustained the injunction, however, it remanded the case to the lower court with instructions to modify portions of the injunction that were overbroad.   See, Avalon Legal Information Services, Inc. v. Keating, No. 5D12-78, Slip Op. at *6.  (Fla. 5^th DCA Mar. 8, 2013).   This post will look at the defenses raised by the employee in her opposition to enforcement of the non-compete agreement.  As the employer ultimately prevailed in Keating, its helpful to understand how the court responded to the employee’s defenses. 

Keating involved an employer seeking to enforce a non-compete agreement against a former employer that was soliciting customers of the employer.  Opinion at *2.  The employer in Keating provided consulting services for sheriffs agencies throughout Florida.  These services included training sheriffs on techniques for service of process.  During her employment, the employee in Keating signed a non-compete agreement which prohibited her from competing with and soliciting the employer’s civil process contracts throughout Florida.  Id. at *2.  The non-compete agreement lasted for three years following the expiration of the employment agreement.  Id.

Once the employment contract expired, the employee elected not to renew.  A few weeks after leaving the employer, however, the employer received a copy of a solicitation letter sent from the employee to all sixty-seven sheriffs’ offices throughout Florida.  Id.  The employer in Keating did not immediately seek to enforce the terms of the non-compete agreement.  Instead, the employer sent letters to its customers explaining that it still intended to provide civil process consulting services.  Despite its efforts to protect its customer relationships, over the next year the employer lost sixteen contracts with sheriffs’ offices.  Id.

After the trial court entered an order enforcing the non-compete, the employee appealed and raised several defenses to enforcement.  Id. at 4.  The employee first argued that the trial court erred in finding that she violated the non-compete agreement.  The Fifth District disagreed, finding there was plenty of evidence to prove the employee breached the non-compete agreement, including the employer’s testimony, the employee’s solicitation letter and a copy of the employee’s contract which it used to recruit customers of the employer.  Id.  The court noted that the non-compete agreement clearly prohibited the employee from “answering questions and reviewing documents as a civil process consultant,”  the type of work the employee was engaging in after leaving the employer.  Id.

Next, the employee argued that the non-compete agreement did not protect a legitimate business interest as required under Fla. Stat. § 542.335.  Id.  Again disagreeing with the employee, the court in Keating noted that the trial court determined that the restrictive covenant protected the employer’s “substantial relationships with existing and prospective clients” and “client goodwill.”  Id.  In support of its findings, the Fifth District recognized that the employer had purchased the business for $200,000 and this purchase price included client relationships and goodwill.  Id.   These relationships constituted a protectable interest which supported enforcement of the non-compete agreement.  Id.

The employee’s third defense to enforcement of the non-compete agreement focused on the duration of the agreement.  The non-compete provided for a three year duration.  The employee argued that the three year period was unreasonable under Fla. Stat. § 542.335(1)(d).  Opinion at *5.  Even though the non-compete exceeded the statutory presumption of two years duration, the trial court found the duration reasonable.  Id.  The employer testified that it selected a three year duration because the contracts were set to expire in 2012.  If the employer selected a duration that was less than three years, the non-compete agreement would be useless because it would not protect contracts up for renewal.  Id.  Based on this reasoning, the Fifth District affirmed the trial court’s ruling on the three year duration.

The employee’s final defense was that the non-compete agreement was unenforceable as being contrary to public policy. On appeal, the Fifth District noted that the trial court did not identify any public policy argument that would have substantially outweighed the need to protect the employer’s legitimate business interest in enforcing the agreement.  Opinion at *5.  Instead, the trial court found that public policy favored enforcing the non-compete agreement against the employee to protect a party’s “valid contractual rights.” Id., citing Hilb Rogal & Hobbs of Fla., Inc. v. Grimmel, 48 So.3d 957, 962 (Fla. 4^th DCA 2010).  

The employer in Keating did not receive all the relief it initially requested.  By that, the Fifth District remanded the case to the trial court with instructions that the court modify the injunction.  The Fifth District found the trial court’s order too broad as it prohibited the employee from competing for “any sheriffs in Florida” in the area of civil service consulting.  Id. at *6.  The appellate court found it appropriate to amend the order so that the employee could compete for those sheriff’s offices where the employer had no substantial relationship.  Id. 

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