Most of the calls I receive in my Fort Lauderdale office are from people who have just received a cease and desist letter from a law firm that represents their former employer. The story is a familiar one. The person worked for one company, moved on to another company and is now being accused of violating their non-compete agreements. These letters generally tend to be filled with boilerplate threats and dramatic flair. They have subject lines like, “Re: Blatant Violation of Your Legal Obligations.” They ramble on at length about trade secrets and confidential information (much of which is not even at issue). But they have to say something. They have to make a credible threat. When someone gets one of these letters, they generally have four options: (1) Quit the new job (2) Do nothing and let the chips fall where they may (3) Hire an attorney to write a letter in response to the cease and desist letter or (4) Hire an attorney to sue the former employer first. The fourth option – suing first in a preemptive strike – is the focus off this post.
As with all cases and disputes, the best strategy will depend on the specific facts and circumstances of your situation. If you are in an incredibly weak position on the facts and the law, then it may be best for you to simply sit tight and see what happens. Your former company may decide that litigation is simply not worth the time and expense. Then again, you may have been a high-ranking employee with access to company information that truly is confidential, proprietary or even a trade secret. In that instance, yes, your former employer will probably sue you if you do not respond to the cease and desist letter. In that instance, the best strategy may be to immediately hire a lawyer and try to negotiate some favorable resolution with the other side. Say the non-compete agreement was written to cover 3 years. Maybe you can agree to some type of settlement that involves paying the company; shortening the duration; agreeing to leave the market and sit on the bench for a while; certain assurances; etc. But these two options – quitting your job or doing nothing – are the types of options that are available when you are in a weak position. What do you do when you have the facts and the law on your side? What do you do when you are in a position to beat the non-compete agreement and have it declared invalid or unenforceable?
You sue first. I recommend this strategy to a small number of clients and prospective clients. These clients are in a very strong position. For many of them, a year or more has already elapsed since they left their former employer. Likewise, the employer’s arguments about confidential information and customers have glaring weaknesses and are subject to attack. In these limited circumstances, it is possible to sue first for a declaratory judgment. Essentially, you are asking the court to declare the non-compete agreement invalid or unenforceable. To be candid, this can be a risky strategy. There is no guarantee that you will prevail. And you will have to pay the costs and attorneys fees for filing the case. But, if you do prevail, there is a strong likelihood that you will be able to recover those costs and fees either under (1) a provision in your employment contract or (2) the Florida non-compete statute 542.335.
If the facts warrant it, you can take an even more aggressive posture. You can pursue both a claim for a declaratory judgment and other causes of action predicated on your former employer’s anticompetitive conduct. While there is no claim that is perfectly applicable to an attempt to enforce a bogus non-compete agreement, there are some causes of action that are helpful. If you strike first, you may want to consider including a claim for tortious interference with contract or tortious interference with prospective economic advantage. If you are legally working for a new employer and your old employer is interfering with your new employment relationship and causing you actual damages, then that is actionable. If you are working with clients in the industry and your old employer is interfering with those relationships, that, too, is actionable.
There are other reasons to file first, but those involve certain ultra-specific legal scenarios that probably are not relevant here. For instance, if the parties to the dispute come from multiple states, and one of those states is California, then you may want to strike first and file in California (where non-compete agreements are unenforceable). Or if you want to litigate the case in a particular forum – say Miami or Fort Lauderdale – and you can establish venue and jurisdiction there.
The bottom line: If you are faced with a possible non-compete lawsuit, but you are in a strong position on the merits, you may want to consider suing first and seeking a declaratory judgment. If you are anywhere in Florida – whether you are in Miami or Palm Beach or Pensacola or anywhere in between – and have questions about your non-compete problem, please contact Fort Lauderdale attorney Jonathan Pollard.