Vital Pharmaceuticals, Inc. v. Alfieri et al

Filing 262

ORDER denying 182 Motion for Summary Judgment. Signed by Judge Raag Singhal on 5/9/2022. See attached document for full details. (pls)

Case 0:20-cv-61307-AHS Document 262 Entered on FLSD Docket 05/09/2022 Page 1 of 9

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 20-61307-CIV-SINGHAL/VALLE
VITAL PHARMACEUTICALS, INC.
d/b/a VPX SPORTS/REDLINE/BANG
ENERGY,
Plaintiff,

v.

CHRISTOPHER ALFIERI, an individual,
ADAM PERRY, an individual, ANDREW
LAROCCA, an individual, AMY MAROS,
an individual, and ELEGANCE BRANDS,
INC., a Delaware corporation,
Defendants.
___________________________________/
OPINION AND ORDER
THIS CAUSE has come before the Court on Defendants LaRocca and Alfieri’s
(“Defendants”) Motion for Summary Judgment, filed on February 18, 2022 (the “Motion”)
(DE [182]). Defendants filed a Statement of Undisputed Material Facts on February 18,
2022 (“Defendants’ SOF”) (DE [183]). Plaintiff Vital Pharmaceuticals, Inc. (“Plaintiff” or
“VPX”) filed a Response on March 5, 2022 (DE [201]). Plaintiff was directed to refile its
Response to comply with the Court’s Notice of Court Practice Order. Plaintiff refiled its
Amended Response on April 27, 2022 (DE [253]). Plaintiff filed an Opposing Statement
of Material Facts (“VPX’s SOF”) on March 5, 2022 (DE [202]). Defendants filed their
Reply on March 28, 2022 (DE [237]).

The Motion is now ripe for this Court’s

consideration.
I.

LEGAL STANDARD
Pursuant to Federal Rule of Civil Procedure 56(a), summary judgment “is

appropriate only if ‘the movant shows that there is no genuine [dispute] as to any material

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fact and the movant is entitled to judgment as a matter of law.’” Tolan v. Cotton, 572 U.S.
650, 656–57 (2014) (per curiam) (quoting Fed. R. Civ. P. 56(a)); 1 see also Alabama v.
North Carolina, 560 U.S. 330, 344 (2010). “By its very terms, this standard provides that
the mere existence of some alleged factual dispute between the parties will not defeat an
otherwise properly supported motion for summary judgment; the requirement is that there
be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
247–48 (1986). An issue is “genuine” if a reasonable trier of fact, viewing all the record
evidence, could rationally find in favor of the nonmoving party in light of his burden of
proof. Harrison v. Culliver, 746 F.3d 1288, 1298 (11th Cir. 2014). And a fact is “material”
if, “under the applicable substantive law, it might affect the outcome of the case.” Hickson
Corp. v. N. Crossarm Co., 357 F.3d 1256, 1259–60 (11th Cir. 2004). “[W]here the
material facts are undisputed and do not support a reasonable inference in favor of the
non-movant, summary judgment may properly be granted as a matter of law.” DA Realty
Holdings, LLC v. Tenn. Land Consultants, 631 Fed. Appx. 817, 820 (11th Cir. 2015).
The Court must construe the evidence in the light most favorable to the nonmoving
party and draw all reasonable inferences in that party’s favor. SEC v. Monterosso, 756
F.3d 1326, 1333 (11th Cir. 2014). However, to prevail on a motion for summary judgment,
“the nonmoving party must offer more than a mere scintilla of evidence for its position;
indeed, the nonmoving party must make a showing sufficient to permit the jury to
reasonably find on its behalf.” Urquilla-Diaz v. Kaplan Univ., 780 F.3d 1039, 1050 (11th
Cir. 2015). “[T]his, however, does not mean that we are constrained to accept all the

1 The 2010 Amendment to Rule 56(a) substituted the phrase “genuine dispute” for the former “‘genuine
issue’ of any material fact.”

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nonmovant’s factual characterizations and legal arguments.” Beal v. Paramount Pictures
Corp., 20 F.3d 454, 459 (11th Cir. 1994).
II.

DISCUSSION
A. Legitimate Business Interest
Defendants first argue that VPX cannot establish a protectable legitimate business

interest to justify its restrictive covenants. See Motion, at 5–9. According to Defendants,
information contained in VPX’s distributor lists is neither confidential nor proprietary and
can easily be obtained from public sources. Id. at 6. Moreover, Defendants assert, VPX
cannot identify a single customer (distributor) that was obtained by Elegance. Id. at 7.
Furthermore, Defendants argue that VPX has proffered no evidence that either LaRocca
or Alfieri ever used VPX’s purported confidential or proprietary information. Id. at 8.
Finally, Defendants contend that VPX has not sought to enforce the applicable provision
of the employment agreements pertaining to disclosure of confidential or proprietary
information. Id. at 8.
The Court already determined this issue in its Opinion and Order denying
Defendant Maros’ Motion for Summary Judgment. See (DE [261]). Specifically, the Court
found that VPX’s business plans, negotiated agreement templates with specific thirdparties, product formulas and design, business strategy, and any other work product that
represents an investment by the proponent that would cause unfair competition if
misappropriated by a competitor, likely qualify as confidential business information to
which VPX has a protectable legitimate business interest. Id. at 9–10. Accordingly, as
this Court held in that decision, and as it now reiterates, there are, at the very least,
genuine issues of material fact whether VPX has a protectable legitimate business

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interest in its confidential business information that justifies its restrictive covenants.
Accordingly, summary judgment is improper on this issue.
B. The Law-of-the-Case Doctrine
Defendants argue that the Eleventh Circuit decision in this case (DE [175]) controls
the disposition of their Motion. However, here too the Court addressed and rejected this
argument in its Opinion and Order denying Defendant Maros’ Motion for Summary
Judgment. See (DE [261]). Thus, summary judgment is not warranted on this basis.
C. Tortious Interference and Non-Solicitation Covenant
To prevail on a claim of tortious interference with a business relationship, a party
must show (1) the existence of a business relationship, (2) knowledge of the relationship
on the part of defendant, (3) an intentional and unjustified interference with the
relationship by the defendant, and (4) damage to the plaintiff because of the breach of
that relationship. Tamiami Trail Tours, Inc. v. Cotton, 463 So. 2d 1126, 1127 (Fla. 1985).
Defendant Alfieri argues that he had no knowledge of the restrictive covenants at issue
and thus could not have had the requisite knowledge required by the second element.
See Motion, at 12. The second element refers to knowledge of the business relationship
by the defendant, not knowledge of contract terms between the parties to that business
relationship. Moreover, the Tamiami court specifically noted the business relationship
need not be “evidenced by an enforceable contract.” 463 So. 2d at 1127. Accordingly,
Alfieri’s lack of knowledge of the restrictive covenants has no bearing on whether he had
knowledge of the business relationship between the other defendants and VPX—he did.
It is undisputed he was aware that the other defendants were employed at VPX and thus
had a business relationship with VPX.

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Second, Defendants argue VPX cannot show Defendant Alfieri manifested a
specific intent to interfere with the business relationship because Elegance Brands
entered into employment agreements with individual Defendants only with the knowledge
that Defendants could likely not honor their prior contracts. See Motion, at 13. Defendants
cite Martin Petroleum Corp. v. Amerada Hess Corp. for the proposition that “[o]ne does
not induce another to commit a breach of contract with a third person under the rule stated
in this Section when he merely enters into an agreement with the other with knowledge
that the other cannot perform both it and his contract with the third person.” 769 So. 2d
1105, 1107 (Fla. 4th DCA 2000) (quoting Restatement (Second) of Torts § 766 (1977)).
For one, Defendants’ argument does not follow because Elegance Brands, not Defendant
Alfieri, is the one who entered into agreement with the other defendants. Second, it is, at
the very least, a disputed question of fact whether Alfieri knew the other defendants were
bound by the restrictive covenants that they would be breaching by leaving VPX for
Elegance Brands. See VPX’s SOF ¶ 11 (DE [202]). If a factfinder concludes in the
affirmative, Alfieri would have had much more than simply the “knowledge that the
[defendants] cannot perform both [their VPX contract] and [their] contract with [Elegance
Brands].” See Martin Petroleum, 769 So. 2d at 1107. He would have had the knowledge
that the other defendants were affirmatively breaching the non-compete provisions in their
restrictive covenants. And, if a factfinder concludes Alfieri was aware of his own restrictive
covenant, Alfieri would have had the knowledge that he was breaching the non-solicitation
provision in his own restrictive covenant. Accordingly, this argument does not warrant
summary judgment in favor of Defendants.
Third, Defendants argue they did not take any confidential information with them
to Elegance, Elegance has not seen any of VPX’s confidential information as confirmed
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by Raj Beri’s testimony, and VPX cannot prove causation because all Defendants stated
they would leave VPX in any case. See Motion, at 14. As an initial matter, whether
Defendants took confidential information with them to Elegance and whether Elegance
has seen VPX confidential information is not relevant to the issues of whether Defendant
Alfieri committed tortious interference or violated his non-solicitation covenant. And in
any case, whether any of the Defendants did, in fact, take VPX’s confidential business
information with them and whether Elegance obtained this information from them are, at
the very least, disputed questions of fact not fit for summary judgment. See VPX SOF ¶¶
8, 12, 16 (DE [202]).

Whether Defendants planned to leave VPX, independent of

Elegance Brands, is also a disputed question of fact. See VPX SOF ¶ 6 (DE [202]).
Fourth, Defendants argue Alfieri did nothing proactive to tortiously damage or
attempt to damage VPX. See Motion, at 14 (DE [182]). According to Defendants, there
is no evidence Alfieri influenced, induced, or coerced the other defendants to breach their
employment contracts. Id. However, whether Alfieri influenced or induced the other
defendants to “jump ship” is again, at the very least, a disputed question of material fact.
See VPX’s SOF ¶ 15 (deposition testimony of Alfieri where he confirms his efforts to bring
the other defendants over to Elegance). Therefore, summary judgment is not warranted
on the issues of whether Alfieri committed tortious interference or breached his nonsolicitation covenant.
D. Liquidated Damages Provision
Defendants contend the liquidated damages provision contained in their
employment agreements violate Florida law because it is punitive in nature and in
terrorem by its nature. See Motion, at 15–17 (DE [182]). The provision states that breach
of the non-disclosure of confidential information covenant requires payment of the greater
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of $50,000 per occurrence or the sum of 40% of the Company’s gross annual sales. (DE
[76-1, 76-3 ¶ 7(b)(ii)]). The provision provides that breach of the non-compete covenant
requires the payment of the greater of $25,000 per occurrence or the sum of 50% of the
Employee’s first year gross earnings. Id. The provision provides that breach of the nonsolicitation covenant requires the payment of the sum of $100,000 per party. Id.
Defendants assert that, by VPX’s calculations, LaRocca owes $400,000 in damages and
Alfieri owes $300,000 in damages. See Motion, at 16 (DE [182]). Finally, Defendants
assert VPX cannot credibly contend it suffered any loss of sales or other business
damages. Id. at 17.
“Florida law recognizes that where damages are not clearly ascertainable, parties
to a contract may agree to a predetermined amount of damages that will flow from a
breach of their contract.” Gables v. Choate, 792 So. 2d 520, 522 (Fla. 3d DCA 2001)
(citing Hyman v. Cohen, 73 So. 2d 393 (Fla. 1954)). Under Florida law, “[l]iquidated
damages arising from breach of contract are appropriate when (1) damages from the
breach are not readily ascertainable, and (2) the sum stipulated is not grossly
disproportionate to the damages reasonably expected to follow from the breach.” Resnick
v. Uccello Immobilien GMBH, Inc. 227 F.3d 1347, 1350 (11th Cir. 2000) (citations
omitted). Critically, “liquidated damages are inappropriate when they serve only to punish
the breaching party.” Id. (citations omitted). “The fact that the liquidated damages may
be excessive at the time of breach does not lead to the conclusion that the liquidated
damages clause is a penalty and therefore not enforceable.” Secrist v. Nat’l Service
Industries, Inc., 395 So. 2d 1280, 1283 (Fla. 2d DCA 1981) (citations omitted). Where a
liquidated damages provision contains “two separate and distinct parts,” any one of which
is excessive, a court may properly enforce the provision found not to be excessive. Id.
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Applied here, the Court finds the first element is easily met because the
approximate loss in sales and market share from the disclosure of confidential business
information or loss of valuable employees is highly indeterminate. However, whether the
second element is met requires a determination of the damages reasonably expected to
follow from a breach. VPX asserts that damages flowing from the disclosure of its
confidential business information or loss of valuable employees could potentially create
severe consequences and catastrophic dilution of market share. See Amended
Response, at 21–22 (DE [253]). But, the Court is left to guess exactly how to approximate
VPX’s reasonably expected damages. Thus, whether the liquidated damages provision
meets the second element creates questions of fact that cannot be resolved at this stage.
The Court notes that the liquidated damages provisions regarding the non-disclosure of
confidential information covenant and non-compete covenant contain alternative
liquidated damages amounts. These undoubtedly qualify as having “two separate and
distinct parts,” allowing this Court to award the alternate amount if the other is found
excessive.

However, this is not the case with the non-solicitation covenant, which

imposes a flat $100,000 amount per party. Nevertheless, because the record does not
contain sufficient undisputed facts to determine VPX’s reasonably expected damages,
summary judgment is improper on this issue.
E. Proof of Damages
Defendants contend that summary judgment is warranted because VPX cannot
prove any damages. See Motion, at 17–18 (DE [182]). According to Defendants, VPX
cannot show any concrete injury. Id. VPX’s contention that competitors could acquire
protected information giving them an unfair competitive advantage is, according to
Defendants, remote and speculative. Id. at 18.
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“It is well established in Florida that where the allegations of a complaint show the
invasion of a legal right, the plaintiff on the basis thereof may recover at least nominal
damages . . . .” Hutchison v. Tompkins, 259 So. 2d 129, 132 (Fla. 1972) (citations
omitted). If breach is proven, VPX can at least recover nominal damages under Florida
law. VPX also has numerous other avenues to potentially assert and recover damages.
First, VPX could seek reimbursement for any amount of wages paid out to employees
while they were breaching their contracts and working simultaneously for the benefit of a
competitor.

Second, VPX could enforce its liquidated damages provisions against

defendants for breaches of the non-disclosure of confidential information covenant, the
non-solicitation covenant, and the non-compete covenant.

Third, VPX could seek

recovery of any costs associated with replacing employees lost due to the solicitation
activity by Alfieri. Fourth, VPX could seek attorney fees incurred as a result of enforcing
its restrictive covenants, which are awardable pursuant to defendants’ employment
agreements.

Accordingly, the Court finds Defendants are not entitled to summary

judgment on the issue of proof of damages. Therefore, it is
ORDERED AND ADJUDGED that Defendants LaRocca and Alfieri’s Motion for
Summary Judgment (DE [182]) is DENIED.
DONE AND ORDERED in Chambers, Fort Lauderdale, Florida, this 9th day of May
2022.

Copies furnished counsel via CM/ECF
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