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Five Things to Remember in Florida Non-Compete Injunctions

There are now different legal standards governing the enforceability of restrictive covenants in Florida, depending upon the period of time in which they were executed. Since the legal standards are quite different, they create "traps for the unwary." American Residential Servs., Inc. v. Event Tech. Servs., Inc., 715 So. 2d 1048 (Fla. 3d DCA 1998). There are difference standards for agreements executed prior to June 28, 1990; agreements executed from June 28, 1990 through June 30, 1996, which are governed by §542.33, Fla. Stat.; and agreements executed from July 1, 1996 through present, which are governed by § 542.335, Fla. Stat.

The Court Must Apply The Correct Statute

For example, in Tri-County Sweeping Servs., Inc. v. Lawson, 757 So.2d 1290 (Fla. 4th DCA 2000) (per curiam), the Fourth District Court of Appeal reversed the trial court's denial of a request for injunctive relief because the trial court erroneously applied the pre-1996 law to a non-compete entered into in 1997, thereby precluding enforcement against an independent contractor.

"We reverse the November 5, 1999 order denying appellant's request for injunctive relief. The face of the order indicates that the trial court applied the incorrect law. This case concerns the enforcement of a covenant not to compete entered into in 1997." Id. See also Am. II Elecs., Inc. v. Smith, 830 So. 2d 906, 908 (Fla. 2d DCA. 2002).

The Order Must Set Forth The Standard And Findings

"In order to obtain a temporary injunction, the party seeking the injunction must establish that: (1) irreparable injury will result if the injunction is not granted; (2) there is no adequate remedy at law; (3) the party has a clear legal right to the requested relief; and (4) the public interest will be served by the temporary injunction." Provident Mgmt. Corp. v. Treasure Island, 796 So. 2d 481, 485 n.9 (Fla. 2001); see also Yachting Promotions, Inc. v. Broward, 792 So.2d 660, 663 (Fla. 4th DCA 2001).

"A temporary injunction is an extraordinary remedy which ‘should be granted sparingly and only after the moving party has alleged and proven facts entitling it to relief." Orkin Extermination Co. Inc., v. Tfank, 766 So. 2d 318, 319 (Fla. 4th DCA 2000)(emphasis in the original)(holding that where "there is notice and a contested evidentiary hearing, the use of a verified complaint, standing alone, does not constitute proof sufficient for establishing the necessary elements of a temporary injunction").

The written order must set forth the specific findings required for issuance of an injunction. Watkins v. Colonial Life and Acc. Ins. Co., 719 So. 2d 934, 935 (Fla. 5th DCA 1998); Harrison v. Palm Harbor MRI, Inc ., 703 So.2d 1117, 1119 (Fla. 2d DCA 1997)("[T]he court's written order was defective since it failed to make specific findings regarding irreparable harm, inadequate remedy at law, substantial likelihood of success on the merits and consideration of public policy").

The Order Must Specify What It Prohibits

"[A]n order should be confined within reasonable limitations and phrased in such language that its requirements can be met, without resort to portions of the record or facts outside the ‘four corners' of the injunction itself. One against whom an injunction is directed should not be left in doubt as to what his is required to do." Clark v. Allied Associates, Inc., 477 So.2d 656, 666-67 (Fla. 5th DCA 1985). See also Williamson v. Geneva, Inc ., 550 So.2d 8, 11(Fla. 2d DCA 1989)(holding that injunction did not meet the requirements of Fla.R.Civ.P. 1.610(c) because it did not include list of customers and therefore did not describe in reasonable detail the act to be restrained).

The Movant Must Post A Bond

Fla.R.Civ.P. 1.610(b) requires that the moving party post a bond as a condition of having the court enter a temporary injunction. See Provident Mgmt. Corp. v. Treasure Island, 796 So. 2d 481, 485 (Fla. 2001). "It is error for the trial court to enter a temporary injunction which fails to require the movant to post a bond." East v. Aqua Gaming, Inc., 805 So.2d 932, 935 (Fla. 2d DCA 2001).

The Court Must Conduct An Evidentiary Hearing On The Amount Of The Bond

"Since the damages recoverable for wrongfully obtaining an injunction are limited to the amount of the injunction bond, the court must provide both parties the opportunity to present evidence as to the amount of an appropriate bond." Richard v. Behavioral Healthcare Options, Inc., 647 So.2d 976, 978 (Fla. 2d DCA 1994).

In MetalMax Cutting Tools, Inc., v. Mil-Tec USA, Inc ., 794 So.2d 609, 611 (Fla. 2d DCA 2001), Mil-Tec claimed that a former employee unlawfully used trade secrets in conjunction with his employment with MetalMax and Lexington Cutter, Inc. Mil-Tec moved for a temporary injunction.

The trial court heard testimony from Lexington's president about the costs incurred with developing the new cutting tool. However, the Court denied appellants request for an evidentiary hearing on the amount of the bond.

The Second District Court of Appeal stated that the trial court abused its discretion by not conducting an evidentiary hearing on the bond amount so that it could consider lost profits or attorney's fees that the appellant would incur if the temporary injunction was later overturned. Id.

The Court "recognize[d] that a trial court may consider factors other than anticipated costs and damages in setting a bond, including the adverse party's likelihood of overturning the temporary injunction." See also Offshore Marine Towing, Inc., v. Sea Tow Services Int'l., Inc., 778 So.2d 510, 511 (Fla. 4th DCA 2001)(trial court committed error by not holding evidentiary hearing on bond amount).

This article provided courtesy of Ryan D. Barack.

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