Florida District Court of Appeal Requires Evidentiary Hearing to Determine Amount of Bond for Injunction Enforcing Non-Compete Agreement

In an employment and business litigation case involving a temporary injunction against a former employee who signed a non-compete agreement, the trial court entered an Order for Temporary Injunction in favor of the employer that prohibited the former employee from working as a sales representative in a defined geographical area, from utilizing any confidential information learned from the employer, and from contacting any of the employer’s customers and clients.

The former employee appealed and presented several arguments.  After explaining that the trial court’s ruling comes to the appellate court with a presumption of correctness, which required the appellate court to uphold the trial court’s factual findings of the Order for Temporary Injunction, the Fourth District Court of Appeal nonetheless determined that the trial court had not properly determined the amount of the bond to require the former employer to post.

The appellate court explained that when a trial court sets an injunction bond, the amount should reflect the trial court’s determination following an evidentiary hearing of the foreseeable damages for a wrongful injunction.  The amount of the bond is important because it generally establishes the damages available to the defendant if the injunction was entered improperly.  In this instance, the trial court set the bond at $100,000 but did not hold any evidentiary hearing.  Therefore, the appellate court remanded the action to the trial court to hold an evidentiary hearing.  The appellate court also decided that the injunction, along with the $100,000 bond, should remain in place pending the outcome of the evidentiary hearing.

The case is styled Meadows v. Medical Optics, Inc., Case No. 4D11-2842, Fourth District Court of Appeal of Florida.  The opinion of the appellate court was issued on June 20, 2012.

Matthew J. Meyer is a Partner in our Florida office.