It is not uncommon for a non-compete agreement which a party seeks to enforce in Florida to contain a choice of law provision that requires the parties to apply the law of another state. An issue that arises in such circumstances is whether the court will automatically apply the law of the forum as spelled out in the non-compete agreement or apply Florida law. This issue was addressed by the Fourth District a couple of years ago in Magner International Corp v. Brett, 960 So.2d 841 (Fla. 4th DCA 2007).
In Magner, an employer filed an emergency motion with the trial court seeking an injunction to enforce a non-compete agreement. The trial court denied the motion, finding that the non-compete agreement was not legally assigned to the employer. The employer appealed and the Fourth District reversed the trial court. Id. at 843.
The employee in Magner began employment with the employer in 1992. During the course of his employment, the employee signed a non-compete agreement. In 2000, the employer entered into a separatation agreement with one of the company's principals. Under the separation agreement, the employee went to work for a new entity (the "New Employer") wherein the employer assigned the employee's non-compete agreement to the New Employer. Six years later, the employee resigned working for the New Employer and began working for a competitor. Soon after, the New Employer filed a complaint and emergency motion for temporary injunction seeking enforcement of the non-compete agreement. Id. at 843.
The trial court in Magner found that the New Employer lacked standing to enforce the assigned non-compete agreement. In considering the appeal, the Fourth District first looked to the choice of law provision contained in the contract. Paragraph 8 of the contract provided that the non-compete agreement "shall be interpreted and enforced in accordance with the laws of the State of Connecticut." Id. The court in Magner noted that "Florida courts are obligated to enforce choice of law provisions unless a showing is made that the law of the chosen forum contravenes strong public policy or that the clause is otherwise unreasonable or unjust." Id. at 843-44, quoting Gilman + Ciocia, Inc., v. Wetherald, 885 So.2d 900, 902 (Fla. 4th DCA 2004)(further citations omitted).
The Fourth District next found that no showing was made that the law of the chosen forum, Connecticut, was contrary to public policy or otherwise unreasonable. The court therefore applied Connecticut law which allows for the assignment of non-compete agreements upon the sale of a business when the entire business is sold to another entity. Id. at 844, citing Madrigal Audio Laboratories, Inc. v. Cello, 799 F.2d 814, 821 (2d Cir. 1986)(holding that "Connecticut adheres to the view, rejected by most jurisdictions, that an employee's covenant not to compete is an assignable asset of the employer.")
Magner, while upholding the forum selection clause contained in the non-compete agreement, leaves open the opportunity to challenge a forum selection clause that is contrary to public policy. The employee in Magner did not show that Connecticut's assignability of non-competes was unreasonable. Still, Florida has one of the most comprehensive non-compete statutes in the country. Circumstances may arise where a litigant can show that applying the laws governing non-competes of another state is either unreasonable or contrary to Florida public policy and therefore should not be enforced.
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