In many non-compete cases, the employer seeks a temporary injunction at the outset of the case to prevent further harm. If the employer loses that motion, the case usually settles or proceeds to discovery as in a standard civil action. However, there can be another option—immediate appeal. A recent Florida appellate decision demonstrates why this can be a winning strategy in the right circumstances.
In AmeriGas Propane, Inc. v. Nelson Sanchez, et al., No. 3D20-1447 (Fla. 3d DCA Nov. 3, 2021), the plaintiff AmeriGas, a provider of propane services to businesses, sued its former account manager, defendant Sanchez, and his new employer, defendant Blossman Gas, a direct competitor. During his employment with AmeriGas, Sanchez entered into an agreement that included non-disclosure, non-competition, and non-solicitation covenants.
Soon after Sanchez left AmeriGas for Blossman Gas, AmeriGas lost 18 customers to Blossman Gas that Sanchez previously managed. AmeriGas filed suit asserting breach of contract claims against Sanchez and tortious interference claims against Sanchez and Blossman Gas. AmeriGas then filed a motion for temporary injunction seeking to enjoin Sanchez from breaching his contractual obligations. AmeriGas also sought to enjoin Blossman Gas from tortiously interfering with its agreement and assisting Sanchez in violating the restrictive covenants.
Trial Court Denies the Motion for Temporary Injunction
During his deposition, Sanchez admitted to enrolling several customers on behalf of Blossman Gas that he previously serviced at AmeriGas, approaching other AmeriGas customers with offers from Blossman Gas, and telling other AmeriGas customers to contact him for service at Blossman Gas. Despite this evidence, the trial court denied AmeriGas’s motion for temporary injunction, finding that it failed to establish a likelihood of success on the merits because it failed to prove that Sanchez directly solicited customers in violation of his contract.
Victory on Appeal—with a Bonus
Perhaps because AmeriGas presented strong evidence, AmeriGas elected to take an immediate appeal from the trial court’s denial of its motion for a temporary injunction. State law varies greatly with respect to the appealability of a non-final, or interlocutory, ruling, but the Florida appellate court concluded the immediate appeal was proper.
The appellate court reversed the trial court and concluded AmeriGas established the factors necessary to obtain a temporary injunction. First, the court held AmeriGas established its legitimate business interest in the covenants, based on valuable confidential business information and substantial relationships with specific prospective or existing customers. The court also concluded AmeriGas had presented sufficient evidence of breach, despite the trial court’s interpretation of the evidence to the contrary. Finally, the court concluded AmeriGas was entitled to a presumption of irreparable harm under Florida law because it established violation of a restrictive covenant, which the defendants could not overcome.
Thus, the appellate court reversed and remanded with instructions for entry of the temporary injunction.
Keep in mind AmeriGas obtained this appellate ruling more than two years after defendant Sanchez left AmeriGas—in fact, several months longer than the two-year temporal scope of the restrictive covenants. Why would AmeriGas go through the trouble of appealing denial of the motion for temporary injunction if the restrictions ran during the pendency of the appeal?
Under Florida law, entry of an injunction entitled AmeriGas to restart the clock, so to speak. The appellate court noted in its opinion that “AmeriGas is entitled to the two-year duration of its restrictive covenants” on remand.
Taking an immediate appeal from the denial of a motion for temporary relief can be an effective tactic. Employers should consider whether taking an appeal would be procedurally proper, and whether reversal of the trial court would entitle the employer to extend the restrictive covenants. The appellate process can take time, so if there is a risk the restrictions will not be tolled, immediate appeal may not be worth it.
Jackson Lewis attorneys in the Restrictive Covenants, Trade Secrets and Unfair Competition practice group are available to assist in these situations.