The Fourth District Court of Appeals Changes the Landscape of Florida’s Law on Restrictive Covenants

Posted on Blog December 21, 2015


In Transunion Risk and Alternative Data Solutions, Inc. v. Reilly, Case No. 4D15-494 (Fla. 4th DCA Dec. 2, 2015), the Fourth District Court of Appeal reversed the trial court’s order denying Transunion’s motion for a preliminary injunction to enforce a non-compete agreement against Transunion’s former employee, James Reilly. The Fourth District found that the trial court misapplied the presumption of irreparable injury provided for in Florida Statutes §524.335(1)(j).
The Fourth District opinion changes the framework of how the trial courts should apply the non-compete statute in two ways. First, the Fourth District explained that once the trial court found that presumption of irreparable injury applied, which implicitly includes a finding that Reilly violated an enforceable non-compete agreement, the trial court erred in not requiring Reilly to present evidence that Transunion did not suffer an injury as a result of his breach of the non-compete agreement. The interesting wrinkle in this case is that trial court had adjourned the evidentiary hearing after Transunion rested because it found that Transunion’s own evidence failed to document when Reilly allegedly use Transunion’s confidential information. The Fourth District noted that this finding is not dispositive on the issue of irreparable injury. The Fourth District held that this was in error because all the trial court was required to do was to consider whether the presumption applied, and it did, the trial court did not have to consider any further evidence by Transunion and should have instead required Reilly to present evidence that Transunion had not suffered an injury as a result of the employee’s breach of the non-compete agreement.
Second, the Fourth District found that the trial court erred in finding that Transunion failed to demonstrate the lack of adequate remedy at law. Even though the trial court found that Transunion’s evidence demonstrated actual monetary damages which refutes any arguments regarding the lack of adequate remedy, the Fourth District explained that once the trial court found that the presumption of irreparable injury applied, that presumption, in essence, carried with it a presumption of no adequate remedy at law.
Although it remains unclear how the trial courts will apply the framework adopted by the Fourth District Court in Transunion, it seems clear that the Fourth District’s analysis is likely to tip the scale in favor of the employers in non-compete disputes.

 

zarco

Beshoy Rizk
Associate


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