Vital Pharmaceuticals, Inc. v. Alfieri

• Decision Date: 20 January 2022
• Docket Number: No. 20-14217,20-14217
• Parties: VITAL PHARMACEUTICALS, INC., a Florida corporation d.b.a. VPX Sports/Redline/Bang Energy, Plaintiff-Appellee-Cross Appellant, v. Christopher ALFIERI, an individual, Andrew LaRocca, an individual, Elegance Brands, Inc., a Delaware corporation, Defendants-Cross Appellees, Adam Perry, an individual, Defendant, Amy Maros, an individual, Defendant-Appellant-Cross Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

23 F.4th 1282

VITAL PHARMACEUTICALS, INC., a Florida corporation d.b.a. VPX Sports/Redline/Bang Energy, Plaintiff-Appellee-Cross Appellant,

v.Christopher ALFIERI, an individual, Andrew LaRocca, an individual, Elegance Brands, Inc., a Delaware corporation, Defendants-Cross Appellees,Adam Perry, an individual, Defendant,Amy Maros, an individual, Defendant-Appellant-Cross Appellee.

No. 20-14217

United States Court of Appeals, Eleventh Circuit.

Filed: January 20, 2022

Beverly A. Pohl, Peter R. Goldman, Danna Khawam, Scott Douglas Knapp, Nelson Mullins Riley & Scarborough, LLP, Fort Lauderdale, FL, Stephanie Souraya Khouri, Vital Pharmaceuticals, Inc., Weston, FL, Gregg Howard Metzger, Cozen O'Connor, MIAMI, FL, for Plaintiff-Appellee-Cross Appellant.

Jonathan Pollard, Christopher Scott Prater, Pollard, PLLC, Fort Lauderdale, FL, for Defendant-Appellant-Cross Appellee AMY MAROS.

Christopher Scott Prater, Pollard, PLLC, Fort Lauderdale, FL, for Defendant-Cross Appellee Christopher Alfieri.

Patrick H. Gonyea, Law Offices of Patrick H. Gonyea, PA, Tampa, FL, for Defendant-Cross Appellee Andrew LaRocca.

Before William Pryor, Chief Judge, Grant, and Anderson, Circuit Judges.

William Pryor, Chief Judge:

This appeal and cross-appeal involve the partial grant and partial denial of a motion for a preliminary injunction to enforce several restrictive covenants against the former employees of a producer of energy drinks. One former employee argues on appeal that she should not have been enjoined. The producer argues on cross-appeal that the district court should have enjoined additional former employees.

Many, but not all, of the restrictive covenants—and the corresponding provisions in the preliminary injunction—have expired. So, we dismiss as moot the portions of the former employee's appeal that challenge the expired provisions. We also dismiss as moot the entire cross-appeal, which concerns only the expired covenants. But we have jurisdiction over—and reach the merits of—the former employee's appeal from the unexpired provisions in the preliminary injunction. And we vacate those provisions because the producer failed to prove its entitlement to preliminary relief.

I. BACKGROUND

Vital Pharmaceuticals, Inc., a Florida corporation, produces and sells energy-drink products under the brand name "BANG." It views itself as a competitor of "[c]ompanies such as ... Red Bull, Rock Star[,] and Monster Energy." And it considers itself "a recognized leader in the energy drink and sports nutrition markets."

In 2019, Vital made four hires relevant here. It hired Christopher Alfieri as vice-president of sales and distribution. It hired Adam Perry as director of sales and distribution. It hired Andrew LaRocca as director of distribution strategy. And it hired Amy Maros as senior supply chain manager.

When they accepted the job offers, these individuals signed employment agreements containing three restrictive covenants. They agreed not to work for "a [c]ompeting [c]ompany" "[d]uring the term of [their] employment with [Vital] ... and for a period of one ... year from [their] termination or cessation date." They agreed not to solicit Vital employees to join a competing company, a provision that was also valid for one year from termination. And they agreed "never to disclose" or "to utilize for [their] own benefit, or for any third party's benefit" any of Vital's confidential information, including its product formulae and its marketing and sales information.

The new hires did not remain at the company for long. Vital terminated Alfieri in March 2020 when its business plans changed. Alfieri then joined Elegance Brands, Inc., a Delaware corporation, as its chief revenue officer. Elegance principally sells alcoholic beverages, but in 2019 it developed a cannabidiol-infused caffeinated drink called "Gorilla Hemp." LaRocca and Perry left Vital in May 2020 and accepted jobs with Elegance. Maros resigned from Vital effective June 17, 2020, but it appears that she began working for Elegance in early June.

Vital sued Alfieri, LaRocca, Maros, Perry, and Elegance. It alleged that the individuals violated their non-compete covenants by working for Elegance within a year after leaving Vital; that Alfieri violated the employee non-solicitation covenant by encouraging LaRocca, Maros, and Perry to join Elegance; and that Elegance and Alfieri engaged in tortious interference with Vital's contractual relationships with the other former employees. Vital sought injunctive relief and damages.

Vital then moved for a preliminary injunction. It asked the district court to enjoin its former employees from violating their non-compete covenants by working for Elegance or another competitor during the one-year term of those covenants, "as such period may be extended due to tolling." It also sought to enforce Alfieri's employee non-solicitation covenant. And it asked that Elegance be enjoined from interfering with the former employees’ restrictive covenants and from using any confidential information belonging to Vital. Perry settled with Vital before the district court ruled on the motion.

After a two-day evidentiary hearing, the district court granted the motion in part. It first determined that the restrictive covenants were valid and enforceable under Florida law. See FLA. STAT . § 542.335. Specifically, it concluded that the covenants were justified by Vital's "legitimate business interests" in its product formulae, in its other confidential information, and in its customer relationships. See id. § 542.335(1)(b). And it rejected the argument that Vital was required to "identify specific customers" to establish a legitimate business interest in its customer relationships.

The district court then concluded that Vital "ha[d] shown a substantial likelihood of succeeding on its claims against Maros ... but not [against] Alfieri or LaRocca." It explained that Vital had "presented ... more than sufficient evidence ... that Maros ha[d] breached the [agreement] she signed" because the evidence established that "Maros accepted a position at Elegance while still employed [by] and collecting [a] salary from [Vital]." And it reasoned that it could infer a likelihood of success from the breach of the restrictive covenant. But, crediting the testimony of Elegance's chief executive officer, the district court found that "there [was] absolutely no evidence that Alfieri or LaRocca took any information with them from [Vital] to Elegance" or that Elegance had seen any of Vital's confidential information. So, Vital could not "make a prima facie showing that Alfieri or LaRocca breached their [agreements]."

The district court also determined that Vital had satisfied the other elements necessary to secure a preliminary injunction against Maros. Under Florida law, the district court explained, Vital was entitled to a "presumption of irreparable injury" because it had proved "[t]he violation of an enforceable restrictive covenant," id. § 542.335(1)(j), and Maros had not rebutted the presumption. The balancing of harms favored Vital because the district court was unable to "consider any individualized economic or other hardship that might be caused to the person against whom enforcement is sought." See id. § 542.335(1)(g)(1). The public interest favored the enforcement of the restrictive covenants. And Maros's defenses to enforcement failed.

The preliminary injunction contained five operative provisions. First, Maros was "enjoined for a period of twelve ... months," "calculated from" the date Vital posted a bond, "from working for Elegance" or other competitors of Vital. Second, Elegance was also prohibited during the same period from employing Maros or using any of Vital's confidential information. Third, Maros was "further enjoined from working for any other competitor" and from soliciting Vital employees "for a period of twelve[ ]months as set forth in the [employment] [a]greement," to be "tolled until the date that Maros and Elegance c[a]me into compliance with the non-competition restriction of the agreement." Fourth, although the district court had suggested in its opinion that Alfieri and LaRocca would not be enjoined, it prohibited the two men, along with Maros, from soliciting "current [Vital] energy drink customer[s] or prospective customers about whom [they] had" confidential information belonging to Vital. Finally, it stated that the three individuals "shall not use, permit to be used, disclose, or transmit for any purpose any of [Vital's] [c]onfidential and [p]roprietary information."

Vital posted a bond on October 16, 2020. Maros timely appealed the preliminary injunction against her. See 28 U.S.C. § 1292(a)(1). And Vital timely cross-appealed the partial denial of preliminary injunctive relief against Alfieri and LaRocca. See id.

Vital moved to supplement the record on appeal. Vital asked this Court to take notice that "Alfieri and LaRocca were terminated [by Elegance] on October 12, 2020, and Maros was terminated on October 16, 2020." We carried the motion with the case.

In the light of this new information, we directed the parties to file supplemental briefs explaining when and whether the one-year-long provisions in the employment agreements and preliminary injunction had expired. We also directed the parties to discuss whether any aspect of the appeal or cross-appeal was moot. The parties agreed that the two time-limited provisions in the preliminary injunction had expired, and that the prohibition against using Vital's confidential information had not expired because there was no applicable time limit. But Maros argued that her appeal was not moot. And Vital argued the same as to its cross-appeal.

II. STANDARDS OF REVIEW

Two standards govern our review. "We review de novo questions of our jurisdiction." United States v. Amodeo , 916 F.3d 967, 970 (11th Cir. 2019). And we review for abuse of discretion a ruling on a motion for a preliminary injunction. See Jysk Bed'N Linen v....