Pollard PLLC has scored another major appellate victory, this time in the United States Court of Appeals for the 11th Circuit. The trial court case involved several employees who left Vital Pharmaceuticals or “VPX” (the maker of Bang energy drink) to join a start-up beverage company called Elegance Brands. All of these employees had non-compete agreements. The court held a two-day evidentiary hearing on VPX’s motion for a preliminary injunction. After the hearing, the trial court enjoined one of the employees – Maros – who worked in the supply chain segment of VPX. In issuing its preliminary injunction, the Southern District of Florida held that VPX had established a legitimate business interest in both (1) its formulas and (2) its customer relationships.
On appeal, Pollard argued that VPX was not entitled to injunctive relief because it failed to establish any legitimate business interest, thereby rendering the non-compete agreement unenforceable. Specifically, Pollard argued that VPX had already admitted that its formulas were not at issue. And, with respect to customers, VPX had failed to put any specific, protectable customer relationships at issue.
The 11th Circuit agreed. In its published opinion, the Court made two significant findings: First, that Florida non-compete law only protects “substantial” customer relationships. And that this requires plaintiffs seeking an injunction to provide enough detail about the specific customer relationships at issue for courts to evaluate the nature and protectability of those relationships. Second, the Court held that VPX failed to establish irreparable harm.
The 11th Circuit has repeatedly stated that a preliminary injunction is an “extraordinary” and “drastic” measure— one to be granted only when there is evidence of actual and imminent irreparable harm. In spite of this guidance, federal district courts in Florida routinely issue preliminary injunctions in non-compete cases even where that standard for irreparable harm has not been met. Part of the confusion owes to Florida state law. Florida’s non-compete law (Florida Statutes 542.335) requires courts to presume irreparable harm flowing from the violation of any enforceable or valid non-compete agreement.
But Florida’s statutory presumption of irreparable harm simply cannot be reconciled with the Federal Rules. Chief Judge Pryor wrote a separate, extensive concurring opinion where he delved into the “thorny” issue of Florida’s presumption of irreparable harm in non-compete cases. To put it in brief, Judge Pryor wrote that federal courts apply federal law. And that in federal court, Federal Rule of Civil Procedure 65 trumps Florida’s state law statutory presumption of irreparable harm.
That specific issue seems likely to reach the full 11th Circuit Court of Appeals (en banc), and possibly even the United States Supreme Court.
On the briefs for the firm were Jonathan Pollard and Chris Prater. Pollard himself presented the oral argument before the 11th Circuit in Atlanta.
Pollard PLLC is a litigation firm based in Fort Lauderdale, Florida. The firm and its attorneys have extensive experience litigating non-compete and trade secret cases. The firm’s office can be reached at 954-332-2380.