IN THE SUPREME COURT OF FLORIDA CASE NO. 9. L.T. Case No.: 4D12-1313 2 NAHOMI ORTIZ Petitioner v. ANAKARLI BOUTIQUE, INC., Respondent, PETITIONER'S JURISDICTIONAL BRIEF On Review from the District Court of Appeal Fourth District, State of Florida Case No. 4D12-1313 Respectfully Submitted, SALOMON BRAVO, PL Gustavo A. Bravo, Esq. Attorneysfor Petitioner Nahomi Ortiz Plantation Corporate Center Two S. University Dr., Suite 330 Plantation, FL 33324 Telephone: (954) 760-4131 Facsimile: (954) 760-4305 gbravo@salomonbravo.com
TABLEOFCONTENTS TABLE OF CONTENTS...i TABLE OF CITATIONS...ii STATEMENT OF THE CASE AND FACTS... 1 SUMMARY OF ARGUMENT...3 JURISDICTIONAL ARGUMENT... 4 C CLUSION... e e. e... e... 042... e e. e...... e. e e.. e e...042..042.042...042... CERTIFICATE OF SERVICE... 8 CERTIFICATE OF COMPLIANCE... 9 1
TABLE OF CITATIONS Cases Cantor v. Cochran, 184 So. 2d 173 (Fla. 1966)... 3-7 Crawford v. David Shapiro & Co., P.A., 490 So. 2d 993 (Fla. 3d DCA 1986)...5 Davidson v. Iona-McGregor Fire Protection & Rescue Dist., 674 So. 2d 858 (Fla. 2d DCA 1996)... 6 Kane Furniture Corp. v. Miranda 506 So.2d 1061 (Fla. 2d DCA 1987)...3, 5 Keith v. News & Sun Sentinel Co. 667 So.2d 167, 171 (Fla.1995)...3, 4 Maguire v. American Family Life Assur. Co. ofcolumbus, Ga., 442 So. 2d 321 (Fla. 3d DCA 1983)... 5 VIP Tours oforlando, Inc. v. State, Dep't oflabor & Employment Sec. 449 So.2d 1307 (Fla. 5th DCA 1984)...3, 4 11
STATEMENT OF THE CASE AND FACTS Respondent, an eyebrow threading salon, hired Petitioner in 2008. See Opinion at 1. While Petitioner trained as a worker, Respondent paid Petitioner a salary and classified her as a W2 employee. See Id. at 2. In 2009, Respondent reclassified Petitioner as a 1099 independent contractor and began treating her as such. See id. During the time Petitioner was classified as a W2 employee, Respondent had Petitioner sign a Non-Compete Agreement, which provided in pertinent part: In consideration of my at-will employment or continued at-will employment by Anarkali Boutique, Inc. (hereinafter referred to as the "Company") and the compensation now and hereafter paid to me, I hereby agree as follows: I will not, either during my employment with Company or thereafter, directly or indirectly, for the purpose of obtaining them as customers, for any business that in any way competes with the business of the Company, solicit, induce, or have any contact with: (1) any current customer of the Company; (2) any person who has been a customer of the Company within the eighteen (18) month period prior to the end of my employment by the Company; and (3) any prospective customer of the Company who are or were identified through contacts I became aware of or developed during my employment with the Company... I agree and understand that nothing in this Agreement shall confer on me any right with respect to continuation ofmy employment with the 1
Company, nor shall it interfere in any way with my right or the Company's right to terminate my employment at any time, with our without cause. I specifically hereby acknowledge that I understand my employment with the Company is "at-will" and that I may be discharged from my employment for any reason or for no reason at all. (Emphasis Supplied). This agreement is the final, complete and exclusive agreement of the parties with respect to the subject matter hereof and supersedes all prior discussions between us. No modification or amendment of this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing signed by the party to be charged. Any subsequent change or changes in my duties, salary or compensation will not affect the validity or scope of this Agreement. As used in this Agreement, the period of my employment includes any time during which I may be retained by the Company as a consultant.. Succinctly, the Fourth District's opinion held that "the mere changing of the worker's status from an employee to an independent contractor did not cause the two-year non-compete period to being running." Opinion at 4. 2
SUMMARY OF ARGUMENT Petitioner seeks to invoke the discretionary jurisdiction of this Court pursuant to Florida Rule of Appellate Procedure 9.030(a)(2)(A)(iv). The December 12, 2012 decision below (the "Opinion"), see Appendix at 1, misapplies and thereby conflicts with this Court's rulings in Cantor v. Cochran, 184 So.2d 173 (Fla.1966) and its progeny, among others, Keith v. News & Sun Sentinel Co., 667 So.2d 167, 171 (Fla.1995); Kane Furniture Corp. v. Miranda, 506 So.2d 1061 (Fla. 2d DCA 1987); VIP Tours of Orlando, Inc. v. State, Dep't of Labor & Employment Sec., 449 So.2d 1307 (Fla. 5th DCA 1984). Petitioner submits that the Fourth District's Opinion contradicts and is otherwise inconsistent with key principles that distinguish between an employee and an independent contractor, as set forth in Cantor and its progeny. Specifically, Cantor and its progeny make clear that the distinction between an employee and an independent contractor is more than a mere change in duties, salary and compensation, which the Fourth District's Opinion suggests. Rather, the Fourth District's opinion overlooks the very nature of an at-will employment, and in the process ignores the most telling method in establishing control, which Cantor and its progeny indicate is the primary factor in distinguishing an employee from an independent contractor. That is, the transition from employee to independent 3
contractor involves the relinquishment of significant control that goes well beyond the mere change in duties, salary or compensation. JURISDICTIONAL ARGUMENT In Cantor v. Cochran, 184 So.2d 173 (Fla.1966), the supreme court set out the factors to be considered in determining whether one is an employee or an independent contractor: (a) the extent of control which, by the agreement, the master may exercise over the details of the work; (b) whether or not the one employed is engaged in a distinct occupation or business; (c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision; (d) the skill required in the particular occupation; (e) whether the employer or workman supplies the instrumentalities, tools and a place of work for the person doing the work; (f) the length of time for which the person is employed; (g) the method of payment, whether by time or job; (h) whether or not the work is part of the regular business of the employer; (i) whether or not the parties believe they are creating the relation of master and servant; (j) whether the principal is or is not in business. 4
Id. at 174-75. The first element of the Cantor test, control, is a primary indicator of status. Keith v. News & Sun Sentinel Co., 667 So.2d 167, 171 (Fla.1995); VIP Tours of Orlando, Inc. v. State, Dep't of Labor & Employment Sec., 449 So.2d 1307 (Fla. 5th DCA 1984). As explained in Kane Furniture Corp. v. Miranda, 506 So.2d 1061 (Fla. 2d DCA), rev. denied, 515 So.2d 230 (Fla.1987). In that regard, the supreme court in Cantor explained the following regarding the element of control: But the most tellingfactor establishing control was that petitioners fired the claimant without giving rise to a cause of action for breach of contract. The power to fire is the power to control. The absolute right to terminate the relationship without liability is not consistent with the concept of independent contractor, under which the contractor should have the legal right to complete the project contracted for and to treat any attempt to prevent completion as a breach of contract. Cantor v. Cochran, 184 So. 2d 173 (Fla. 1966) (Emphasis Supplied). In this regard, Florida courts have routinely held that at-will employments, which apply only to employees, inherently give employers this absolute right to terminate a worker. See Maguire v. American Family Life Assur. Co. ofcolumbus, Ga., 442 So. 2d 321, 323 (Fla. 3d DCA 1983) ("Without an employment contract specifically obligating both employer and the employee for a definite term of employment, the employment is considered to be indefinite and terminable at the will of either party.") (Emphasis Supplied); Crawford v. David Shapiro & Co., P.A., 490 So. 2d 993, n. 7 (Fla. 3d DCA 1986) (explaining that "under the 5
terminable at-will doctrine, employers had absolute freedom to discharge employees without notice and without cause") (Emphasis Supplied). In simple terms, the "general rule of at-will employment is that an employee can be discharged, as long as he is not terminated for a reason prohibited by law." Davidson v. Iona-McGregor Fire Protection and Rescue Dist., 674 So. 2d 858 (Fla. 2 DCA 1996) (Emphasis Supplied) (citing Crawford 490 So. 2d at 996, n. 4). Here, the crux of the Fourth District's misapplication of Florida law is perhaps best described in the following portion of the Opinion: Here, the company's changing of the worker's status to an independent contractor changed the worker's duties, salary, and compensation. The worker was no longer a trainee being paid a salary. Instead, the worker was permitted to maintain her own clientele and "make more money" by being paid through commissions. minus her share of the business's expenses. Thus, the mere changing ofthe worker's status from an employee to an independent contractor did not cause the two-year non-compete period to begin running. Instead, the two-year non-compete period did not begin running until the worker left the company. Id. at 4-5 (Emphasis Supplied). However, as shown above, Cantor and its progeny make clear that the distinction between an independent contractor and an employee is more than a mere change in duties, salary or compensation. Indeed, the primary factor in determining the distinction is control, which the ability to fire or terminate a worker is the most telling factor. This ability is consistent only with the principles of an "at-will" employee, and not an independent contractor. Thus, the change in 6
status from an "at-will" employee to that of an independent contractor was more than a mere change in duties, salary and compensation. As such, the Fourth District's opinion, in characterizing the change of worker status as a mere change in duties, salary or compensation, actually overlooks that such change instead alters the very fabric of the employmentwhereby an employer relinquishes substantial control over a worker. CONCLUSION The Fourth District's decision expressly and directly conflicts with Cantor and its progeny in its failure to properly characterize the significance of the transition from employee to independent contractor, inasmuch as it involves the relinquishment of significant control that goes well beyond the mere change in duties, salary or compensation. Respectfully Submitted, SALOMON BRAVO, PL Attorneysfor Petitioner Ortiz Plantation Corporate Center Two South University Drive, Ste. 330 Plantation, FL 33324 Telephone: (954) 760-4131 Facsimile: (9 60-05 By: Gustavo A. Bravo Florida Bar No. 551287 7
CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 21st day of March, 2013, we served a copy of the foregoing via Email and US Mail upon John Arrastia, Jr. (john@acplegal.com), Arrastia & Capote, LLP, Brickell Bayview Centre, Suite 2310, Miami, FL 33130. By: Gustavo A. Bravo Florida Bar No. 551287 8
CERTIFICATE OF COMPLIANCE I hereby certify that this Jurisdictional Brief complies with the font requirements of Florida Rule of Appellate Procedure 9.210(a)(2). The Jurisdictional Brief is written in Times New Roman 14 poi. By: Gustavo A. Bravo Florida Bar No. 551287 9
IN THE SUPREME COURT OF FLORIDA CASE NO. L.T. Case No.: 4D12-1313 NAHOMI ORTIZ Petitioner v. ANAKARLI BOUTIQUE, INC., Respondent, / APPENDIX TO PETITIONER'S JURISDICTIONAL BRIEF Anarkali Boutique, Inc. v. Ortiz, 104 So.2d 1202 (Fla. 4th DCA December 12, 2012)
DIsTRIcT COURT OF APPEAL OF THE STATE OF FLORIDA FOURTH DISTRICT July Term 2012 ANARKALI BOUTIQUE, INC., a Florida corporation, Appellant, GERBER, J. V. NAHOMI ORTIZ, Appellee. No. 4D12-1313 [December 12, 2012] A company appeals from the circuit court's non-final order denying the company's motion for temporary injunction against its former worker for violating a non-compete/non-solicitation agreement. The company argues the court misinterpreted the agreernent to f'md that when the company changed the worker's status to an independent contractor, the non-compete period b.egan running and then expired before the worker left to start a competing business. We agree with the company's argument and reverse. The company hired the worker in 2008. The company had the worker sign a non-compete/non-solicitation agreement. The agreement stated, in pertinent part: In consideration of my at-will employment or continued at-will employment by [the company] and the compensation now and hereafter paid to me, I hereby agree as follows: I will not, either during my employment by the Company or for a period of two (2) years after I am no longer employed by Company, engage, as an employee, independent contractor, officer, director, or shareholder, in any employment, business, or activity that in any way competes with the business of the Company within a one-hundred (100) mile radius of any store, office, or facility of the Company. I
hereby acknowledge that I understand and know what the business of the Company is, including, but not limited to, the products and services that it offers or sells. I will not, either during my employment by the Company or thereafter, directly or indirectly, for the purpose of obtaining them as customers for any business that in any way competes with the business of the Company, solicit, induce, or have any contact with: (1) any current customer of the Company; (2) any person who has been a customer of the Company within the eighteen (18) month period prior to the end of my employment by the Company; and (3) any prospective customers of the Company who are or were identified through contacts I became aware of or developed during my employment with the Company. Any subsequent change or changes in my duties, salary or compensation will not.affect the validity or scope of this Agreement.... While the company was training the worker, it paid her a salary. However, after the company allowed the worker to build her own clientele, the company, in 2009, began treating the worker as an independent contractor. The company's owner explained the reasoning for this change in status: "[T]hey have to make a living, so we pay them a salary and then, when... they build a large enough clientele they often request that we put them on commission so they make more money " As part of the independent contractor arrangement, the worker received a 35% commission on the services she performed. In exchange, the worker had to pay taxes on the commissions and had to pay her share of the business's rent, supplies, utilities, and insurance. The company's owner testified that, over the next two years, the worker saw a minimum of fifty clients per day and built up a clientele of at least one thousand clients. In 2011, the worker left the company and opened her own business, performing the same services, at a location less than five miles from the company's location. The owner testified that, after the worker's departure, she learned from clients and other workers that many of the company's clients went to the worker's new business. 2
The company filed a complaint for injunctive relief and damages and a motion for temporary injunction against the worker. In both filings, the company alleged that the worker violated the non-compete/nonsolicitation agreement. The motion alleged the existence of legitimate business interests justifying the agreement's restrictive covenants. See 542.335(1)(b), Fla. Stat. (2008) ("The person seeking enforcement of a restrictive covenant shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant."). The motion also alleged that the restrictive covenants were reasonably necessary to protect the company's established interests. See 542.335(1)(c), Fla. Stat. (2008) ("A person seeking enforcement of a restrictive covenant also shall plead and prove that the contractually specified restraint is reasonably necessary to protect the legitimate business interest or interests justifying the restriction."). The motion further alleged the elements necessary to obtain a temporary injunction. See Univ. Med. Clinics, Inc. v. Quality Health Plans, Inc., 51 So. 3d 1191, 1195 (Fla. 4th DCA 2011) ("[A] party seeking a temporary injunction must establish that (1) irreparable harm will result if the temporary injunction is not entered; (2) an adequate remedy at law is unavailable; (3) there is a substantial likelihood of success on the merits; and (4) entry of the temporary _injunction will serve the public interest.") (citation omitted). In opposition, the worker argued that when the company changed her status to an independent contractor, she ceased being an employee under the agreement, and thus the two-year non-compete period began running at that time. The worker further argued that the two-year noncompete period expired before she left to start her business. After an evidentiary hearing, the circuit court entered an order denying the company's motion for temporary injunction. In the order, the court agreed with the worker's argument and found that, when the company changed the worker's status to an independent contractor, the two-year non-compete period began running and then expired before the worker left to start her business. The court did not otherwise make factual findings as to whether the company proved section 542.335's requirements or the elements of a temporary injunction. This appeal followed. The company argues the circuit court misinterpreted the agreement to find that when the company changed the worker's status to an independent contractor, the two-year noncompete period began running. Our review of this argument is de novo. See DePuy Orthopaedics, Inc. v. Waxman, 95 So. 3d 928, 934 (Fla. 1st 3
DCA 2012) ("[W]here a trial court's order on a temporary injunction is based on an interpretation of a contract, de novo review is appropriate."). We agree with the company's argument. The circuit court gave effect to only those provisions of the agreement referring to the worker as an employee. The court did not give effect to the agreement's provision that "[a]ny subsequent change or changes in my duties, salary or compensation will not affect the validity or scope of this Agreement." This was error. See Philip Morris, Inc. v. French, 897 So. 2d 480, 488 (Fla. 3d DCA 2004) ("Courts are required to construe a contract as a whole and give effect, where possible, to every provision of the agreement."). Here, the company's changing of the worker's status to an independent contractor changed the worker's duties, salary, and compensation. The worker was no longer a trainee being paid a salary. Instead, the worker was permitted to maintain her own clientele and "make more money" by being paid through commissions minus her share of the business's expenses. Thus, the mere changing of the worker's status from an employee to an independent contractor did not cause the two-year non-compete period to begin running. Instead, the two-year non-compete period did not begin running until the worker left the company. Even if we were to construe the agreement's provisions to be in conflict, we still would conclude that the two-year non-compete period did not begin running until the worker left the company. "A primary rule of contract construction is that where provisions in an agreement appear to conflict, they should be construed so as to be reconciled, if possible. In so doing, the court should strive to give effect to the intent of the parties in accord with reason and probability as gleaned from the whole agreement and its purpose." Arthur Rutenberg Corp. v. Pasin, 506 So. 2d 33, 34 (Fla. 4th DCA 1987) (internal citation omitted). Further, "[a] court shall construe a restrictive covenant in favor of providing reasonable protection to all legitimate business interests established by the person seeking enforcement." 542.335(1)(h), Fla. Stat. (2008). "A court shall not employ any rule of contract construction that requires the court to construe a restrictive covenant narrowly, against the restraint, or against the drafter of the contract." Id. Construing the agreement here, its obvious purpose was to preclude the worker from competing with the company after the company trained the worker and allowed her to build her own clientele. It would be unreasonable to construe the contract as having the two-year noncompete period begin to run while the company still was employing the worker as an independent contractor - i.e., when the worker is not 4
competing with the company - but have the non-compete period expire just before the worker leaves the company to start her own competing business. To hold otherwise would lead to absurd conclusion. See Am. Med. Int'l, Inc. v. Scheller, 462 So. 2d 1, 7 (Fla. 4th DCA 1984) ("If clauses in contract appear to be repugnant to each other, they must be given such an interpretation and construction as will reconcile them, if possible, and if one interpretation would lead to an absurd conclusion, then such interpretation should be abandoned and the one adopted which would accord with reason and probability.") (citation and quotation omitted). Based on the foregoing, we reverse the circuit court's order denying the company's motion for temporary injunction. Because the court did not make factual findings as to whether the company proved section 542.335's requirements or the elements of a temporary injunction, we remand for the court to review the record to determine whether the company met that burden. We leave it to the court's discretion to decide whether it requires a further hearing before it makes that determination. Reversed and remandedforproceedings consistent with this opinion. STEVENSON and LEVINE, JJ., concur. Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; Mily Rodriguez-Powell, Judge; L.T. Case No. 12-1236 03. John Arrastia, Jr. of Arrastia Capote & Phang LLP, Miami, for appellant. Gustavo A. Bravo of Salomon Bravo, PL, Plantation, for appellee. Not final until disposition of timely filed motion for rehearing. 5