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Florida Non-Compete Agreements: Customers vs. Suppliers

In Florida, non-compete agreements are governed by Florida Statute 542.335.   The statute indicates that non-compete agreements can only be used to protect legitimate business interests.  Although the Statute does not claim to be exhaustive, it does spell out a number of such interests.  These interests include relationships with customers.  In characteristic fashion, many companies suing to enforce non-compete agreements attempt to conflate customers and suppliers.  Fortunately, courts – at least in Florida – have been reluctant to extend the statute to protect non-customer relationships.

Anybody who is litigating a non-compete case in Florida should look at Southern Wine & Spirits v. Simpkins, Case No. 1:2010cv21136 (S.D.F.L. 2010).  It has some of everything.  SWS is a wine & spirits distributor.  They get wine and spirits from manufacturers suppliers.  The suppliers are the companies that actually make the product.  Think Diageo, for example, or Robert Mondavi.  One of Southern’s central contentions in the case was that 542.335, the Florida non-compete law, protected relationships with suppliers.  This meant that if an employee left Southern and went to work for another wine and spirits distributor, that former employee could not reach out to the suppliers.

At face value, if you do not think it through, it may sound somewhat plausible.  Suppliers, customers….  maybe they are all the same.  But if you reflect on this at all, the argument falls apart.  The customers, here, are bars, restaurants and retail stores that buy wine and spirits from Southern and other distributors.  Those are the customers.  There are tens of thousands of those.  And relationships with specific customers out of those tens of thousands of customers are protectable.  But the suppliers?  They are obviously limited in number.  They are well-known in the industry.  They are a discrete universe.   They are not customers.  The issue was well-briefed in the Simpkins case.

Another great (and fairly recent) decision out of the Middle District of Florida, Concrete Surface Innovations v. McCarthy, the court resolved the supplier issue conclusively, holding:

“As explained by the parties, Metzger-McGuire and VersaFlex are manufacturers of epoxy that is used in renovations and repairs of concrete, and they are the only two manufacturers of epoxy that Wal-Mart and Sam’s Club will allow the contractors that they hire to use in renovating their stores. Concrete contends that its “substantial relationships” with Metzger-McGuire and VersaFlex are protectable business interests, but as far as the Court can tell these suppliers are vendors of a product that is necessary for some jobs to be awarded but they are not akin to “clients” or “customers.” Cf. Bradley v. Health Coal., Inc., 687 So. 2d 329, 334 (Fla. 3d DCA 1997) (finding that trial court erred in enjoining former employee from contacting any of former employer’s suppliers and noting that the presumption of irreparable injury for “direct solicitation of customers” in version of Florida statute then in effect did not extend to “doing business with suppliers”). Indeed, as noted by Floors, Concrete is the customer or client of Metzger-McGuire or VersaFlex-not the other way around.”

The takeaway:  Non-compete agreements are often drafted in a form that is overbroad and unenforceable as written.  When employers sue former employees for violating non-compete agreements, they are often guilty of overreaching (i.e. attempting to “protect” interests that are not protectable under the non-compete statute).  At least under Florida law, relationships with suppliers cannot be protected using the non-compete statute.

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