In one of the year’s most significant Florida non-compete decisions, Florida’s Fifth District Court of Appeals vacated a preliminary injunction entered by the trial court against a team of software engineers and their Deltona-based company. At its core, the case involved rival tech firms fighting over the right to perform work for Robbins Research International (“RRI”), a conglomerate owned by the world-renowned motivational speaker and life coach Tony Robbins.
Two software engineers, Michael Evans and Andrew Chinn, worked for Tech Guys as independent contractors. Tech Guys was one of multiple vendors that performed software development services for RRI. At some point during his employment, Evans negotiated a second agreement with Tech Guys and RRI that did not contain any non-compete provisions. Evans then left Tech Guys and started his own software engineering company, X-Tech. Chinn, who had a non-compete with Tech Guys, joined Evans in the X-Tech venture. The relationship between RRI and Tech Guys ended and RRI proceeded to hire X-Tech. Predictably, Tech Guys sued alleging that Evans, Chinn and X-Tech were engaging in unfair competition, violating their non-compete agreements and tortuously inferring with Tech Guys’ relationships. After an evidentiary hearing, the trial court entered a preliminary injunction barring Chinn and X-Tech from performing work for RRI or any Tech Guys’ client.
The defendants appealed. In what likely will be a seminal decision in the Florida non-compete space, Florida’s 5th DCA vacated the injunction. The 5th DCA held that although Tech Guys had done a significant amount of business with RRI (roughly $500,000 over the past few years), that the relationship was not protectable. RRI used multiple vendors and never had an exclusive relationship with Tech Guys. In fact, shortly before moving its business to X-Tech, RRI had offered Tech Guys work at industry standard rates. Tech Guys insisted on higher rates and basically turned away the work. According to the appellate court:
Tech Guys did not present competent, substantial evidence demonstrating that enforcement of Chinn’s non-compete agreement was necessary to protect its business interests…
The takeaway: Florida non-compete law only protects substantial customer relationships. And in spite of the dollar amount at issue, the market realities demonstrate that the relationship in this case was not substantial and therefore not protectable. The case is set for trial in February 2016.
Pollard PLLC is a litigation boutique focused on competition law. The firm’s principal Jonathan Pollard began his career at Boies, Schiller & Flexner and has extensive experience litigating non-compete, trade secret and antitrust cases. His office can be reached at 954-332-2380.