Fourth DCA Reverses Denial of Injunction in Non-Compete Case
In a recent decision by the Fourth District Court of Appeals, USI Insurance Services of Florida, Inc., v. Pettineo, Case No. 4D08-303 (July 16, 2008), the appellate court reversed the trial court's denial of a temporary injunction in a non-compete case filed by the buyer of an insurance agency. The decision is noteworthy for a few reasons:
First, it states explicitly, in a way that few appellate court decisions do, that section 542.335, which replaced section 542.33, "places a substantially smaller burden on the party establishing the need for injunctive relief and shifts some of the burden on the defending party." The court then neatly summarizes the burden-shifting scheme under the "new" statute (which is now more than a decade old but is still frequently misconstrued by trial courts).
Second, the decision notes the distinction between a non-compete provision in an asset purchase agreement and one that is incidental to an employment agreement. In the former case, the buyer has a particularly strong claim to enforcement of the non-compete agreement, "to enter the field of competition unhampered by the adverse influence of the seller." The court even goes as far as quoting a 1931 Florida Supreme Court decision, Massari v. Salciccia, 136 So 522, 524 (Fla. 1931), for the proposition that "[p]arties to the sale of a business are free to forge agreements 'which have for their object the removal of a rival and competitor in a business.'”
Third, the court notes that an injunction can be entered against those who are not parties to a non-compete agreement as long as they receive notice and an opportunity to be heard. The court cites its own decision in Leighton v. First Universal Lending, LLC, 925 So.2d 462, 6465 (Fla. 4th DCA 2006), which notes that "an injunction may bind non-parties identified with parties in interest, in privity with them, represented by them, or subject to their control."
