Tuesday, December 07, 2021

targeting residents of one building can be advertising or promotion

De Cortes v. Brickell Investment Realty, LLC, --- F.Supp.3d ----, 2021 WL 5768173, NO. 21-21109-CIV-ALTONAGA/Torres (S.D. Fla. Jul. 1, 2021)

De Cortes, an 84-year old woman, worked for defendants/predecessors from 2003-2020 in their real estate business. “Defendants represent clients in and out of Florida in the negotiations for the purchase or sale of real property.” Defendant BIR’s office is in the Four Ambassadors building, where De Cortes has lived and continues to live. Defendants represent 170 owners of units in the Four Ambassadors.

In 2020, De Cortes obtained a Florida real estate sales associate license and asked if she could serve as a real estate agent for BIR. Instead, BIR terminated her and posted a notice on its office door stating that she’d retired, and it also emailed and texted clients with the same statement.

One of BIR’s employees told De Cortes that she’d signed a non-compete agreement; she alleged that he “slipped the Agreement into a stack of papers” for her to sign because she had no incentive to sign a non-compete agreement. The Agreement restricts her from doing business with BIR’s clients and from working for any of BIR’s competitors for a five-year period after her employment ends. BIR then sent C&D letters to De Cortes and her new real estate firm, alleging she breached restrictive covenants and theatening to sue the firm for injunctive relief and damages. Defendants allegedly informed clients and prospective clients; residents, owners, and renters at the Four Ambassador building; and Four Ambassadors’ agents, employees, and vendors that De Cortes was stealing their clients and violating restrictive covenants.

De Cortes alleged that the restrictive covenants were unenforceable because they didn’t protect any confidential information, long-term relationships, specialized training, or other legitimate interests.

Although De Cortes’s FLSA claim (relating to wages/hours) did not provide a basis for supplemental jurisdiction over state law tortious interference/defamation/etc. claims, the Lanham Act claim did.

Even assuming Rule 9(b) applied, De Cortes sufficiently pled that claim. The “what” was two false statements: (1) “[Plaintiff] was retired from the real estate industry” and (2) “Plaintiff is stealing BIR’s clients and violating lawful restrictive covenants.”

Defendants only argued about (2). Though they contended that she didn’t allege that they believed the noncompete was unenforceable when they made the relevant statements, she did allege that her signature was fraudulently obtained, which was enough on the pleadings.

Commercial advertising or promotion: Defendants argued that the C&D and statements to clients and prospective clients weren’t commercial speech because the statements “pertain to BIR’s legal rights under the Agreement.” But “[c]ommercial speech encompasses not merely direct invitations to trade, but also communications designed to advance business interests.” That was pled here.

Likewise, defendants argued that the purpose of the statements was not to influence consumers to hire BIR, but instead merely to protect BIR’s legal rights. But De Cortes sufficiently alleged an alternative purpose — “to further BIR’s stranglehold on the Four Ambassadors building[.]”

Sufficient dissemination to the relevant public: The requirement is that “the representations must be disseminated sufficiently to the relevant public to constitute advertising or promotion within that industry.” Here, De Cortes plausibly alleged that the members of the relevant purchasing public were the owners and renters, and prospective owners and renters, of the units in the Four Ambassadors, and that the statements were widely disseminated to them.

What about “in commerce”?  De Cortes pled that defendants (1) “represent[ed] clients in and out of Florida in the negotiation of the purchase or sale of property” and (2) made “false and misleading representations to individuals and entities involved in interstate commerce and these false and misleading representations affect interstate commerce.” This was enough.

Under Florida law, “[a]ny restrictive covenant not supported by a legitimate business interest is unlawful and is void and unenforceable.” Because there was an actual controversy, despite defendants’ “near-frivolous” argument to the contrary, the court could evaluate De Cortes’s claim for declaratory relief.

Tortious interference: Defendants’ defense of the privilege of competition was premature.

Defamation per se: The statements about breach of agreements alleged fell within recognized categories of defamation per se in that they would tend to injure De Cortes in her profession. Claims that De Cortes was stealing clients and confidential information and violating enforceable restrictive covenants “naturally imply Plaintiff is untrustworthy.” And they threatened the company with which she affiliated with legal liability should it continue to employ her. Likewise, statements that De Cortes was retired indicated that she was not taking on work or clients. “In each case, a client or potential client, or employer or potential employer, would likely take these statements to mean Plaintiff was either not taking on work or, if she was, she could not be trusted with it — thus injuring her in her trade or profession.”

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