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The Competition Muddle
"Constantly, clients would walk into my office and say, 'Will this agreement be enforceable here?'" says Tampa attorney Thomas Steele, a top ranking Florida expert on non-compete agreements. "I'd have to tell them,'We haven't got the faintest idea.' And these people from New York or Chicago or Atlanta would look at you like, 'Just how backward a state is this, Bubba?'"
As of July 1, not quite as backward as it used to be. A little-noticed measure passed by the Legislature this year should stabilize the state's law on non-compete agreements. It's even expected to give Florida a leg up on other states in attracting out-of-state businesses.
"It's very definitely a pro-employer statute," says D. Michael Underhill, an employment lawyer in Washington, D.C., with Morgan, Lewis & Bockius. "Florida hopefully will be the beginning of a trend."
The 1996 legislation completely rewrote the state's existing statutes on non-compete agreements in an effort to bring clarity to an area of the law that had become increasingly muddy in recent years. At heart, "restrictive covenants" amount to what lawyers call restraints of trade, and judges traditionally have been hostile to such restraints because they can make people unemployable in their professions. The problem dates back to 1953, when Florida's Legislature adopted a statute specifically legalizing non-compete clauses. The broadly worded law was an invitation to overuse, and by the 1980s, even low-level workers like beer truck drivers were becoming victims of pieces of paper they had unthinkingly signed months before.
The Legislature amended the state's law in 1990, but instead of softening the pro-employer law, the amendments virtually gutted it. The amendments allowed judges to toss out agreements based on a wide range of public-policy concerns, some of which were vague.
"It turns out that change was a disaster," Steele says. "In 1992 and 1993 there were decisions across the state that led to different results on the same facts." The new law also made it much harder to enforce even legitimate, reasonably limited agreements, says Kevin Neal, assistant vice president for governmental affairs for Associated Industries of Florida.
With the urging of many businesses, the Florida Bar appointed a special committee chaired by Steele and, after years of work, it produced the 1996 legislation. The new law still allows judges to consider some of the public-policy issues that formed the heart of the 1990 amendments. In addition, it says agreements must have a legitimate business purpose, and be reasonable in scope.
But the new law also provides so-called "safe harbors" that will make non-compete agreements more enforceable.Under the new law, judges must presume that an agreement by an employee not to compete for six months is reasonable. It's up to the employee to prove otherwise. Longer time periods apply to agreements by franchisees and others.
Existing non-compete agreements formed under the old law will continue to be valid, so attorneys advise that employers should start thinking about updating them. When push comes to shove, new agreements will be more likely to be enforceable. And in the end, they'll probably be fairer to all concerned.
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Trial Lawyers Lose A Friend
This year some business lobbying groups quietly vowed to unseat state Rep. Robert Trammell, the longtime chairman of the House Judiciary Committee, because of his perceived sympathy for trial lawyers.
Instead, Trammell did it himself, announcing this summer that he wouldn't run again. Trammell says he plans to spend more time on his Marianna law practice, although lobbying also is likely to figure in his future. Trammell's decision apparently was shaped by the fact that he had been blocked from advancing to the state Senate or Congress. He also faced term limit restrictions soon.
As Judiciary chairman since 1988, Trammell repeatedly lent his clout to efforts by lawyers to rewrite a 1986 tort reform law that reduced business exposure in many personal-injury cases. So far, the efforts have been bottled up by business groups. Democrats haven't indicated whom they will pick if they retain control of the House. If Republicans take over, rumors pointed to Rep. David Bitner, R-Port Charlotte. Bitner, an ad agency owner and avid baseball card collector, has been a steady proponent of tort reform as a member of Judiciary.
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Murder and Business
A murder case featuring a clown-suited hit man could wind up having serious implications for some businesses.
The case was brought by the parents of the victim, Lita Sullivan, against her husband, former Palm Beach socialite James V. Sullivan. It charges that Sullivan hired the hit man who gunned down his wife at her Atlanta home in 1987. At the time the Sullivans were in the midst of a bitter divorce.
A federal judge dismissed murder conspiracy charges against Sullivan, saying prosecutors couldn't prove their case. But after Lita Sullivan's parents brought their wrongful-death suit against him in Florida in 1991, a Palm Beach jury found Sullivan liable for $4 million.
A Florida appeals court threw out that verdict last year, on the grounds that the suit was filed after the two-year statute of limitations had expired. Lita's parents appealed, arguing that they had no way of knowing before 1991 that Sullivan was responsible. They now contend that concealment of one's responsibility for a wrong should halt or "toll" a statute of limitations. The case is set for argument before the state Supreme Court this month.
If the case is decided in favor of Lita Sullivan's family, lawyers say it could have an impact on many types of business-related lawsuits where the wrong might be obvious, but the wrongdoer isn't - for example, in product-liability cases and some kinds of securities fraud.
"Nobody would be safe from any kind of lawsuit," complains Sullivan's lawyer, Lawrence Heller of Miami. "There has to be a point at which civil litigation ends." Not surprisingly, the case has drawn a friend-of-the-court brief from the Academy of Florida Trial Lawyers in support of the proposed change.
