Federal Court Interprets Florida and Pennsylvania Law To Endorse Protection Of Salon Services Company's Customer … – Lexology
In states that permit the enforcement of non-compete and other restrictive covenant agreements against former employees, companies must still demonstrate that the restrictions are designed to protect a legitimate business interest, and not to simply avoid ordinary competition. In Osborne Assocs. v. Cangemi, Case No. 3:17-cv-1135-J-34MCR (M.D.Fla. Nov. 14, 2017), the federal court for the Middle District of Florida held that under both Florida and Pennsylvania law, a salon and spa treatment company that serviced residents of senior living facilities had protectable interests in its customer relationships as well as the confidential business information it developed in furtherance of those relationships. A key factor in the decision was that the company’s customers were not the residents of the facilities, but the facilities themselves.
For approximately twenty-five years, Osborne Associates, Inc. d/b/a Generations Salon Services (“Generations”) has provided professional salon and spa services to residents of senior living facilities. However, while the residents were the ultimate service recipients, Generations did not transact business with them directly, but instead with the senior living facilities where they resided. In this niche market, business relationships between salons and senior living facilities are typically continuing in nature and subject to exclusivity contracts that impede the facilities’ use of competing businesses.
In March 2016, Generations hired Sheryl Cangemi as its Director of Business Development (based in Florida), and Julie Calianno as the Regional Operations Manager for its Pennsylvania territory. Cangemi and Calianno both signed restrictive covenant agreements that prohibited them from “working in a competitive activity for a period of one year following the termination of employment; soliciting any client, customer, officer, staff, or employee of Generations Salon for [a competing purpose]; and using or disclosing Generations Salon’s confidential and proprietary information.” Given that Calianno was employed in Pennsylvania rather than Florida, her agreement called