Enforcing Restrictive Covenants in Florida: What Constitutes an “Appropriate and Effective Remedy?”

In Florida, restrictive covenants regarding non-competition, non-solicitation and non-disclosure/confidentiality are governed by Section 542.335 of the Florida Statutes.  Restrictive covenants are widely used in competitive industries to protect the business interests of employers.  Noncompetition, nonsolicitation and non-disclosure agreements can significantly reduce the risks that often come with the separation of an employee, such as the exposure of confidential information, proprietary methods and trade secrets, along with the potential loss of referral sources or goodwill in the marketplace. These valuable protections depend, however, on the enforceability of the restrictive covenant under Florida law.

Once an employer has overcome the hurdle of demonstrating that its restrictive covenant is enforceable, the next issue is determining how to enforce it.  Section 542.335(1)(j) provides that a court shall enforce a restrictive covenant by any “appropriate and effective remedy.”  Well, what constitutes an “appropriate and effective remedy?”  Most business owners simply want the former employee or contractor to be prohibited by court order from violating (or continuing to violate) the restrictive covenant.  Fortunately, the statute specifically allows for the entry of temporary and permanent injunctions against whom enforcement of the covenant is sought.  

In simple terms, an injunction prevents (or enjoins) a person or company from engaging in certain behavior.   A preliminary injunction is permitted under the rules of civil procedure, and allows a litigant to request that the Court intervene and enter an injunction on a temporary/preliminary basis to maintain the status quo while the case continues to conclusion or trial. To obtain a preliminary injunction under Florida law, a plaintiff must prove:  1) irreparable harm; 2) a substantial likelihood of success on the merits; 3) a balancing of competing claims of injury to the parties; and 4) consideration of the public interest.  The only difference in the elements needed for the granting of a permanent, as opposed to a preliminary, injunction under Florida is the need to show actual success on the merits, not merely a likelihood of success.  

The “irreparable harm” factor is the crux of injunctive relief. An injury must be actual and imminent, not remote or speculative.   For an injury to be irreparable, it cannot be undone through monetary remedies.  In other words, if money would make the injured party whole, no irreparable harm exists under the law and injunctive relief is not appropriate.  

Some examples in which Florida courts have found the existence of irreparable harm include:

• the dissemination of confidential information by a former employee to the employer’s competitors; the employer’s reputation for maintaining its clients’ confidentiality would be tarnished and its competitors could underbid it (VAS Aero Services, LLC v. Arroyo, 860 F. Supp. 2d 1349, 1362 (S.D. 2012));  

• the taking of an employer’s confidential and trade secret information by a former employee upon termination, which would result in ongoing harm if the confidential information were disclosed to competitors, and “merely offering to return confidential information or trade secrets does not remove a threat of irreparable harm” (Hayes Healthcare Serv., LLC v. Meacham, No. 19-60113-CIV, 2019 WL 2637053, at * 5 (S.D. Fla. Feb. 1, 2019)); and

• loss of control of reputation, loss of trade, and loss of goodwill, including where there is a loss of customer goodwill because the damages flowing from such losses are difficult to calculate (Leedom Mgmt. Group, Inc. v. Perlmutter, No. 8:11–cv–2108–T–33TBM, 2012 WL 909322 at * 8 (M.D. Fla. Feb. 15, 2012)).  

The practical effect of an injunction is that it forces the party against whom enforcement is sought to do or refrain from doing precisely what the restrictive covenant stated in the first place.  Accordingly, injunctive relief is the most common remedy sought by plaintiffs in restrictive covenant enforcement lawsuits.  

If, however, a plaintiff is unable to make the requisite showing for entry of an injunction under Florida law, money damages may still be appropriate.  Additionally, section 542.335(1)(k) expressly provides for the award of attorneys’ fees and costs to the prevailing party, even absent a contractual provision authorizing such an award.  The legal issues involved in enforcing restrictive covenants are regularly evolving and can be complex.  It is important you consult and engage an experienced law firm for business matters like these.  If you need assistance enforcing a noncompetition, nonsolicitation or confidentiality provision for your business, click  here to contact the business litigation firm of Chane Socarras, PLLC or call us at (561) 309-3190.