Florida Statute 542.335 applies to the enforcement of non-compete agreements in Florida. In relevant part, that statute provides that a court shall presume irreparable harm flowing from the violation of an enforceable non-compete agreement. Let me unpack this. In non-compete cases, the main event is usually a preliminary injunction. In most non-compete cases, it is incredibly difficult for plaintiffs to prove legally recoverable damages. Beyond this, most plaintiffs in non-compete cases care more about shutting down the competition than they do about collecting whatever damages they could possibly prove. In light of this, Florida state law basically eliminates the requirement that non-compete plaintiffs prove any actual or imminent harm. Instead, Florida law requires courts to presume such harm if there is (a) a non-compete agreement and (b) a legitimate business interest.
On this particular legal point, Florida state law clearly and directly conflicts with federal law. In a non-compete case that is litigated in Florida state court, this isn’t a problem—- because Florida state courts naturally apply Florida state procedural law. But for a Florida non-compete case that is litigated in federal court, this is a huge problem. Because federal courts apply federal procedural law.
Federal Rule of Civil Procedure 65 sets out the requirements for issuance of a preliminary injunction in federal court. FRCP 65 clearly requires that a party seeking a preliminary injunction make a clear showing of immediate and irreparable harm. In fact, federal case law routinely holds that this showing of irreparable harm is the most important factor in determining whether to grant injunctive relief. So if a plaintiff in federal court cannot prove that an injunction is necessary to prevent immediate and irreparable harm, any request for a preliminary injunction should be denied. The United States Court of Appeals for the Eleventh Circuit (which ultimately governs the federal courts in Florida) has repeatedly reaffirmed this point: No proof of irreparable harm, no injunction.
The problem here: Certain judges in the Florida federal district courts have relied upon Florida’s state law presumption of irreparable harm in choosing to grant preliminary injunctions. This is not a court-by-court distinction (as in SDFL, MDFL, NDFL). It is a judge-by-judge distinction. So within a particular court (e.g. Southern District of Florida), you have some judges holding that a presumption applies and other judges holding that no presumption can apply under federal law.
Our Recent Appeal to the 11th Circuit
This exact issue arose in a case that we litigated and ultimately appealed to the Eleventh Circuit. In that case (Vital Pharms., Inc. v. Alfieri, 23 F.4th 1282 (11th Cir. 2022)), the SDFL enjoined one of the defendants under a non-compete agreement. In doing so, the court held that there was a presumption of irreparable harm under Florida state law. We raised numerous issues on appeal and ultimately prevailed. The 11th Circuit vacated the preliminary injunction. Chief Judge Pryor wrote the majority opinion along with a separate concurrence. In his extensive concurring opinion, he focused squarely on the issue of Florida’s presumption of irreparable harm and how that presumption conflicts with federal procedural law. As Judge Pryor explains it: The matter of granting injunctive relief is procedural, not substantive. And under Eerie, federal courts are bound to apply federal procedural law. That means movants seeking a preliminary injunction must prove irreparable harm, rather than relying on a state law presumption.
My Commentary: Non-Compete Exceptionalism
Over the past decade, I have litigated nearly 200 non-compete cases. As many folks know, I am a staunch critic of the overuse and abuse of employee non-compete agreements. In some states, non-compete abuse is rampant. In places like Florida, companies routinely use non-compete agreements to prevent fair and ordinary competition, limit employee mobility, and suppress wages. In Florida, non-compete agreements are everywhere—- at every level of every industry. Even janitors and factory workers have non-compete agreements. In jurisdictions where they can get away with it, companies engage in this sort of non-compete abuse because it is profitable. But it is not just profitable for the companies. It is profitable for many lawyers and law firms. Several large law firms that are based in Florida or that have a major Florida presence have an entire practice group dedicated to non-compete enforcement. In short: Corporate entities and certain corporate lawyers in Florida have a vested interest in perpetuating this system — because it is lucrative. Beyond this, if we objectively consider the existing power structure, the true power (resources, wealth, political clout, etc.) overwhelmingly lies on that side: the side of those favoring aggressive non-compete use and enforcement. The power dynamics and economic realities simply do not favor employees (particularly working class or middle class ones) mounting a real challenge to this regime. To put it bluntly: How can a factory worker, security guard, or administrative assistant ever get a lawyer and challenge a non-compete agreement in a state like Florida? If I don’t represent these people for free (as I have done dozens of times), then who will? I don’t see a long line of lawyers who have the appetite or the resources for that specific (and often ugly) type of pro bono or contingency work.
Against this backdrop, we have witnessed the emergence of what I term “non-compete exceptionalism” in Florida. In other words, ordinary rules and obstacles are frequently relaxed for companies seeking to enforce non-compete agreements. The system appears set up to facilitate (a) aggressive use / abuse of non-compete agreements by corporate actors (b) use of incredibly broad / unreasonable non-compete agreements and (c) easy non-compete enforcement.
From a legal and analytical perspective, that is particularly ironic. Non-compete agreements are restraints of trade and naturally subject to antitrust scrutiny. Legally, they are supposed to be disfavored and enforced only where absolutely necessary to protect a legitimate business interest. Over the past decade, my colleagues and I have made tremendous progress toward reforming this area of law and creating a body of new Florida case law that establishes (or reestablishes) the proper application of the relevant non-compete statute (542.335).
On this particular issue, it is obvious (to me) that federal courts must apply Rule 65. And, under Rule 65, a party seeking a preliminary injunction must prove irreparable harm. The Florida Legislature’s efforts to make it easier to enforce non-compete agreements cannot trump federal law. Judge Pryor’s concurrence provides a roadmap for any litigants who find themselves in front of the 11th Circuit on this same issue. Because this issue is bound to crop up again soon.
Jonathan Pollard is a competition lawyer based in Fort Lauderdale, Florida. He has extensive experience litigating non-compete, trade secret, and unfair competition cases. His office can be reached at 954-332-2380.
