(1) The memorandum argues that the plaintiff, ERHM Orthopedics, is entitled to a temporary injunction against the defendant, Todd Edwards, under Florida law. (2) It asserts that the plaintiff met the three requirements for a temporary injunction by showing it had a valid contract with the defendant, the defendant intentionally breached the contract, and no adequate remedy except injunctive relief exists. (3) The memorandum further argues that the plaintiff has legitimate business interests to protect based on its long-term customer relationships and sales territory, citing a similar Florida appellate court case.
Original Description:
Original Title
Memorandum of Law (Sample Motion #2) citing depuy orthorpedics
(1) The memorandum argues that the plaintiff, ERHM Orthopedics, is entitled to a temporary injunction against the defendant, Todd Edwards, under Florida law. (2) It asserts that the plaintiff met the three requirements for a temporary injunction by showing it had a valid contract with the defendant, the defendant intentionally breached the contract, and no adequate remedy except injunctive relief exists. (3) The memorandum further argues that the plaintiff has legitimate business interests to protect based on its long-term customer relationships and sales territory, citing a similar Florida appellate court case.
(1) The memorandum argues that the plaintiff, ERHM Orthopedics, is entitled to a temporary injunction against the defendant, Todd Edwards, under Florida law. (2) It asserts that the plaintiff met the three requirements for a temporary injunction by showing it had a valid contract with the defendant, the defendant intentionally breached the contract, and no adequate remedy except injunctive relief exists. (3) The memorandum further argues that the plaintiff has legitimate business interests to protect based on its long-term customer relationships and sales territory, citing a similar Florida appellate court case.
Plaintiff, ERHM ORTHOPEDICS, INC. (hereinafter “Plaintiff”, in support of its Motion for Temporary Injunction against Defendant, TODD EDWARDS, an individual (hereinafter referred to as “Defendant”), and to supplement the evidence presented and the testimony heard by the Court on June 14, 2016 (the “Hearing”), hereby files this Memorandum of Law, and states: PLAINTIFF IS ENTITED TO INJUCTION UNDER SECTION 542.335 OF THE FLORIDA STATUTES The Florida Second District Court of Appeals has held that, in order for Plaintiff to be entitled to a temporary injunction in a restrictive covenant case, Plaintiff must show that it has: (1) a contract; (2) the former employee's intentional breach of the contract; and (3) the existence of no adequate remedy except injunctive relief, recognizing that irreparable harm is presumed. Sarasota Beverage Co. v. Johnson 551 So.2d 503 (Fla. 2d DCA 1989). Plaintiff provided evidence and testimony at the Hearing which met all elements that are required, thus Plaintiff is entitled to the entry of a Temporary Injunction. The Florida Legislature codified in Section 542.335(1)(a) Fla.Stat (2016) that the Court will only enforce a restrictive covenant if it is set forth in writing and signed by the person against whom enforcement is sought. VALID CONTRACT In the instant case, it is undisputed that Plaintiff and Defendant signed an Employment Agreement which was admitted as evidence as Plaintiff's Exhibit #5 (“Employment Agreement”). Defendant's Employment Agreement contained three (3) restrictions in the form of l).a confidentiality covenant as enumerated in section 13 on page 6, 2). a covenant not to compete as enumerated in section 14 on page 7, and 3). a covenant not to solicit as enumerated in section 15 on page 8.(See Plaintiff Exhibit “5”). Defendant wrote to Plaintiff in an email on July 13, 2012 (See Plaintiff's Exhibit 1, 2nd paragraph) and Defendant also testified that before being hired by Plaintiff in 2012 that he had to be released from a non-compete agreement from his previous employer. Defendant acknowledged in writing and also testified the he knowingly and voluntarily entered into the Employment Agreement with full knowledge of the restrictive covenants contained in the agreement. (See Plaintiff's Exhibit “4” 2nd paragraph). Defendant testified that he tendered written notice of his resignation and then worked the additional thirty (30) days as requested by George Etheridge pursuant to the terms of his Employment Agreement. In the instant case, both the evidence submitted to the Court and the testimony of witnesses prove that Defendant had a valid signed contract with Plaintiff that contained restrictive covenants, and as such, Plaintiff has demonstrated to this Court that the Employment Agreement complies with Section § 542.335(1)(a) Fla.Stat (2016). Legitimate Business Interest With regard to Plaintiff having a legitimate business interest that warrants protection by this Court through the enforcement of the restrictive covenants contained with the Employment Agreement, the Court received stipulated facts as contained in section 4, page 3 of the Joint Pre- Hearing Conference Report that: (a) Precision Orthopedics, Inc. (“Precision”) is a Florida corporation formed in 1986 that engages in the sale of orthopedic products and services to hospitals, orthopedic surgeons, and surgical centers within Southwest and Central Florida; and (b) that the restricted sales territory as listed in Section 14 of the Employment Agreement (see Plaintiff's Exhibit #5 were the Florida counties of Alachua, Charlotte, Citrus, Collier, De Soto, Glades, Hardee, Hendry, Hernando, Highlands, Hillsborough, Lake, Lee, Levy, Manatee, Orange, Osceola, Pasco, Pinellas, Polk, Sarasota, Seminole, Sumter and Volusia County Florida (the “Restricted Territory”)). At the Hearing, Plaintiff's President, George Etheridge, testified that; over the thirty (30) years that his companies have done business in the Restricted Territory, the companies have developed an orthopedic sales organization that is one of the top sales distributors of orthopedic products and supplies in the United States. In addition, over the thirty (30) years his companies have developed strong relationships with their customers which he testified were doctors, hospitals, and surgical centers within the Restricted Territory. George Etheridge testified that all aspects of his business were dedicated to the selling of orthopedic products and services, and that his company did not manufacture any products, but only sold products and supplies. Plaintiff's employees, including Defendant, were encouraged to develop personal relationships with the surgeons located within Restricted Territory. Plaintiff's employees work very closely with the surgeons, and they develop close relationships with surgeons during their employment, including, but not limited to, obtaining knowledge relating to the surgeon's preference regarding products, surgical procedures or techniques, instruments as well as becoming familiar with the surgeon's families and hobbies so that these personal relationships would generate additional sales for the orthopedic products, supplies and services sold by, or provided by, Plaintiff. George Etheridge testified that these customers were a vital part of his company's business, and that some of the customers have been with his company since he started in the orthopedic sales business. With regard to the Plaintiff being the employer for the Defendant as opposed to Precision Orthopedic, George Etheridge testified that after a massive orthopedic product recall where Precision was named as Defendant in hundreds of product liability lawsuits, he and his business partners formed ERHM Orthopedics, Inc. (“Plaintiff”) in 2001. Plaintiff signed a Management Agreement with Precision in January 2002 that has been admitted to evidence as Plaintiff's Exhibit #9. Pursuant to the terms of the Management Agreement, Plaintiff's duties included managing the sales staff of the Business (page 2, section 1(A) 7), wherein Business was defined as Precision's orthopedic sales company. At the time the Management Agreement was signed, Precision was under contract with Centerpulse Orthopedics (“Centerpulse”) which was acquired by Zimmer in 2003, and Precision entered into an agreement with Zimmer in April 2004. George Etheridge testified all sales employees hired after 2001 were hired as employees of Plaintiff and not Precision. On cross-examination at the Hearing, George Etheridge testified that Plaintiff had several other orthopedic manufacturers that were under contract to Plaintiff, and named several that are also listed on Exhibit B, page 14, of Defendant's Employment Agreement (See Plaintiff's Exhibit #5). George Etheridge also testified that Plaintiff managed all of the day-to-day operations of the business including managing the sales force, leasing of office, payroll for all employees, employee benefits, and all other business matters were conducted through Plaintiff. Through the evidence submitted to the Court in the form of documents admitted to evidence as well as the testimony of the parties, Plaintiff has shown and therefore proven to this Court that Plaintiff has legitimate business interest as defined § 542.335(1)(b) 3 and 4 Fla.Stat (2016) to protect through the use of the restrictive covenants as contained in the Defendant's Employment Agreement. To the contrary, the Defendant has presented multiple lists of doctor's names that were received into evidence as Defendant's Exhibits A through E, and presented Defendant's testimony to the Court that the contact information or surgeons' names were all generally available from a public source (as the information about surgeons and products are available online). Additionally, Defendant testified that all surgeons are required by law to use the products that best serve the needs of their patients, and surgeons are not required to use any particular orthopedic manufacturer. Some surgeons use products from different orthopedic manufacturers, and Plaintiff does not have any contracts with the surgeons. Based upon the evidence submitted to the Court, Defendant has argued that Plaintiff does not have legitimate business interests to protect in its customers or its territory through the use of restrictive covenants as contained in Defendant's Employment Agreement. Defendant's argument is contrary to Florida law on this issue. In DePuy Orthopaedics, Inc. v. Waxman, 95 So.3d 928, 938 (Fla. 1st DCA 2012), the Court found that DePuy Orthopaedics had legitimate business interests to protect which justified the use of the non-compete covenants that DePuy Orthopaedics was seeking to enforce against its former sales representatives. The First District Court of Appeal determined that DePuy Orthopaedics had developed substantial relationships with surgeons and hospital administrators through the sale and use of its product as well as through promotion and advertising of the products, and had therefore developed a legitimate business interest in its customers within its territory through sales of orthopedic products to those customers in southern Florida for thirty (30) years. In the instant case, Plaintiff shares many similarities with DePuy Orthopeadics as it has developed substantial relationships with its customers over a long protracted period of time by selling and distributing orthopedic products with the Restricted Territory. Applying the First DCA's analysis and ruling in DePuy Orthopaedics, Inc. v. Waxman, this Court should find that Plaintiff has a legitimate business interest that warrants protection though the use and enforcement of the restrictive covenants as contained in the Defendant's Employment Agreement. As evidence at the Hearing shows, Plaintiff has legitimate business interests in its substantial relationships with specific existing customers, and legitimate business interests with customer, patient, or client goodwill associated within a specific geographic area, Plaintiff has legitimate business interests as defined in Section § 542.335(1)(b) 3 and (4)c. As such, the restricted covenants of the Employment Agreement are necessary to protect said legitimate business interests. Contractually Specified Restraint Is Reasonably Necessary To Protect a Legitimate Business Interest Section § 542.335(1)(c) Fla.Stat (2016) requires Plaintiff to plead and prove that the restricted covenants in the Employment Agreement are reasonably necessary to protect Plaintiff's legitimate business interest. A review of the Employment Agreement shows that the restrictive covenants contained therein are reasonably necessary to protect Plaintiff's legitimate business interest. As each of the restricted time periods as contained in the Covenant Not to Compete and Covenant Not to Solicit sections of the Employment Agreement are two (2) years, then according to § 542.335(1)(d) 1 Fla.Stat (2016) the time periods of each restrictive covenant are deemed to be reasonable. See Plaintiff's Exhibt “5”, Sections 14 and 15 pages 7 and 8 of the Employment Agreement. Furthermore, Defendant at the Hearing did not present any evidence that rebuts the presumption that the two (2) year time period restriction is unreasonable, so the two (2) year period is deemed reasonable. George Etheridge testified at the Hearing that Plaintiff's employees have relationships with surgeons located in each of the counties listed in the Restricted Territory. (SeeExhibit A page 13 of the Employment Agreement, Plaintiff's Exhibit 5). Additionally, George Etheridge testified that Plaintiff's employees make sales to hospitals, orthopedic surgeons, and surgical centers in each county located within the Restricted Territory, make sale presentations within each county, and provide case coverage within each county of the Restricted Territory. George Etheridge went on to testify that Defendant was hired to help grow sales within every county of the Restricted Territory by helping to sell orthopedic products, making product presentations, providing services to Plaintiff's customers, and covering orthopedic surgical cases. Dining Defendant's testimony at the Hearing, Defendant admitted that he had provided services and surgical case coverage throughout the Restricted Territory. In Plaintiff's Exhibit “8” dated January 14, 2016, Defendant states in the third paragraph: “I've been doing cases in our entire area, from Gainesville to Naples and Orlando”. As the Restricted Territory is limited to areas wherein Defendant actually provided services and developed relationship in, the restriction is reasonably necessary to protect Plaintiff's legitimate business interests in the Restricted Territory that Plaintiff developed over the last thirty (30) years. § 542.335(1)(b) Fla.Stat (2016) and Florida case law have made it clear that there is little question under Florida law that an employer has a legitimate business interest in prohibiting solicitation of its customers with whom the employee has a relationship. Hilb Rogal & Hobbs of Fla., Inc. v. Grimmel, 48 So.3d 957, 962 (Fla. 4th DCA 2010). George Etheridge during his testimony at the Hearing explained that cultivating a relationship with surgeons was a top priority for all of Plaintiff's employees, and while some surgeons were easy to get to convert to Plaintiff's products, it might take years to make a sale to other surgeons. George Etheridge testified that, even though it is hard work, Plaintiff (through Precision) has maintained some relationships for thirty (30) years, while others were new relationships, but Plaintiff found each relationship to be equally important. The specific language of the Covenant Not to Compete as well as the Covenant Not to Solicit are narrowly tailored to protect Plaintiff's legitimated business interest. Defendant, testified at the Hearing, that he provided surgical case coverage for, and communicated with, Plaintiff's customers in each county located in the Restricted Territory. Defendant has admitted that, during his employment with Plaintiff, he has met with Plaintiff's customers, provided services to Plaintiff's customers, covered orthopedic surgical cases, and developed relationships with Plaintiff's customers throughout the Restricted Territory. As such, there is no doubt that preventing Defendant from soliciting Plaintiff's customers is reasonably necessary to protect Plaintiff's legitimate business interest. As the evidence and testimony presented at the Hearing demonstrated that Plaintiff and Defendant had a valid contract with restrictive covenants that are reasonably necessary to protect the legitimate business interest of Plaintiff, Plaintiff would assert that the first element of Sarasota Beverage Co. v. Johnson 551 So.2d 503 (Fla. 2d DCA 1989) has been met by the Plaintiff in the instant action. INTENTIONAL BREACH OF THE CONTRACT It is undisputed that Defendant entered the Employment Agreement with full knowledge of the restrictive covenants contained therein. Defendant also testified that he received and read the letter sent to him by Plaintiff's attorney, Frederick Mills, on March 14, 2016, reminding him of the restrictive covenants of the Employment Agreement. See Plaintiff's Exhibit “6”. During the Hearing, Defendant in his own words stated that he “will stipulate” that: a) Defendant voluntarily resigned from his position with Plaintiff on March 4, 2016. b) Defendant's last day of employment with Plaintiff was April 3, 2016. c) Defendant is an independent contractor of Orthopedic Resources of Florida Inc. (“Orthopedic Resources”); d) On March 18, 2016, Defendant signed the Independent Contractor Agreement with Orthopedic Resources entered into evidence as Plaintiff's Exhibit “7” at Hearing; e) Defendant's first day as independent contractor for Orthopedic Resources was April 4, 2016; f) Orthopedic Resources is a sales representative, agent, and distribution company for the following four (4) orthopedic product manufacturers: Corin Group, Lima Corporate, United Orthopedic Corporation, and ConforMIS, Inc. (See Paragraph 1 page 1 of the_Independent Contractor Agreement, Plaintiff's Exhibit 7); g) Corin Group is a direct competitor with Zimmer; h) United Orthopedic Corporation is a direct competitor of Zimmer; i) ConforMIS, Inc. is a direct competitor of Zimmer; j) Lima Corporate is a direct competitor of Zimmer; k) Orthopedic Resources is a direct competitor of Plaintiff; l) Defendant's territory as an independent contractor for Orthopedic Resources is Hernando, Citrus, Pasco, Pinellas, Pasco, Pinellas, Hillsborough, Manatee, Sarasota, Charlotte, Marion, Sumter, Lake, Polk, Orange and Osceola County Florida (“Defendant's Territory”). (See Schedule C pages 15 and 16 of the Independent Contractor Agreement, Plaintiff's Exhibit 7); m) All counties in Defendant's Territory are located within the Restricted Territory (See Schedule C pages 15 and 16 of the Independent Contractor Agreement, Plaintiff's Exhibit 7, and Exhibit A page 13 of the Employment Agreement, Plaintiff's Exhibit 5).; n) Defendant as an independent contractor for Orthopedic Resources is selling Corin Group, Lima Corporate, United Orthopedic Corporation, and ConforMIS, Inc. within the Restricted Territory,(See Paragraph 1, Page 1 of the Independent Contractor Agreement, Plaintiff's Exhibit 7); and o) Defendant has provided surgical case coverage on behalf of Orthopedic Resources to Dr. David Chasen, Dr. Alan L. Valadie, and Dr. Sam Messiah; and p) Dr. David Chasen, Dr. Alan L. Valadie, and Dr. Sam Messiah were customers of Plaintiff during the time of his employment with Plaintiff. Based upon Defendant's own testimony, it is undisputed that Defendant is working for a orthopedic sales company that is a competitor of Plaintiff and that Defendant had intentionally breached the restrictive covenants as contained in his Employment Agreement. Therefore Plaintiff has proven the second element of Sarasota Beverage Co. v. Johnson 551 So.2d 503 (Fla. 2d DCA 1989), an intentional breach of a restrictive covenant agreement. See Section 14 G, I, J and K and Section 15 on pages 7 and 8 of the Employment Agreement, Plaintiff's Exhibit 5. NO ADEQUATE REMEDY Florida Supreme Court has held that Temporary Injunctions are favored when there is a breach of a restrictive covenant as it is inherently a difficult task to determine just what damage actually is caused by the employee's breach of the restrictive covenant. Miller Mechanical, Inc. v. Ruth, 300 So.2d 11 (Fla. 1974). Furthermore, the Florida Second District Court of Appeals has stated that injunctions are favored “in order to maintain long standing relationships and preserving the goodwill of a company built up over the course of years of doing business.” Variable Annuity Life Ins. Co. v. Hausinger, 927 So.2d 243, 245 (Fla. 2d DCA2006). Defendant testified he began working for Orthopedic Resources on April 4, 2016. Defendnat testified that he is working with three (3) doctors, namely, Dr. David Chasen, Dr. Alan L. Valadie, and Dr. Sam Messiah that were customers of Plaintiff. Discovery is still outstanding and will be ongoing so as to determine if there are other customers being solicited, so it would be impossible to determine at this time the actual extent of the damage caused to Plaintiff as result of Defendant's breach of the Employment Agreement. In addition, if a Temporary Injunction is not granted, Defendant will continue breaching the Employment Agreement which will cause Plaintiff to continue to suffer damage to long standing relationships and goodwill. Lastly, the underlying reasoning for a Temporary Injunction to be issued is to maintain or preserve the status quo. A Temporary Injunction is the only remedy that will maintain the status quo, consequently Plaintiff has no adequate remedy at law except injunctive relief and has proven the final element of Sarasota Beverage Co. v. Johnson 551 So.2d 503 (Fla. 2d DCA 1989). As Plaintiff has presented evidence that: (1) it has a valid contract with Defendant; (2) Defendant intentionally breached the contract; and (3) Plaintiff has no adequate remedy except injunctive relief. Plaintiff would again assert and argue that Plaintiff is entitled to Temporary Injunction. Sarasota Beverage Co. v. Johnson 551 So.2d 503 (Fla. 2d DCA 1989). PLAINTIFF IS ENTITLED TO TEMPORARY INJUCTION PURSUNT TO FLORIDA RULE OF CIVIL PROCEDURE 1.160 Plaintiff in order to be entitled to a temporary injunction must show: (1) the likelihood of irreparable injury: (2) the unavailability of an adequate remedy at law: (3) a substantial likelihood of success on the merits; and (4) that a temporary injunction will serve the public interest. DePuy Orthopaedics, Inc. v. Waxman, 95 So.3d 928, 938(Fla. 1st DCA 2012). THE LIKELIHOOD OF IRREPARABLE INJURY At the Hearing, Plaintiff presented evidence that it had a valid agreement that complied with § 542.335 Fla. Stat (2016). Plaintiff has also presented undisputed evidence that Defendant has breached the Employment Agreement. § 542.335 (1) (j) Fla. Stat (2016) provides that, once Plaintiff has shown a violation of an enforceable restrictive covenant, it creates a presumption of irreparable injury to the person seeking enforcement of a restrictive covenant. This presumption is rebuttable, but at no time did Defendant present any evidence claiming that Plaintiff would not suffer irreparable harm by the breach of the Employment Agreement by Defendant. UNAVAILABILITY OF AN ADEQUATE REMEDY As previously stated in this Memorandum of Law, and due to the nature of the inherently difficult task of determining just what damage Plaintiff will actually suffer as a result of Defendant's intentional breach of the Employment Agreement, temporary injunction is the only adequate remedy at law. SUBSTANTIAL LIKELIHOOD OF SUCCESS ON THE MERITS In DePuy Orthopaedics, Inc. v. Waxman, 95 So.3d 928, 938 (Fla. 1st DCA 2012), the First District Court of Appeal found that, once DuPuy Orthopaedics had established that the restrictive covenants were reasonably necessary to protect its legitimate business interest and Appellees had intentionally breached said restrictive covenants, DePuy Orthopaedics had met its burden of establishing that it is substantially likely to succeed against Appellees. In the instant case, Plaintiff has submitted evidence to this Court at the Hearing that the restrictive covenants contained in the Employment Agreement are reasonably necessary to protect its legitimate business interests. Defendant's intentional breach of the restrictive covenants contained in the Employment Agreement are not in dispute, therefore, Plaintiff is substantially likely to succeed on the merits of this case. PUBLIC INTEREST Public interest favors entry of a temporary injunction to enforce a restrictive covenant agreement as the public has a cognizable interest in the protection and enforcement of contractual rights. “This interest is particularly strong with respect to non-compete agreements, as the Florida Legislature has determined that the enforcement of such agreements are in the public's best interest.” Hilb Rogal & Hobbs of Fla., Inc. v. Grimmel, 48 So.3d 957, 962 (Fla. 4th DCA 2010). At the hearing Defendant did not present any public interest argument against the entry of a temporary injunction. Florida courts and the Florida Legislature favor injunctions for the enforcement of restrictive covenants, and Defendant failed to provide any public interest argument against the entry of the Temporary Injunction. Accordingly public interest favors the entry of a Temporary Injunction in this matter. DEFENDANT'S ARGUMENTS As it is undisputed that a valid agreement exist between the parties and Defendant is in breach of said agreement, Defendant's arguments that were presented are: (1) Plaintiff does not have a legitimate business interest; and (2) Defendant was not a sales representative for Plaintiff and is now a sale representative Orthopedic Resources, so the restrictive covenants are not necessary because of the differences in Defendant's position with Plaintiff and his position with Orthopedic Resource. The issue of Plaintiff's legitimate business interest has been previously addressed in this Memorandum of Law. As to Defendant's second point listed above, George Etheridge testified at the Hearing that all of Defendant's duties and obligations during his employment with Plaintiff were all related to the goal of selling the orthopedic products. Defendant was hired for the purpose of developing strategies to convert surgeons or doctor groups from using their existing orthopedic product manufacturers to orthopedic product manufacturers represented by Plaintiff. See Plaintiff's Exhibit “3” Proposed Sale Strategies for Precision Orthopedics and Section 4 B and C on page 2 and 3 of the Employment Agreement, Plaintiff's Exhibit “5”. Defendant moved to Florida from North Carolina almost four (4) years ago, and at that time he had no relationships with customers and no knowledge about the customers in the Restricted Territory. See Plaintiff's Exhibit 2. During his employment with Plaintiff, Defendant traveled throughout the Restricted Territory wherein he developed relationships with Plaintiff's customers, and learned information that was not readily available to the general public. If the restrictive covenants are not enforced, then Defendant is now able to use the information he gained and the relationships he developed while employed by Plaintiff, which allows Defendant the ability to skip to the front of the line thus providing Defendant with an unfair advantage when competing against Plaintiff. Simply stated, the information garnered and relationships developed by Defendant while employed by Plaintiff provides Defendant with the ability to use Plaintiff's legitimate business interests against Plaintiff in the Restricted Territory, therefore the Motion for Temporary Injunction should be granted. WHEREFORE, for all of the foregoing reasons, Plaintiff respectfully requests that this Court grant Plaintiff's Motion for Temporary Injunction thereby enjoining Defendant from: a) working for a competitor of the Plaintiff within the Restricted Territory; b) soliciting business from any of Plaintiff's customers; c) communicating with or calling on Plaintiff's customers with the intent of diverting or attempting to divert business away from Plaintiff to Defendant and/or a competitor of Defendant; d) using Plaintiff's confidential information in Defendant's business operations or from disclosing Plaintiff's confidential information to a third party; e) award Plaintiff reasonable attorneys' fees and costs incurred in bringing this action and filing and prosecuting this Motion for Temporary Injunction; and f) grant any other such or further relief that this Court deems just and proper. Ryan Quigley RYAN T. QUIGLEY, ESQ. Florida Bar No.: 0030558