Non-Compete News - Florida Supreme Court Holds Referral Sources Are Legitimate Business Interests Under Florida's Non-Compete Statute

Executive Summary: On Thursday, September 14, 2017, the Florida Supreme Court held that referral sources can be valid legitimate business interests under Florida's non-compete statute, potentially warranting enforcement of a restrictive covenant/non-compete agreement. In determining whether referral sources can be legitimate business interests, the Court closely analyzed the statute's plain language and engaged in a fact- and industry-specific inquiry.

The Court analyzed whether referral sources can constitute legitimate business interests in two consolidated cases, both involving the home health care company industry - White v. Mederi Caretenders Visiting Services of Southeast Florida, No. SC16-28, and Americare Home Therapy, Inc. v. Hiles, No. SC16-400. The facts of both cases are remarkably similar.

In White, Mederi Caretenders Visiting Services of Southeast Florida (Caretenders), a home health care company (HHC), hired White as a marketing representative to solicit physicians and medical facilities for home health service referrals. White executed a confidentiality and non-compete agreement that precluded her from working in Martin and St. Lucie Counties for one year after termination. Subsequently, White resigned from Caretenders, began employment with a direct competitor, and solicited referral sources with whom she developed relationships while working with Caretenders. Caretenders sued to enforce White's non-compete agreement, and the trial court entered summary judgment in White's favor, finding that Caretenders did not have legitimate business interests in its referral sources. In entering summary judgment against Caretenders, the trial court relied on the Fifth District Court of Appeal's decision in Florida Hematology & Oncology v. Tummala, 927 So. 2d 135 (Fla. 5th DCA 2006), which found that referral sources are not legitimate business interests under section 542.335 because the statute does not specifically identify referral sources as legitimate business interests. On appeal in White, the Fourth District Court of Appeal reversed the trial court's summary judgment, found that Caretenders had legitimate business interests in its referral sources, and certified conflict with Tummala.

In Hiles, Americare Home Therapy, Inc. (Americare), an HHC, hired Hiles as a home health liaison to solicit referral sources. Hiles executed a non-compete agreement that prohibited her for one year from working with any competitor within fifty miles...