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 Orlando,
Florida Non-Compete
Agreement Lawyer / Attorney
REPRESENTING THE EMPLOYEE
IN RESTRICTIVE COVENANT DISPUTES
Restrictive covenant (covenants not-to-compete)
litigation involves very high stakes,
particularly for the employee who faces a
temporary, or perhaps permanent, loss of his or
her livelihood. Not only is it often expensive
and time-consuming, but also emotionally and
financially draining. Thus, at the beginning of
the representation, the attorney representing an
employee who may be bound by a covenant
not-to-compete should carefully review and
consider the merits of the litigation, as well
as the short-term and long-term business
ramifications for the client.
This page will discuss some of the issues and
decisions to be confronted and the
determinations to be made in such litigation.
Probably the most important strategy decision to
employ when faced with an application for
injunctive relief is to take the offensive
immediately. The employee must attempt to turn
the tables on the employer in order to gain a
tactical advantage. Therefore, an employee who
may be faced with the threat of imminent
litigation through the filing of an injunction
for alleged breach of a restrictive covenant may
wish to consider a preemptive strike: filing a
motion to dissolve or commencing a declaratory
judgment action, which would seek a
determination of the enforceability of the
restrictive covenant and a declaration of its
invalidity, and also may raise other related
issues and claims. If a non-final appeal is
necessary, it should be considered that in cases
where there are no disputed factual matters at
issue, the appellate court will review the
injunction de novo. And, although the
interpretation of a covenant not-to-compete is a
matter of law to be resolved by a trial court,
an appellate court is nevertheless empowered to
undertake an independent assessment of the
covenant's meaning. Thus, an appellate court is
not restricted in its ability to reassess the
meaning and effect of the parties'
non-competition agreement and to reach a
conclusion which differs from that of the trial
court.
As the purpose of an injunction is to prevent irreparable harm,
one such tactic is to show that the employer will not be
irreparably harmed absent the injunction. However, where a
plaintiff sufficiently demonstrates that a former employee is
contacting its customers, the presumption of irreparable injury
attaches.
In addition, one of the requirements for the issuance of an
injunction is a showing that success on the merits is likely. In
Cordis Corp. v. Prooslin, the court held that there was no abuse
of discretion in denying a temporary injunction where the record
showed doubt that the employer had the ability to succeed at
trial. Accordingly, any available factual and legal arguments
should be made which show that the claims have little, if any,
chance of success. Furthermore, a showing that the former
employer does not have a legitimate interest to protect and/or
that the restrictive covenant does not reasonably protect that
interest will go a long way toward casting doubt on the
employer's right to an injunction.
It should be kept in mind that the ultimate goal is to declare
the restrictive covenant invalid, and, if appropriate, to
recover on the employee's counterclaims. Therefore, that
individual must have "clean hands" and be prepared to show the
Court that no improper actions were committed in connection with
his or her former employment. Any arguably wrongful actions by
the employee during the course of the litigation must be avoided
at all costs.
DEFENSES
The most effective defense to a non-compete agreement is that
the employer materially breached the contract between it and the
former employee prior to the employee's alleged breach, thereby
obviating any obligation on the part of the employee to comply
with same. Florida law holds that an employer's material breach
of an employment contract is a relevant factor in determining
whether an employer is entitled to a temporary injunction
enforcing a covenant not to compete. In the case Cordis
Corporation v. Prooslin, 482 So.2d 486 (Fla. 3d DCA 1986),
the court affirmed the trial court's decision to deny a
temporary injunction where there was evidence that the
employer's breach of the underlying contract cast doubt on
whether or not the employer was clearly entitled to success on
the merits. The Prooslin court recognized that if an
employer is in breach or default under an agreement or when he
gives good cause for a former employee's non-performance he has
no standing in equity to seek an injunction. The Prooslin
court noted that the trial court's discretion in granting a
temporary injunction should be guided by established rules and
principles of equity jurisprudence. In the case of Troup v.
Heacock, 367 So.2d 691 (Fla. 1st DCA 1979), the appellate
court reversed the trial court's decision that granted a motion
for temporary injunction. The appellate court noted that the
employer had materially breached the employment contract and
therefore the covenant not to compete was unenforceable by the
employer. The Troup court stated that if the injunction were
allowed to stand not only would it be contrary to equity but it
would result in inverse peonage. Numerous other Florida cases
have recognized the a prior material breach by an employer will
discharge an employee from abiding by a covenant not to compete.
Generally Seaboard Oil Co. v Donovan, 128 So. 821 (Fla. 1930);
Sarasota Beverage Company v. Johnson, 551 So.2d 503 (Fla. 2d DCA
1989) (en banc); Channell v. Applied Research, Inc., 472 So.2d
1260,1262 (Fla. 4th DCA 1985); Thomas v. Fed, Ins. Agency, 51
B.R. 653 (Bankr. M.D. Fla. 1985).
Similarlry,
whether the employee while employed was subjected to
discrimination and/or employment actions which were illegal or
against public policy may create a defense toward enforcement of
a covenant or other duty under the doctrines of unclean hands,
or equitable estoppel, etc. Moreover, the employer's subsequent
actions (i.e., anti-competitive activity, tortious interference,
etc.) arguably could prevent it from obtaining the relief sought
under these theories. In Lee & Associates, Inc., of North
Florida v. Lee, the court held that where the specific contract
language provided, a covenant not-to-compete in an employment
contract did not apply to the employee who was not discharged
for good cause and did not voluntarily leave his employment.
Violations of the Fair Labor Standards Act/Overtime, is a
frequently used defense to enforcement of a non-compete
agreement.
Obviously,
all monetary and breach of contract claims should be asserted
specifically. These may include claims for payment of salary,
severance pay, commissions, expense reimbursement, vacation and
sick pay, etc.
CONCLUSION
An employee must contend with many concerns when faced with
restrictive covenant litigation. Being cognizant of the time,
expense and commitment required, the most prudent course is for
the employee to consult with counsel early and work out a plan
of action before he or she leaves the place of employment. In
view of the high stakes involved, all defenses to injunctive
relief should be investigated and vigorously pursued.
For a confidential
consultation regarding potential employment
dispute cases, contact the Law Office of N. James
Turner, Esq., P.A. at
(407) 422-6464
The
hiring of a lawyer is an important decision that should not
be based solely on advertisements. Before you decide on the
hiring of a lawyer, you should learn about the lawyer's qualifications
and experience.
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