On May 31, 2016, the First District Court of Appeal reversed a trial court order denying a motion for a temporary injunction against a marketing representative who formerly worked for Smart Pharmacy and went to work for a competitor. The compounding pharmacy argued that it is dependent upon physicians prescribing medications to patients and as a result, considers its physician referral sources and their prescribing patterns to be trade secrets.
Viccari, a sales representative for Smart Pharmacy, had a restrictive covenant that precluded him from competing with Smart Pharmacy in the Jacksonville FL market for two years post-employment. Viccari resigned and three months later, went to work for another pharmacy and called on some of the same physicians he contacted when he was working for Smart Pharmacy in the Jacksonville market. Smart Pharmacy filed suit and requested a temporary injunction. The trial court denied the request for the injunction, reasoning that although the noncompete validly protected Smart Pharmacy’s legitimate business interests in its relationships with referring physicians, Smart Pharmacy had an adequate remedy at law. Smart Pharmacy appealed and the 1st DCA reversed the order and remanded for entry of a temporary injunction.
This decision is notable in the North Florida community because there is currently a split of authority in the District Courts of Appeal regarding whether an employer can protect a “referral resource”. Florida Statute §542.331 requires that any restrictive covenant, to be enforced, must be supported by one or more legitimate business interests. In Southernmost Foot and Ankle Specialists, P.A v. Torregrosa, 891 So. 2d 591 (Fla. 3d DCA 2004), Florida?s Third District Court of Appeal held that the employer’s relationships with “referral doctors” who referred patients to a South Florida podiatry practice were included among the legitimate business interests the court would protect.
Yet, in Florida Hematology & Oncology v. Tummala, 927 So.2d 135 (Fla. 5th DCA 2006), the Fifth District Court of Appeal held to the contrary that the statute only protects substantial relationships with specific, identifiable existing or prospective patients. Referral sources supply a stream of unidentified prospective patients with whom the plaintiff had no prior relationship. As such, referral sources do not constitute a legitimate business interest under 542.335. The split in authorities has poised this issue to come before the Florida Supreme Court. However, in the meantime, the Smart Pharmacy case provides some indication that referral sources are protected in the First District Court of Appeal.
For more information concerning this matter, please contact John MacLennan at 359-7812.
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