While Florida law is generally pro-employer, that does not necessarily mean that an employer will always receive a better result in a non-compete case under Florida law than if the non-compete agreement had a different choice of law. Alternatively, a court interpreting that same agreement under Florida law would be more likely to find that three years is an unreasonable term, but such a finding would result in the non-compete term simply being reduced to a reasonable period of time. Accordingly, a three-year non-compete agreement is more likely to be enforced by a court under Delaware law, but if the court concluded that three years was unreasonable, the entire non-compete agreement becomes unenforceable. Delaware law does not have this provision. “If a contractually specified restraint is overbroad, overlong, or otherwise not reasonably necessary to protect the legitimate business interest or interests, a court shall modify the restraint and grant only the relief reasonably necessary to protect such interest or interests.” Section 542.335, Florida Statutes. Florida statutes, however, provide a mechanism by which unreasonable covenants not to compete may be modified by the court to become enforceable. For example, in enforcing non-compete agreements under Florida law, there is a presumption that a covenant longer than two years is unreasonable in relation to employees. These differences can create divergent results. The primary divergence arises because Florida’s non-compete law derives from a statutory framework, which provides for particular legal presumptions, while Delaware non-compete law derives from common law (case precedent). Section 542.335, Florida Statutes, also articulates the same requirement of reasonable temporal and geographical scope, that the agreement protect a legitimate business interest. For example a Delaware court held that, “lthough the non-competition agreements are valid contracts, they will not be enforceable unless the following requirements are met: (1) their duration is reasonably limited temporally, (2) their scope is reasonably limited geographically, (3) their purpose is to protect legitimate interests of the employer, (4) their operation is such as to reasonably protect those interests.” Tristate Courier & Carriage, Inc. Florida law concerning non-compete agreements is generally the most “pro-employer” in the nation, as discussed in a previous article.ĭelaware and Florida law generally adjudicate non-compete disputes pursuant to the same fundamental legal analysis. The choice of Delaware or another state’s law can have significant effect on the result of litigation, particularly when it is the choice of law for non-compete agreements. Florida courts will apply Florida law as it relates to the procedural issues, such as whether a temporary injunction should be issued, and foreign choice of law for the substantive law questions associated with that analysis, such as the element of whether there is a likelihood of success on the merits. This can be a critical issue when employers seek injunctions in non-compete matters. “Generally, when confronted by a choice of law problem, a court will apply foreign law when it deals with the substance of the case and will apply the forum’s law to matters of procedure.” Siegel v. When applying foreign law in Florida, courts “maintains the traditional distinction between substantive and procedural matters.” Siegel v. As a result, Florida courts will often adjudicate disputes under Delaware law. Because of the attractiveness of Delaware incorporation, many corporations will often choose Delaware as a choice of law in their contracts. For example, intra-corporate disputes for Delaware corporations are adjudicated by the Delaware Court of Chancery which is a judicial body designed to quickly and effectively resolve such matters without a jury. This is because there are several benefits that medium to large sized business can enjoy from Delaware incorporation. Many corporations and limited liability companies throughout the United States are incorporated or organized under Delaware law, even though they may have no particular connection to Delaware. The Mavrick Law Firm represents clients in breach of contract litigation, trade secret litigation, non-compete agreement litigation, employment litigation, trademark litigation, and other legal disputes in federal and state courts and in arbitration. Peter Mavrick is a Fort Lauderdale non-compete attorney, and also advocates for clients in Palm Beach, Boca Raton, and Miami, Florida. When these choice-of-law provisions are valid and enforceable, they can have significant repercussions on the results of noncompete litigation. This is known as a choice of law provision. Noncompete agreements sometimes designate the laws of other states to govern the parties’ contractual obligations, even if the agreement is made in Florida.
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