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Florida Non-Compete Agreements: Harm to the the Employee Not a Factor

One of the most important factors courts typically consider in granting or denying an injunction is the balance of harms. In short, the balance of harms considers the harm that the moving party faces absent an injunction vs. the harm to the opposing party if the injunction issues. If you’re in Florida and in federal court, that framework applies. But if you are in Florida state court, that framework does not necessarily apply. In the non-compete context, Florida law prohibits the court from considering the harm that will result to the individual or employee if an injunction issues. A recent case out of Florida’s Second District Court of Appeal illustrates this point:

Florida Digestive Health Specialists (FDHS) filed a motion for temporary injunction against one of its former employees, Dr. Ramon Colina, in an effort to enforce a non-compete agreement and prevent Dr. Colina from going to work for a competitor. FDHS has various had various employment and partnership agreements with Colina that contained a variety of restrictive covenants. Under these restrictive covenants, Colina was prohibited from practicing gastroenterology in Sarasota, Manatee or Charlotte counties or any other county where FDHS operated a medical practice at the time of his terminated. Strangely, however, the non-compete contained a carve out that allowed Colina to establish his own practice, or, to join a practice that was owned and managed by physicians and contained no more physicians than FDHS at the time of his departure. This actually seemed to give Colina some exit options that would allow him to continue practicing but avoid non-compete litigation.

But 4 days after leaving FDH, Colina joined a competing medical practice called Intercoastal Medical Group. Intercoastal had more than 70 doctors throughout Sarasota and Manatee Counties and did not fit within the carve out. As expected, FDHS sued and sought a temporary injunction barring Colina from practicing with Intercoastal or using any of FDHS’s confidential information. The trial court issued an injunction prohibiting Colina from disparaging FDHS or interfering with its patient relationships, but did not enjoin him from working for Intercoastal. The court reasoned that the harm to Colina from an injunction outweighed the possible harm that FDHS would face absent an injunction. FDHS appealed.

FACTORS FOR TEMPORARY INJUNCTION

On appeal, Florida’s Second DCA held that the trial court committed reversible error by considering the possible harm that an injunction could cause Dr. Colina.

According to the appellate court, it was error for the court to consider personal hardship as a factor in denying the injunction motion and allowing Dr. Colina to continue working for his new employer. As the court pointed out, Florida Statutes § 542.335 specify only four elements a court must consider in the enforcement of a restrictive covenant: 1) the likelihood of irreparable injury, 2) unavailability of an adequate remedy at law, 3) likelihood of success on the merits, and 4) public interest in granting the injunction. The statute also specifically prohibits personal economic or other hardship from being a factor in the court’s analysis of an injunction. Therefore, the Court of Appeal reversed this portion of the trial court’s order and instructed it to uphold the 2-year non-compete.

 The Takeaways:

  • Florida: Florida is the most aggressively pro non-compete state in the entire country. If you expect Florida non-compete law to be similar non-compete law in other states, you are in for a rude awakening. And if you expect Florida non-compete law to be reasonable or grounded in common sense, you are dead wrong. Yes, it’s possible to successfully defend against a Florida non-compete case, but it’s tough.
  • Doctors: In some states, physician non-compete agreements are unenforceable. But in Florida, courts routinely and aggressively enforce physician non-compete agreements.
  • State Court: If this same case could have been removed to federal court (under diversity), then a different framework would have applied. In federal court, the federal rule governing injunctions (FRCP 65) applies. Under FRCP 65 and the case law interpreting that rule, a federal court must consider the harm to both parties. Bottom line: Get the case into federal court if you can.

This case is Florida Digestive Health Specialists, LLP v. Colina, No. 2D14-4561, 2015 WL 6874913 (Fla. 2nd DCA 2015).

 

Jonathan Pollard is the principal of Pollard PLLC, a Fort Lauderdale-based litigation boutique focused on competition law. The firm and its attorneys have extensive experience litigating non-compete, trade secret and antitrust matters. They represent clients throughout the country. Their office can be reached at 954-332-2380.

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