Estetique Inc. USA v. XPAMED, LLC et al

Filing 36

ORDER granting in part and denying in part 6 Motion for Preliminary Injunction; denying 30 Motion to Dissolve Temporary Restraining Order. See Order for details. Signed by Judge James I. Cohn on 9/14/2011. (prd)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO.: 0:11-CIV-61740-COHN/SELTZER
ESTETIQUE INC. USA, a Florida corporation,
Plaintiff,

V.
XPAMED LLC, a Florida corporation,
MARIO GUASTELLA, an individual,
and JOSE MONTILLA, an individual,
Defendants.
____________________________________/
ORDER GRANTING IN PART MOTION FOR PRELIMINARY INJUNCTION
THIS CAUSE is before the Court upon Plaintiff’s Motion for a Preliminary
Injunction [DE 6], Defendants’ Responses to the Motion [DE’s 9 and 25], Plaintiff’s
Reply [DE 28], and Defendants’ Motion to Dissolve the Temporary Injunction [DE 30].
The Court has carefully considered these filings, the argument of counsel and the
evidence presented on September 2 and 9, 2011, including the credibility of witnesses,
and is otherwise fully advised in the premises.
I. BACKGROUND
Estetique Inc., USA (“Estetique” or “Plaintiff”) seeks a preliminary injunction
against Defendant Xpamed, LLC, a competitor business founded by Defendant Mario
Guastella (“Guastella”), a former employee of Plaintiff. Xpamed, Guastella and
Xpamed sales consultant Jose Montilla (“Montilla”), another former employee of
Plaintiff, are allegedly using Plaintiff’s confidential customer information to sell similar
products to these customers. Plaintiff’s Complaint alleges claims for false advertising
(Count I) and unfair competition (Count II) under the federal Lanham Act; breach of

contract against Guastella and Montilla for violations of non-compete agreements
signed by them (Counts III and IV), misappropriation of trade secrets under Florida law
(Counts V), and common law conversion claim (Count VI). The Court granted an ex
parte temporary restraining order (“TRO”) when the case was filed [DE 8], though the
TRO was not effective until August 10, 2011, when Plaintiff posted the required $25,000
bond [DE 10]. After Defendants twice moved for extensions, the TRO was extended
without objection until September 2, 2011, the first day of the hearing [DE 15]. When
the hearing could not be completed that day, the Court extended the TRO and
completed the hearing on September 9, 2011.
II. FINDINGS OF FACT1
1.

Estetque, which operates primarily from its office in Miramar, Florida, is a
distributor/seller of aesthetic and beauty equipment for spas, medical spas and
professional aesthetic centers in the United States, the Caribbean, Central and
South America, and Mexico. Plaintiff also maintains local offices in several
Central and South American countries. Testimony of Moshe Segebre
(“Segebre”).2

2.

Plaintiff primarily sells five products of aesthetic and beauty equipment, which
are used for a variety of treatments: (a) RejuveMax, an anti-aging collagen bed

1

The Court has received proposed findings of fact from each party. These
documents have been filed in the docket of this case and served on all opposing parties
[DE’s 34 and 35]. Due to the detailed nature of the evidence in support of and
opposition to the preliminary injunction motion, the Court does incorporate verbatim
certain portions of both Plaintiff’s and Defendants’ Proposed Findings, though this Court
has made an independent judgment that these findings are correct. Cf. Bright v.
Westmoreland County, 380 F.3d 729 (3rd Cir. 2004).
2

Nearly all of the evidence regarding Plaintiff’s business comes from the
testimony of Moshe Segebre.
2

manufactured by Hapro International in the Netherlands; (b) LipoMax RF, a body
contouring device; (c) LumiMax, a device for skin improvement; (d) LumiMax PL,
a device using fractional pulsed light whose stated uses include hair removal,
photo-rejuvenation, acne treatment and vascular treatment; and (e) DermaMax,
a device using microdermabrasion technology.
3.

Estetique offers sales and customer support services in connection with these
products.

4.

Plaintiff relies on a combination of its sales personnel and internet presence to
market and sell its products and services. Plaintiff generates leads from its
website, and its sales force travels to Central and South America to meet directly
with plastic surgeons, spa owners, and others in the industry in an attempt to
promote its sales.

5.

Estetique’s internet presence through the company’s website is an important
component of new and repeat business.

6.

The market for Plaintiff’s products is highly competitive. Estetique’s success is
dependent, in part, on its ability to protect its proprietary technology and
customer information (both current and prospective). Estetique has spent over
ten years developing this proprietary customer information.

7.

Estetique’s customer information, such as names, contact information and
product needs, gives Estetique a continuing competitive advantage. Much of this
information includes customers’ private cell phone numbers, private e-mail
addresses, and information concerning their specific product needs. Plaintiff
compiled this information through in-person meetings, prior sales, seminars and
contact through its website. This information, in the manner that Estetique
3

maintains it, is not generally known and would be difficult to duplicate.
8.

Estetique limits access to its proprietary customer database, in addition to the
requirement that employees sign confidentiality and non-competition
agreements.

9.

In October 2008, Estetique hired defendant Montilla as a member of its sales
team, allowing Montilla to market Plaintiff’s products and services to Plaintiff’s
customers.

10.

In June 2010, Plaintiff hired defendant Guastella as a web designer, responsible
for maintaining and designing Plaintiff’s internet presence.

11.

As a condition of their employment, both Montilla and Guastella executed an
“Agreement Regarding Inventions, Confidentiality and Non-Competition” (the
“Agreement”) which, among other things, provides for the protection of Plaintiff’s
“Proprietary Information” (defined to include customer lists and marketing or
sales information), a non-competition period of five years post-termination of
employment, and a customer non-solicitation period of five years posttermination of employment. Plaintiff’s Exhibits 1 & 2.

12.

Montilla’s and Guastella’s obligations with respect to non-competition are set
forth in Paragraph 7 of the Agreement:
During the term of my employment with the Company, and for
a period of five (5) years thereafter, regardless of reason for
termination, I will not, directly or indirectly, whether as owner,
partner, shareholder, consultant, agent, employee, co-venturer
or otherwise, engage, participate or invest in any business
activity in the Restricted Region with respect to the Products
and Services.3 I understand and agree that the restrictions set
3

“Products and Services,” as defined in Paragraph 1(e) of the Agreement,
“means individually and collectively the development, manufacture or marketing of
products, or performance or marketing of services which are competitive with or similar
4

forth in this Section 7 are intended to protect the Company’s
reasonable competitive business interests, its interest in its
Proprietary Information and established and prospective
customer relationships and goodwill, and agree that such
restrictions are reasonable and appropriate for this purpose.
For purposes hereof, the “Restricted Region” shall mean any
state or location in which the Company operates and conducts
its business or into which the Company directs its services.
13.

Montilla’s and Guastella’s obligations with respect to non-solicitation of
Estetique’s clients and suppliers are set forth in Paragraph 8 of the Agreement:
During the term of my employment with the Company and for
five (5) years thereafter, regardless of reason for termination,
I will not, in any capacity, directly or indirectly: (a) solicit the
business or patronage of any Customer for any other person
or entity for the purpose of providing Products and Services;
(b) divert, entice or otherwise take away from the Company the
business or patronage of any Customer, or attempt to do so;
(c) solicit or induce any Customer to terminate or reduce its
relationship with the Company; (d) provide or assist with the
provision of Products and Services to a Customer (except in
his capacity as an employee of the Company); (e) refer a
Customer to another provider of Products and Services or (f)
purchase products for any reason whatsoever from any
individual or entity that supplies, or has at any time ever
supplied, the Company with products.

14.

Estetique subscribes to a web-based application known as EmailBrain for
purposes of managing its e-mail, marketing and sales. Substantially all sales
and marketing information, including client and prospective client contact
information, is accessible from EmailBrain.

15.

Given the confidential and highly proprietary nature of the information stored in
EmailBrain, Estetique limits access to the database to its sales force and

to the products or services of the Company, or products or services which the Company
has under development or which are the subject of active planning at any time during
my employment.
5

management.
16.

Guastella, who was hired by Estetique as a web designer in June 2010, was not
provided access to EmailBrain as part of his day-to-day activities, but was given
access for a specific task in September 2010.

17.

On September 14, 2010, Guastella packed up his personal belongings and
never returned to work. Guastella did not provide any notice to Estetique that he
was leaving.

18.

Guastella testified that he was given a very lengthy assignment which would take
a number of days to complete but which Segebre demanded he complete in only
one business day. When he did not, Segebre berated him in the presence of
Guastella’s fellow employees, whereupon Guastella resigned.

19.

When Guastella left, he was in possession of certain confidential information of
Estetique, including web server passwords/login information that no other
Estetique employee possessed.

20.

As a result, Estetique withheld Guastella’s final paycheck until such time that he
returned the information to Estetique. In November 2010, without having
received the information from Guastella, Estetique relented and sent the final
check to Guastella. The parties dispute whether Guastella was working for
Estetique during the period from September 14, 2010 to the issuance of his final
check in November 2010. Resolution of this factual dispute is not material to the
Court’s resolution of the present motion.

21.

Estetique did not change the EmailBrain password for several weeks after
Guastella left. On October 1, 2010, someone from an internet protocol (IP)
address belonging to Guastella obtained access to Plaintiff’s EmailBrain
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database.
22.

Estetique employed Montilla as a member of its sales force until March 9, 2011.
According to Segebre, Estetique terminated Montilla’s employment as a result of
poor sales performance, unsatisfactory reviews, and because Montilla had
several times been found to be providing inaccurate or false information to
Estetique’s clients about the products Montilla was selling.

23.

Montilla testified that even though he applied his skills to his job diligently and
was successful at selling Estetique’s products, his employment was abruptly
terminated when he became ill, called in sick, and refused to return to work when
he was demanded to do so by Segebre.

24.

During his employment with Estetique, Montilla was not provided with access to
EmailBrain, but was provided with access to lists of contact information for
customers and prospects assigned to him.

25.

On September 28, 2010, shortly after he physically left Estetique, Guastella
registered the domain name http://www.Xpamed.com. Xpamed is a company
based in Miami, Florida whose main objective is to design, produce, assemble,
sell and distribute high-tech equipment for the cosmetic industry worldwide.

26.

Xpamed’s website lists for sale spa and beauty equipment that is substantially
similar to the equipment sold by Estetique. For example, among the various
categories of items listed for sale on Xpamed’s website are medical spa
equipment, collagen beds, photo rejuvenation equipment, microdermabrasion
equipment, and radio frequency treatment equipment – the same categories of
equipment Estetique sells.

27.

Although Xpamed claims to sell 150 different products in 42 different categories,
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the testimony of Defendants Montilla and Guastella did not substantiate this
claim.
28.

Montilla and Guastella testified that they focus Xpamed’s sales on laser-based
products, which are more advanced than Plaintiffs’ products. Xpamed’s target
market per device is in the $15,000 to $30,000 market range, while Plaintiff’s
average sales price is approximately $40,000.

29.

Guastella testified that Xpamed’s product line is based primarily on laser
technologies and designed for “invasive” procedures which can only be
performed by highly skilled medical practitioners or technicians.

30.

The Court finds that despite this emphasis on laser-based products, Defendants’
products still perform the same functions as those sold by Plaintiff, and are
competitive with and similar to Plaintiffs’ products. The evidence shows that if a
customer were to purchase a hair-removal device from Defendants, they would
not also purchase Plaintiff’s products. Although it may be based upon a different
technology, Xpamed’s products substitute for Plaintiff’s products in the
marketplace.

31.

Xpamed has taken content directly from Estetique’s website. For example,
Xpamed’s website contained a press release, located at
http://xpamed.com/Press%20Release.html, under the heading “Xpamed
launches new line of IPL aesthetic equipment.” Plaintiff’s Exhibit 4.

32.

Guastella admitted during the September 2 hearing on the Injunction Motion that
the Xpamed press release is a verbatim copy of a July 2010 Estetique press
release. Plaintiff’s Exhibit 5. Although he referred to his conduct as a “mistake,”
Guastella admitted to intentionally copying the press release and changing all
8

references from Estetique to Xpamed. He then posted the press release on the
Xpamed website.
33.

Although the Xpamed domain name was registered in September 2010, the
website did not go “live” until December 2010, at which time Xpamed began
actively targeting Estetique’s clients and competing against Estetique by offering
for sale similar medical spa and aesthetic equipment as those sold by Estetique.

34.

Montilla and Guastella testified that they only obtained customer information
from publicly available sources, such as an email search program called EmEx3.

35.

Guastella testified that Xpamed used a different software program to create its
website, and relies upon an organic search engine optimization technique to
attract interested parties, rather than the “pay to click” strategy employed by
Plaintiff when he was employed there.

36.

Xpamed relies upon its online store to market its products and inquiries
generated through the online store are followed up by Montilla, who addresses
customer questions leading up to sales.

37.

Further, Xpamed began targeting Estetique’s customers through both e-mail and
telephone solicitations. Plaintiff’s Exhibits 6, 7 and 8.

38.

The e-mail solicitations contain in-line images of equipment being sold by
Xpamed – equipment that is similar in look and function to that sold by Estetique,
but at a substantially lower price. Id.

39.

In addition, certain of Xpamed’s e-mail solicitations and its website identify
Xpamed’s collagen beds (allegedly purchased from ProSun, the U.S. distributor
of Hapro International – the same manufacturer from which Estetique purchases
its collagen beds) as “FDA Approved.”
9

40.

The Defendants’ sole evidence that these collagen beds are “FDA Approved” is
a “Certificate to Foreign Government” issued by the FDA with respect to certain
tanning beds sold by ProSun. The Certificate to Foreign Government does not
state that these beds are approved by the FDA nor does it grant any
authorization to market them as such.

41.

Segebre testified that Estetique does not market its own Hapro-manufactured
collagen bed (the RejuveMax) as “FDA Approved” because it is Segebre’s
understanding that the FDA does not “approve” these devices and specifically
prohibits the marketing/advertising of these devices as approved. Estetique is
unaware of any competitor, other than Xpamed, that markets collagen beds as
approved by the FDA.

42.

Segebre learned about Xpamed’s e-mail and telephone solicitations from several
of Estetique’s customers who received them and forwarded or showed the
emails to him.

43.

Segebre testified that these customers were contacted via their private cell
phone numbers and/or private e-mail addresses, information which is not publicly
available or in the public domain. In addition, certain of these customers were
not affiliated with the medical spa/aesthetic industry (such as private investors).

44.

According to the Defendants, Xpamed purportedly compiled all of its contact
information from publicly available sources, including but not limited to software
known as “Email Extractor.” The Defendants did not, however, present any
evidence that the contact information of the customers specifically identified in
Estetique’s moving papers or referenced at the injunction hearing could be
obtained from these public sources.
10

45.

As a web developer for Plaintiff, Guastella never had any contact with
Estetique’s customers and prospective customers during his time at Estetique.

46.

As a sales person for Plaintiff, Montilla was responsible for contacting individuals
and entities in Estetique’s customer database to solicit their business.

47.

Prior to his termination of employment, Montilla was actively soliciting a customer
in South America, Dr. Rada, for the purchase of one or more of Estetique’s
devices.

48.

Shortly after his employment was terminated by Estetique, Guastella hired
Montilla to work as a salesperson for Xpamed.

49.

Montilla does not, however, use his own name when conducting business for
Xpamed. Rather, he works under the alias “Danny” or “Daniel Avila,” a name he
did not use or ever mention during his three years at Estetique.

50.

The “Daniel Avila” Facebook account was created on or around April 28, 2011
(approximately one month after Montilla was fired), and almost immediately
began posting information in support of Xpamed.

51.

“Daniel Avila” has contacted Estetique customers with whom he dealt with as
“Montilla” while employed by Estetique.

52.

Montilla testified that he assumed the identify of Danny Avila because he wished
to dissociate himself from Estetique, and avoid any confusion with any potential
customers.

53.

Montilla further testified that he only dealt with customers who made inquiries of
Xpamed and did not “cold call” any customers.
III. CONCLUSIONS OF LAW
A. Preliminary Injunction Standard
11

In order to obtain a preliminary injunction, Plaintiff must establish the following
four elements: (1) a substantial likelihood that it will prevail on the merits; (2) a
substantial threat that it will suffer irreparable injury if the injunction is not granted; (3)
the threatened injury to plaintiff outweighs the threatened harm the injunction may do to
the defendants; and (4) granting the preliminary injunction will not disserve the public
interest. Church v. City of Huntsville, 30 F.3d 1332, 1342 (11th Cir.1994). Because a
"preliminary injunction is an extraordinary and drastic remedy," it is "not to be granted
until the movant clearly carries the burden of persuasion as to the four prerequisites."
Id. (quoting Northeastern Fl. Chapter of the Ass'n of Gen. Contractors of Am. v. City of
Jacksonville, 896 F.2d 1283, 1285 (11th Cir.1990)); see also McDonald’s Corp. v.
Roberts, 147 F.3d 1301, 1306 (11th Cir. 1998).
B. False Advertising and Unfair Competition Claims
To establish a likelihood of success on the merits of a false advertising claim
under the Lanham Act:
the movant must demonstrate the following: “(1) the ads of the opposing
party were false or misleading, (2) the ads deceived, or had the capacity
to deceive, consumers, (3) the deception had a material effect on
purchasing decisions, (4) the misrepresented product or service affects
interstate commerce, and (5) the movant has been-or is likely to beinjured as a result of the false advertising.” Johnson & Johnson, 299 F.3d
at 1247.
North American Medical Corp. v. Axiom Worldwide, Inc., 522 F.3d 1211, 1224 (11th
Cir. 2008).
In an argument raised for the first time in their motion to dissolve the temporary
restraining order (filed minutes before the continuation of the preliminary injunction
hearing on September 9, 2011), Defendants contend that Plaintiffs lack standing to

12

bring these claims. Rather than engage in a standing analysis at this time, the Court
concludes that the admissible evidence does not show a substantial likelihood of
success on the merits of a false advertising claim regarding the elements of whether
the deception had a material effect on purchasing decisions and whether the
misrepresented product affects interstate commerce. Statements made by their
customers to Segebre about their confusion were not admitted into evidence due to a
hearsay objection. Thus, there is no evidence regarding those purchasing decisions,
other than a large inference from Moshe Segebre’s testimony regarding decreased
traffic to Plaintiff’s website. While this may be evidence of injury, it is not sufficient to
show a likelihood of success on the merits of a false advertising claim.
As for the claim in Count II for unfair competition under the Lanham Act, Plaintiff
alleges that Defendants used confidential customer information to market goods as
“FDA approved,” when they were not so approved. Defendants rely upon a “Certificate
to Foreign Government” for their claim. Plaintiff puts forth legal argument and also
testimony from Moshe Segebre that this Certificate does not mean that a product may
be represented as “FDA Approved.” The Court concludes that Plaintiff has not shown a
substantial likelihood of success on the merits that this claim is in fact false. In addition,
even if it was false adverstising, Defendants contend that there is no evidence whether
foreign customers are likely to be influenced by whether or not a product is “FDA
Approved.” While the Court believes such influence is likely, the Court concludes that
Plaintiffs have not shown a substantial likelihood of success on the merits for an unfair
competition claim based upon this allegedly false representation.4
4

Although not described in their Complaint, Plaintiffs also appear to seek relief
based upon Defendants’ use of the term “SpaMed.” Plaintiffs apparently began using
the term “Spamed Solutions” as a marketing campaign. Plaintiffs contend that
13

C. Breach of Contract – Employment agreement
In Autonation, Inc. v. O'Brien, 347 F.Supp. 2d 1299, 1304 (S.D. Fla. 2004), the
legal standard for enforcement of a restrictive employment agreement under Florida law
was put forth:
Under Section 542.335 of the Florida Statutes, restrictive
covenants are valid if the employer can prove: (1) the existence of one or
more legitimate business interests justifying the restrictive covenant; and
(2) that the contractually specified restraint is reasonably necessary to
protect the established interests of the employer. North American
Products Corp. v. Moore, 196 F.Supp.2d 1217, 1228 (M.D.Fla.2002). If
the employer can establish its prima facie case, the burden shifts to the
employee to show that the restriction is overbroad, overlong, or otherwise
not reasonably necessary to protect the established interests of the
employer. Fla. Stat. 542.335(1)(c). Additionally, when the employer
establishes a legitimate business interest, irreparable injury must be
presumed and the burden shifts to the employee to establish the absence
of such injury. Fla. Stat. 542.335(1)(j); North American Products Corp.,
196 F.Supp.2d at 1228; Don King Prods., Inc. v. Chavez, 717 So.2d 1094,
1095 (Fla. 4th DCA 1998).
Pursuant to Florida's statute, “legitimate business interests”
include: trade secrets, valuable confidential business information,
substantial relationships with specific prospective or existing customers,
customer goodwill, and extraordinary or specialized training. Fla. Stat.
542.335(1)(b). Moreover, courts are statutorily required to construe a
restrictive covenant in favor of providing reasonable protection to all
legitimate business interests established by the person seeking
enforcement. Fla. Stat. 542.335(1)(h); AutoNation, Inc. v. Maki, 2004 WL
1925479, *3 (Fla.Cir.Ct. Aug. 25, 2004).
In Florida, confidential business information is considered a
legitimate business interest that can be protected by a restrictive covenant
in an employment contract. New Horizons Computer Learning Centers,
Inc. v. Silicon Valley, 2003 WL 23654790, *6 (M.D.Fla. Nov. 12, 2003).
However, information that is commonly known in the industry and not
unique to the allegedly injured party is not confidential and is not entitled
to protection. Anich Indus., Inc. v. Raney, 751 So.2d 767, 771 (Fla. 5th
DCA 2000) (citing Keel v. Quality Med. Syst., Inc., 515 So.2d 337-38 (Fla.
Defendant Xpamed’s name, when pronounced in Spanish, sounds substantially similar
to, if not an exact copy of, “Spamed.” The Court concludes that Plaintiffs have not
shown a substantial likelihood of success that consumers are confused by Defendants’
use of their name.
14

3d DCA 1987)).
1. Confidential Business Information
Plaintiff contends that its confidential client information qualifies as a “trade
secret” or “confidential business information,” either of which is a “legitimate business
interest” under Florida law. The Court concludes Plaintiff has not shown that this
information is a trade secret under Florida law. Plaintiff, however, has shown a
substantial likelihood of success that Defendants used confidential client information.
Moreover, even if Plaintiff had not proven that Defendants used confidential customer
information, Plaintiff has proven that Defendants have solicited Plaintiff’s customers in
violation of the Agreement. Even though some email addresses were available by
public searches, an alternative method of proving a legitimate business interest under
Florida law is proving that Plaintiff had substantial relationships with specific prospective
or existing customers.
With regard to client contact information serving as a “valuable confidential
business information,” this Court previously addressed the issue of a compilation of
client information, some of which could be publicly available. In Continental Group, Inc.
v. KW Property Mgmt., LLC, 622 F.Supp. 2d 1357, 1374-75 (S.D. Fla. 2009), a dispute
between competing property management companies, this Court stated:
Although viewed in isolation much of this information could be discovered
by competitors by contacting condominium associations or industry
sources, the Court concludes that the work and labor expended by
Plaintiff in compiling the information, whether board contacts in a county,
on-site employee checklists, hurricane preparedness, or environmentally
related (“green”) improvements, plus Plaintiff’s judgment as to the
inclusion of the selected information, raises the level of the information to

15

valuable confidential business information in their final compiled form.5
Thus, such compilations are valuable for a business or a competing
business. In this case, KW has benefitted from its receipt, via Kravit, of
the compiled information detailed in the Findings of Fact section of this
Order. These compilations have not only saved KW numerous work
hours in obtaining the information and in deciding what to include in the
contacts lists, checklists, procedures, and other on-site documents, but
have instantly made KW’s on-site operations appear more professional to
the client base of both TCG and KW. Thus, the information also qualifies
as having a legitimate business interest in client goodwill associated with
the specific marketing or trade area of property management for
condominium associations. The Court concludes that Plaintiff has shown
a substantial likelihood of success on the merits that it has a legitimate
business interest in its non-compete, non-solicitation agreement with
Defendant Kravit and that Kravit breached the contract by using
documents belonging to TCG in her employment with KW.

While Defendants are correct that the level of evidence regarding the taking of
confidential information by Defendants from Plaintiff is not as strong as it was in the
Continental Group case, it is clear to this Court that Defendants solicited Plaintiff’s
customers with some non-public information obtained from Plaintiff’s database, in
violation of the Agreement. See Plaintiff’s Exhibits 6, 7 and 8.
2. Solicitation of Employees
Plaintiff also asserts that Guastella breached the non-competition agreement by
soliciting Montilla to join Xpamed. Defendants argue that Montilla had already been
terminated by Plaintiff at the time he was hired by Xpamed. However, the Agreement
signed by Guastella clearly forbids hiring any individual who had been employed by the

5

To draw an analogy from copyright law, compilations can even be
copyrightable. Feist Publications, Inc. v. Rural Telephone Service Co., Inc., 499 U.S.
340, 356 (1991), citing 17 U.S.C. § 101 (“A ‘compilation’ is a work formed by the
collection and assembling of preexisting materials or of data that are selected,
coordinated, or arranged in such a way that the resulting work as a whole constitutes an
original work of authorship. . . .”).
16

Company within a two year period preceding Guastella’s termination. This would
include Montilla, who had garnered valuable confidential business information regarding
Plaintiff’s clients while employed as a sales representative. Guastella therefore also
breached the non-solicitation of employee provision of his Agreement.
3. Similar Products
Defendants contend that they have not breached the Agreement because the
products they sell are not similar to Plaintiff’s products. The Court notes that the
Agreements state that Defendants cannot market products which “are competitive with
or similar to the products or services of the Company.” As discussed in its Findings of
Fact, the Court concludes that while not exactly the same, Xpamed’s products compete
with Plaintiff’s products in the same marketplace. This activity violates the plain
language of the Agreement.
4. Unclean Hands Defense
Defendants assert that Plaintiff is not entitled to injunctive relief because
Defendants Guastella and Montilla were each constructively discharged by Plaintiff.
Even taking the disputed facts described above in a light more favorable to Defendants,
a single instance of a supervisor/owner “berating” an employee does not create an
environment which rises to the level of a constructive discharge as to Defendant
Guastella. The facts as presented by Guastella do not rise to the level necessary to
preclude injunctive relief based upon his non-competition agreement. As for Defendant
Montilla’s claim that he was terminated for calling in sick one day, when combined with
Segebre’s testimony regarding Montilla’s job performance, the Court also concludes
that no constructive discharge has been shown by Defendants.
17

4. Reasonable Necessity of Restrictions
Defendants attack the enforceability of the Agreements, contending that under
Fla. Stat. § 542.335(1)(d)(1), a period of restraint of greater than two years is presumed
unreasonable. Plaintiff argues that because there is a separate five year ban on nonsolicitation of customers in the Employment Agreement, which it believes constitutes a
trade secret ban, that the five year term is reasonable as a protection of trade secrets,
and governed by Fla. Stat. § 542.335(1)(e). However, as noted above, Plaintiff has
failed to show a substantial likelihood of success that its confidential customer
information rises to the level of a trade secret.
The restrictive covenant in this action is therefore overbroad as to a reasonable
period of time. While Plaintiff has shown that some specified restraint is reasonably
necessary to protect the established interests of the employer, a five year period is
unreasonable. The Court has the authority under Florida law to “modify the restraint
and grant only the relief reasonably necessary to protect such interest.” Fla. Stat.
§ 542.335. In this case, the Court concludes that a reasonable time period would
extend until August 10, 2012. This period is one year from imposition of the temporary
restraining order, and less then two years from when Guastella and Montilla left
Plaintiff’s employ.
Defendants also challenge the geographic scope of the restriction. In that
regard, the Agreement initially appears limitless, in that its restricts former employees
from any geographic area in which Plaintiff does business or intends to do business.
The Court can rationally construe this provision to be limited to the areas that the
evidence shows Plaintiff operates in: the United States, Central America (including
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Mexico), South America, the Caribbean and South America. That does leave the
European and Asian markets open to Defendants without restriction.
D. Conversion Claim
Plaintiff also asserts a claim for conversion of confidential and proprietary
information. The elements of conversion in Florida as: “(1) an act of dominion
wrongfully asserted; (2) over another's property; and (3) inconsistent with his ownership
therein.” Special Purpose, 125 F.Supp.2d at 1099-1100, citing Warshall v. Price, 629
So.2d 903, 904 (Fla. 4th DCA 1993), rev. den., 641 So.2d 1346 (Fla. 1994). As
described above, although Plaintiff has shown that Defendants have contacted
Plaintiff’s customers by using confidential information, the Court concludes that Plaintiff
has not demonstrated a substantial likelihood of success on the merits of a claim for
conversion for this activity. Absent the restrictive covenant, Defendants would not be
subject to preliminary injunctive relief.
E. Remaining Preliminary Injunction Elements
Having found that Plaintiff has a substantial likelihood of success on the merits of
its breach of contract against Defendants Montilla and Guastella, the Court turns to the
other elements required for issuance of a preliminary injunction.
1. Irreparable Harm
For violations of a covenant not to compete or solicit in compliance with Florida
Statutes Section 542.335, upon a showing of legitimate business interest as in this
case, irreparable harm is presumed, though Defendants can rebut this presumption. As
discussed above, Plaintiff has shown that the compilation of otherwise publicly available

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information can be protected as confidential information. The Court concludes that
Defendants have not rebutted the presumption of irreparable harm.
2. Balance of the Harm to the Parties
Defendants argue that Plaintiff cannot (as of yet) quantify any measurable
damages due to loss of any clients, yet it seeks to ban Guastella and Montilla from
developing their start up business. While the Court acknowledges that Defendants
would be harmed by such a remedy, it is Defendants Guastella and Montilla who
breached their contract with Plaintiff. Moshe Segebre testified that Plaintiff’s sales have
diminished since Defendants began their business. Thus, some injunctive relief is
necessary to enforce the contracts.
3. Public Interest
Defendants assert that restraining competition will injure the public at large, since
Defendants sell their products at a substantially lower cost than Plaintiff. As this Court
noted in Continental Group, “the public interest also requires adherence to contracts
and fair competition.” 622 F.Supp. 2d at 1378. In this case, Defendants have used a
substantial shortcut to completing sales by contacting Plaintiff’s clients and using the
information they gained while employed by Plaintiff to make their own sales at Plaintiff’s
expense. These actions, taken in violation of their contractual agreements, require
injunctive relief to remedy these breaches that does outweigh the public interest in
business competition.

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III. CONCLUSION
Accordingly, it is hereby ORDERED AND ADJUDGED as follows:
1.

Plaintiff’s Motion for a Preliminary Injunction [DE 6] is hereby GRANTED in part
as to the breach of contract claims and DENIED in part as to the other claims in
the Complaint;

2.

Defendants’ Motion to Dissolve the Temporary Injunction [DE 30] is hereby
DENIED;

3.

Defendants Mario Guastella and Jose Montilla, individually and collectively,
together with Xpamed, LLC, their respective agents, servants, employees,
attorneys, accountants, and all persons acting in concert with them or under their
inducement, encouragement or persuasion, are enjoined and restrained from
performing any of the following acts, directly or indirectly, on their own behalf or
on behalf of any third party:
a.

using or causing to be used, or disclosing in any manner, any confidential
client information obtained from the Plaintiff, including without limitation
client and prospective client information, and information relating to or
regarding Plaintiff’s business;

b.

for a period extending from today through August 10, 2012, contacting
any of Plaintiff’s customers for the purpose of selling products or services
as defined in the Non-Competition Agreement;

c.

for a period extending from today through August 10, 2012, soliciting or
attempting to solicit or induce any of Plaintiff’s employees to leave

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Plaintiff’s employment;
d.

for a period for a period extending from today through August 10, 2012,
diverting, soliciting, or taking away any customer of Plaintiff for the
purpose of selling products or services within the United States or any
country within Central America, South America or the Caribbean.

4.

The Court will set this case for trial by separate order.
DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County,

Florida, this 14th day of September, 2011.

Copies furnished to counsel of record on CM/ECF

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