Dealing with a Choice of Law Issue?

Do you have a “choice of law” issue?  In other words, does your contract require you to apply Delaware law (or the law of another state) but you will be filing your lawsuit in Florida?  In this case, how do you know when to apply the law of another state versus Florida law? The answer depends on whether dealing with a substantive versus procedural issue:

When dealing with choice of law matters, Florida adheres to a distinction between substantive and procedural matters. Siegel v. Novak, 920 So. 2d 89, 93 (Fla. 4th DCA 2006); Aerovias Nacionales De Colombia, S.A. v. Tellez, 596 So. 2d 1193, 1195 (Fla. 3d DCA 1992). Thus, Florida courts apply foreign law when dealing with the substantive issues in a case but apply the forum’s law to procedural matters. Schein v. Ernst & Young, LLP, 77 So. 3d 827, 830 n.2 (Fla. 4th DCA 2012).

Quirch Foods, LLC v. Broce, 45 Fla. L. Weekly D2366a (Fla. 3d DCA 2020).

The case of Quirch Foods provides an example when dealing with a choice of law issue.  Here, a company (employer) entered into an employment agreement with senior employees that contained restrictive covenants involving non-competition, non-solicitation, and non-disclosure.  The agreement provided Delaware law would govern.  The employees left to go to a competitor and the employer sued the competitor and the employees in Florida, initially pursuing a temporary injunction to enforce the restrictive covenants.   The initial issue was which law to apply. 

“To obtain a temporary injunction, the petitioner must satisfy a four-part test under Florida law: ‘(1) a substantial likelihood of success on the merits, (2) a lack of an adequate remedy at law, (3) the likelihood of irreparable harm absent the entry of an injunction, and (4) that injunctive relief will serve the public interest.”  Quirch Foods, supra (internal quotations and citation omitted).   

“Although the substantive issue in this case is based on Delaware law (this Court’s analysis of the likelihood that Quirch will succeed on the merits), the standard for granting the temporary injunction is provided by Florida law, as the remaining preliminary injunction factors are procedural.”  Quirch Foods, supra.  

This means that Florida law will govern the procedural standard to determine whether the employer is entitled to a temporary injunction by applying the four-part test above. However, the first part of the test is whether the employer has a substantial likelihood of success on the merits, i.e., the employer has a substantial likelihood in prevailing on the restrictive covenants in the employment agreement.  Since this part of the test deals with a substantive issue, Delaware law will govern this part of the test.

Please contact David Adelstein at [email protected] or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.