Transunion Risk and Alternative Data Solutions, Inc. v. James Reilly

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
TRANSUNION RISK AND ALTERNATIVE DATA SOLUTIONS, INC.,
Appellant,
v.
JAMES REILLY,
Appellee.
No. 4D15-494
[December 2, 2015]
Appeal of non-final order from the Circuit Court for the Fifteenth
Judicial Circuit, West Palm Beach County; Jessica Ticktin, Judge; L.T.
Case No. 2014CA012997.
James G. Sammataro and Brendan S. Everman of Stroock & Stroock &
Lavan, LLP, Miami, for appellant.
Michael R. Tolley, Dennis Richard and Douglas J. Giuliano of Richard
and Richard, P.A., Miami, for appellee.
DAMOORGIAN, J.
Appellant, Transunion Risk and Alternative Data Solutions, Inc.
(“TRADS”), appeals from an order denying its motion for a preliminary
injunction to enforce a restrictive covenant not to compete against its
former employee, James Reilly. Because the trial court failed to correctly
apply the statutory presumption of irreparable injury under section
524.335(1)(j), Florida Statutes (2013), and its remaining findings are not
adequately supported, we reverse and remand for further proceedings.
Background
By way of background, TRADS sued Reilly and sought to enforce a
non-compete agreement. In conjunction with its suit, TRADS also filed a
motion for temporary injunction to enforce the non-compete. Following a
partial evidentiary hearing1 wherein the court adjourned after TRADS
presented its case without requiring Reilly to put on his defense, the court
1 We have sealed portions of the evidentiary hearing as confidential.
entered an order denying TRADS’ motion. As sole grounds for denial, the
court’s order provided:
[T]he presumption of irreparable harm was rebutted based
upon the evidence received and admissions of [TRADS’]
witnesses; that [TRADS] failed to establish that it has no
adequate remedy at law; that [TRADS] failed to establish that
it has a substantial likelihood of success on the merits; and
that [TRADS] failed to establish that a temporary injunction
will serve the public interest.
Analysis
We review this order under a hybrid standard of review. Hilb Rogal &
Hobbs of Fla., Inc. v. Grimmel, 48 So. 3d 957, 959 (Fla. 4th DCA 2010).
“‘To the extent the trial court’s order is based on factual findings, we will
not reverse unless the trial court abused its discretion; however, any legal
conclusions are subject to de novo review.’” Id. (quoting E.I. DuPont de
Nemours & Co. v. Bassett, 947 So. 2d 1195, 1196 (Fla. 4th DCA 2007)).
Section 542.335, Florida Statutes, governs the enforcement of
restrictive covenants. Under section 542.335, “[a] trial court may grant a
temporary injunction if the complainant proves ‘(1) the likelihood of
irreparable [injury], (2) the unavailability of an adequate remedy at law, (3)
a substantial likelihood of success on the merits, and (4) that a temporary
injunction will serve the public interest.’” Grimmel, 48 So. 3d at 959
(quoting Envtl. Servs., Inc. v. Carter, 9 So. 3d 1258, 1261 (Fla. 5th DCA
2009)). We address the court’s findings as to each element TRADS was
required to prove.
1) The Likelihood of Irreparable Injury
With respect to the first element, the “likelihood of irreparable injury,
section 542.335(1)(j) provides, in relevant part, that “[t]he violation of an
enforceable restrictive covenant creates a presumption of irreparable
injury to the person seeking enforcement of a restrictive covenant.” An
enforceable restrictive covenant is one in which “the contractually
specified restraint is reasonably necessary to protect [a] legitimate
business interest.” § 542.335(1)(c), Fla. Stat. Section 542.335(1)(b) sets
forth a non-exhaustive list of “legitimate business interests.” “Therefore,
to benefit from the presumption of irreparable injury, the party seeking to
enforce a covenant not to compete must show that the covenant protects
a legitimate business interest as defined by section 542.335(1)(b) and that
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the covenant was violated.” Walsh v. Paw Trucking, Inc., 942 So. 2d 446,
448 (Fla. 2d DCA 2006).
Although the court found that the presumption of irreparable injury
applied, and thus also necessarily found that TRADS established Reilly
violated an enforceable restrictive covenant, it concluded that the
presumption was rebutted by the evidence. This conclusion establishes
that the trial court misapplied the presumption. Once the party seeking
to enforce the covenant establishes that it is entitled to the presumption
of irreparable injury, “the statute shifts the burden to the respondent to
establish the absence of injury.” DePuy Orthopaedics, Inc. v. Waxman, 95
So. 3d 928, 939 (Fla. 1st DCA 2012). As the trial court’s ruling was issued
before Reilly presented any evidence, Reilly could not have met his burden
of presenting evidence overcoming the presumption.
2) Unavailability of an Adequate Remedy at Law
The trial court also denied TRADS’ motion on the grounds that it failed
to establish the unavailability of an adequate remedy at law. In light of
the court’s finding that the presumption applied, this was also error as the
continued breach of a non-compete agreement threatens a former
employer’s “goodwill and relationships with its customers, and nothing
short of an injunction would prevent this loss.” Id. at 940 (citing Variable
Annuity Life Ins. Co. v. Hausinger, 927 So. 2d 243, 245 (Fla. 2d DCA 2006)
(holding that the ability to demonstrate actual monetary damages does not
preclude a finding of irreparable harm to support injunctive relief)).2
3) Substantial Likelihood of Success on the Merits
The trial court found that TRADS “failed to establish that it has a
substantial likelihood of success on the merits.” This finding runs
contrary to the trial court’s implied finding that TRADS established Reilly
violated an enforceable restrictive covenant. Walsh, 942 So. 2d at 448
(“Evidence that an enforceable covenant not to compete was breached will
support a trial court’s finding of the likelihood of success on the merits.”).
4) The Public Interest in Issuing an Injunction
2 We note also that TRADS’ inability to document Reilly’s “use” of
“confidential information” is not dispositive when analyzing the presumption of
irreparable injury. See, e.g., Proudfoot Consulting Co. v. Gordon, 576 F.3d 1223,
1233 (11th Cir. 2009).
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Under section 542.335(1)(i), a trial court must specifically articulate an
overriding public policy reason if it refuses to enforce a non-compete
covenant based on public policy grounds. § 542.335(1)(i), Fla. Stat.
Although the court ruled that “TRADS failed to establish that a temporary
injunction will serve the public interest,” it failed to “specifically articulate
an overriding public policy reason” as required by the statute.
Conclusion
In sum, while the trial court recognized that the presumption of
irreparable harm arose, it erred as a matter of law by concluding that it
was rebutted by Reilly when Reilly did not put on a rebuttal case. In that
vein, the trial court’s remaining findings were either misinformed or
inadequate under section 542.335. Accordingly, we reverse and remand
for the trial court to complete the hearing to consider Reilly’s opposition to
temporary injunctive relief.
Reversed and remanded.
GROSS and LEVINE, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
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