Is a General Assignment Clause Sufficient under Florida’s Non-Compete Statute?

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[author: Richard D. Tuschman]

Florida's statute governing the enforcement of non-compete covenants provides that a court may enforce such covenants in favor of an assignee or successor, provided that "the restrictive covenant expressly authorized enforcement by a party's assignee or successor."  §542.335(1)(f).

Is a general assignment clause in an agreement that contains a non-compete covenant sufficient under the statute?  The answer to that question is "yes," according to Florida's First District Court of Appeal, DePuy Orthopaedics, Inc. v. Waxman, Case No. 1D12-897 (Fla. 1st DCA, August 3, 2012).  

DePuy manufactures and sells orthopedic products, and it promotes the sale of its products through independent distributors.  A company called Joint Venture, Inc. was DePuy's distributor in South Florida from 1999 to April 30, 2011.  Joint Venture had signed employment agreements with three of its salesmen that contained non-compete covenants.  The agreements contained a general assignment clause: "[Joint Venture's] rights and obligations under this Agreement shall inure to the benefit of and be binding upon [Joint Venture's] assigns and successors."

In March 2011, three salesmen left Joint Venture, joined a new company and started calling on their old accounts in their former DePuy territories, effectively competing with DePuy.  On May 27, 2011, Joint Venture and DePuy confirmed the assignment of Joint Venture's rights in a new agreement, which specifically provided that Joint Venture was assigning its "right to enforce the covenants not to compete executed by the [salesmen] and to pursue damages."

Joint Venture's intent to assign its rights to enforce the non-compete covenants to DePuy was now clear. But was the general assignment language in the employment agreements sufficient under the statute to permit enforcement in favor of DePuy?  

Reversing the trial court, the First DCA said yes, holding that "the statutory requirement of an 'expressly authorized enforcement' of the restrictive covenant to the assignee is satisfied by a general assignment clause in the contract creating the restrictive covenant."  The court cited approvingly to the Fifth DCA's decision in Patel v. Boers, 68 So. 3d 380 (Fla. 5th DCA 2011), which reached the same conclusion.

In a dissenting opinion, Judge Wolf opined that under the plain language of the statute, the restrictive covenant itself must expressly authorize enforcement by a party's assignee or successor.  "A general assignment clause does not meet this requirement," wrote Judge Wolf.

But for now, at least in the First and Fifth District Courts of Appeal, such general assignment clauses are sufficient.  Companies contemplating enforcement in other judicial districts in Florida, however, would be well-advised to include specific assignment language in the restrictive covenants themselves.

 

Published In: General Business Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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