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Florida Courts Do Not Always Recognize Choice of Law Provisions in Non-Compete Agreements

Posted in Labor & Employment

A good non-compete agreement should contain a choice of law provision which specifies which law governs should parties litigate over the enforcement of the agreement.  However, just because the non-compete agreement specifies which law applies does not necessarily mean that a Florida court is required to enforce the agreement according to the law of the state specified in the agreement.  Florida’s Second District Court of Appeal addressed the validity of a choice of law provision in Punzi v. Shaker Advertising Agency, Inc., 601 So.2d 599 (Fla. 2d DCA 1999).  In Punzi, the Second District had to decide whether a non-compete agreement should be enforced according to the law specified in the contract, Illinois law, or according to Florida law as that was the state where the litigation was pending.  In deciding choice of law issues, contract disputes are governed by the law agreed to by the parties so long as the law of the selected forum is not contrary to Florida public policy.  Id. at 600, citing Dept. of Motor Vehicles v. Mercedes-Benz of N. Am., Inc.,  408 So.2d 627 (Fla. 2d DCA 1981). 

Just because the law of the forum state differs from that of the law of the foreign state does not mean that the law of the foreign state is contrary to the public policy of the forum state.  Punzi 601 So.2d at 600, citing Wilkinson v. Manpower, Inc., 531 F.2d 712 (5th Cir. 1976).  Instead, the court must decide whether the law of the foreign state “is harmonious in spirit with the forum state’s public policy.”  Punzi at 600, citing Wilkinson  at 712.  In Punzi, the Second District found that Illinois law, as the law of the foreign state, was not repugnant to the law of Florida.  The court therefore construed the non-compete agreement according to Illinois law.  Id. at 600.

In Temporarily Yours, et al., v. Manpower, Inc., 377 So.2d 825 (Fla. 1st DCA 1979), the First District declined to apply the law of a foreign jurisdiction even though that was the law agreed to by the parties.  The employer in Temporarily Yours sought and received an injunction from the trail court enforcing a non-compete agreement against a former employee and his new company.  Id. at 826.  On appeal, the employee sought to reverse the injunction arguing, in part, that the non-compete agreement was void and unenforceable under Wisconsin law.  Id. at 826-27. 

At the time of the Temporarily Yours decision, Wisconsin law enforced non-compete agreements only if they are reasonably necessary to protect the employer.  Id. at 827.  If a non-compete agreement imposes an unreasonable restraint, the agreement is unenforceable even if it can be enforced in a way that would make the restraint reasonable. Id.  Even though the non-compete agreement was governed by Wisconsin law, the Temporarily Yours court declined to apply the law selected by the parties.  Id.  Instead, the court looked to “[t]he express public policy of Florida [… providing] that restrictive covenants which are reasonable in time and geographic area are enforceable in Florida.”  Id.  These decisions show how litigants may be able to convince a court to apply Florida law in non-compete dispute, provided they can establish that the foreign law specified in the agreement is contrary to Florida’s public policy.

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Jason Cornell is an equity partner with the law firm Fox Rothschild LLP. Jason practices in Fox Rothschild’s Litigation and Financial Services departments. Jason focuses his practice on commercial and employment litigation, with an emphasis on non-compete litigation. You can reach Jason at (561) 804-4415 or jcornell@foxrothschild.com.

Below are additional posts Jason has written on Florida non-compete litigation:

Common Defenses to Enforcement of a Non-Compete Agreement

Are Non-Compete Agreements Enforceable Against Third Parties?

What Are the Burdens of Proof When Enforcing a Non-Compete Agreement?