Florida Non-Competes: Appellate Court Overturns Trial Court’s Denial of Preliminary Injunction Because Trial Court Failed to Properly Apply Rebuttable Presumption of Irreparable Harm
Florida statutory and case law is clear that, in order to avoid the imposition of preliminary injunctive relief, a former employee who is violating his or her non-compete must rebut the evidentiary presumption in favor of the former employer regarding the existence of irreparable harm. This burden-shifting mechanism, which generally applies when the former employer establishes legitimate business interests such as substantial customer relationships and an otherwise enforceable restrictive covenant, results in the rebuttal presumption of irreparable injury upon the violation of the restrictive covenant.
As the Third District Court of Appeal recently explained in reversing the trial court’s failure to properly apply the law of rebuttable presumptions:
The trial court is afforded broad discretion when granting, modifying or denying an injunction. The trial court’s decision can only be overturned on appeal upon a finding of a clear abuse of discretion. Wise v. Schmidek, 649 So.2d 336, 337 (Fla. 3d DCA 1995). We find there was such an abuse as the record shows that Allied presented unrebutted evidence of a statutorily listed legitimate business interest to be protected and also presented unrebutted evidence of irreparable harm.
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At the evidentiary hearing on the motion for temporary injunction, Allied presented unrebutted evidence of the existence of statutorily legitimate business interests to be protected and evidence that Given had substantial relationships with specific prospective or existing Allied customers. Allied’s president, Mr. Palmer, testified that his company had trained Given, over the course of Given’s six-year employment, in its manufacturing and production techniques, marketing strategies, and confidential pricing strategies. In addition, Given had knowledge of existing and prospective customers, and had been sent to several trade meetings to cultivate these contacts. “As with many sales positions, regardless of the industry, forming relationships with prospective and existing customers is invaluable and often vital for success.” Reliance Wholesale, 51 So.3d at 565. Allied, therefore, presented evidence of the existence of legitimate business interests to be protected as defined and set forth in Florida Statutes section 542.335(1)(b) 2, and evidence that Given had substantial relationships with specific prospective or existing Allied customers. See § 542.335(1)(b)3, Fla. Stat. (2016). As such, Allied’s evidence was sufficient to create a rebuttable presumption of irreparable injury for purposes of obtaining a temporary injunction under section 542.335(j).
Once Allied presented evidence of irreparable injury, the burden shifted to Given, the party opposing enforcement, to establish the absence of such injury. § 542.335(1)(j), Fla. Stat. (2016). Given failed to present any such evidence. Given argues that as he had not yet begun actively managing Univar territory because of the pending injunction proceedings, he has not breached the non-compete and no monetary damages were incurred by Allied as a result of his employment with Univar. He admitted that, if he were not enjoined, he would begin managing a sales territory for Univar. However, the only focus at the preliminary injunction stage is to maintain longstanding relationships and preserve the company’s goodwill. See U.S. Floral Corp. v. Salazar, 475 So.2d 1305 (Fla. 3d DCA 1985) (noting that entry of a temporary injunction is the favored remedy for violation of a non-compete agreement); Variable Annuity Life Ins. Co. v. Hausinger, 927 So.2d 243, 245 (Fla. 2d DCA 2006) (“[T]he harm presumed under the statute includes the potential damages to [the plaintiff’s] longstanding relationships with its customers and the protection of confidential client information”). The breach of a non-compete agreement that threatens a former employer’s goodwill and relationships with its customers, indicates that nothing short of an injunction would prevent this loss. See TransUnion Risk & Alternative Data Sols., Inc. v. Reilly, 181 So.3d 548, 551 (Fla. 4th DCA 2015)
Allied Universal Corp. v. Given, — So. 3d —, 2017 WL 1018502 (Fla. 3d DCA March 15, 2017) (reversing trial court and remanding with instructions for the trial court to grant the motion for preliminary injunction).
As the Allied Universal court has reminded us, a rebuttal presumption means exactly that: the former employee must actually rebut with evidence the presumption of irreparable harm. If the presumption is not rebutted, then the trial court has an obligation under Florida law to grant the employer’s motion for preliminary injunction.