Friday, October 16, 2009

Court Declines to Award Attorneys' Fees Against Employer Who Aided Breach of Restrictive Covenant (Bauer v. Dilib, Inc.)

Florida contains a highly favorable body of law that favors employers attempting to enforce non-compete agreements.

The statute, Section 542.335, significantly altered Florida law with regards to non-competes entered on or after July 1, 1996. Some of the significant changes included a fairly wide range of interests that can be protected by a non-compete, a presumption of reasonableness for non-competes lasting six months or less, a repeal of contract construction rules favoring narrow construction of a non-compete, and discretionary attorneys' fees awards even in the absence of a contractual provision.

At issue in the Fourth District's case of Bauer v. Dilib, Inc. was a novel issue pertaining to the statutory provision concerning attorneys' fees. Specifically, the court addressed the question of whether a third-party new employer could be held liable for attorneys' fees for aiding and abetting a breach of a non-compete. In this particular case, the circuit court in Broward County held the statute should be construed to permit recovery against the employer who interfered with the non-compete contract.

On appeal, the court reversed and held that Section 542.335(1)(k) could not be construed to permit such a recovery. According to the court, the employer was not a party to the non-compete agreement, and the only reasonable construction of the entire statute was that the plaintiff ex-employer could not enforce the non-compete against the new employer. Because of this, a discretionary grant of fees under the statute was inappropriate. The court rejected a number of arguments advanced by the plaintiff, ultimately reasoning that statutory fee-shifting provisions must be narrowly construed because they are in derogation of the common law.

Courts have always retained the ability to enjoin parties who are non-signatories from aiding or abetting a breach of a non-compete agreement. Statutes governing injunction procedure almost always provide for this specifically. Further, to fashion complete equitable relief, an injunction order logically must extend beyond mere contract parties. However, this does not mean other facets of relief will automatically be available to third-parties. In this case, the ex-employer's remedy for tortious interference could conceivably encapsulate claims for attorneys' fees as part of a punitive damage award. But the ex-employer has no statutory remedy for fees separate and apart from other relief.


Court: Court of Appeal of Florida, Fourth District
Opinion Date: 9/16/09
Cite: Bauer v. Dilib, Inc., 16 So. 3d 318 (Fla. Dist. Ct. App. 2009)
Favors: N/A
Law: Florida

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