Quirch Foods LLC v. Broce

314 So.3d 327

QUIRCH FOODS LLC, et al., Appellants,

v.Andrew BROCE, et al., Appellees.

No. 3D20-842

District Court of Appeal of Florida, Third District.

Opinion filed October 14, 2020.

Homer Bonner and Peter W. Homer ; Perera Barnhart Alemán, Bayardo Alemán and Jorge Freddy Perera, for appellants.

Becker & Poliakoff, P.A., Kevin Markow and Jeremy C. Sahn (Ft. Lauderdale), for appellees.

Before FERNANDEZ, HENDON, and BOKOR, JJ.

FERNANDEZ, J.

In this enforcement of restrictive covenants in an employment agreement action, the employer, Quirch Foods LLC; Quirch Foods Caribbean, LLC; Quirch Foods Southeast, LLC; and Quirch Foods Management Holdco, LLC (collectively, Quirch), appeal the trial court's "Order Denying Plaintiffs’ Emergency Motion for Preliminary Injunction." We reverse and remand for entry of an order granting Quirch's motion.¹

I. BACKGROUND FACTS AND PROCEDURAL HISTORY

Quirch is a meat packing and food distribution company founded in Cuba in 1967. The Quirch family were exiled to Puerto Rico after the Castro revolution, taking the company with them, and later relocated to Miami, Florida. Quirch employs over six-hundred employees and operates in the highly competitive "center-of-the-plate" meat market with "thin margins." Quirch delivers mainly on the east coast of the United States, from Maine to Miami, but also has a strong presence in Latin America and the Caribbean. Some of its customers include independent and chain supermarkets, food service distributors, food processors and manufacturers, cruise lines, and restaurants. Quirch's main product is beef, pork, and poultry. Their sales in 2018 were over $1 billion, and their beef, pork, and poultry products totaled over $850 million in sales in 2018. Quirch has distribution centers in Miami, Orlando, Atlanta, Chicago, and Puerto Rico, as well as a new distribution facility in Illinois that it opened a few years ago. In addition, Quirch hosts "Power Buys," which are events held during each year where customers meet Quirch employees to discuss product pricing and learn about new Quirch products. In 2018, Power Buys accounted for about a quarter of a billion dollars in sales.

Each center-of-the-plate production division is headed by a category manager for meat, pork, and poultry. These three categories were headed by the individual defendants in this case: Andrew Broce, Kevin Miller, and Jeff Slattery (collectively, the individual defendants). Broce was the category manager for meat who worked for Quirch for almost 23 years. In 2018, Broce earned close to $600,000, which put him in the top ½ percent of all Quirch employees in terms of earnings. Miller was the category manager for pork who worked for Quirch for almost 20 years. In 2018, Miller earned more than $330,000, which put him in the top 1% of all Quirch employees in terms of earnings. Slattery was the category manager for poultry who worked for Quirch for 15 years. Slattery made $100,000, which placed him in the top 2% of the company as far as earnings. These three individual defendants were among the most senior and highest paid employees at Quirch. They directed Quirch's procurement of meat products, which account for 75-80% of Quirch's business. The individual defendants frequently met with Quirch's customers and developed close relationships with vendors/suppliers. They set the pricing for Quirch meat/pork/poultry products, and they determined margin and profitability for these products. They "were the face of Quirch Foods," according to Carmen Sabater, Quirch's chief financial officer. The individual defendants attended weekly sales meetings and presented at those meetings, covering such topics as new products, customer opportunities, market conditions, company strategies, and goals. They attended industry conferences and events and provided Quirch with information on market trends. Quirch attributes its success to the business relationships it has built, with both its buyers and its sellers. Quirch spent several hundred thousand dollars over a couple of years for the three individual defendants to nurture their relationships with customers through entertainment and travel expenses that Quirch paid for.

The individual defendants ran each of their categories, fostered relationships with Quirch's clients, as these relationships were crucial to their success. They had access to client emails, pricing (which they directed), profitability, margins, patterns of purchase of customers, client preferences, credit terms, lines of credit offered to customers, and new product introductions. They also had knowledge of Quirch's proprietary software, an internally developed enterprise resources system that Quirch invested millions of dollars in. They had substantial input into the design and development of that software.

Defendant/appellee G&C Food Distributors & Brokers, Inc. (G&C) is a New York corporation doing business in Florida with its principal place of business in Syracuse, New York. Richard Chapman is G&C's president. G&C employs about four-hundred people. G&C is also in the meat distribution business and deals in "center-of-the-plate" products. Like Quirch, it delivers from Maine to Miami. In the fall of 2019, G&C opened a Miami office 2.7 miles away from Quirch's distribution center in Medley, Florida, in order to expand its sales to new territories, including Latin America.

In December 2018, Quirch received an investment from Palladium Equity Partners, LLC, a private equity group. The Quirch family remained part owners with the new set of owners, however, the Quirch family stepped down from direct control. Francisco Grande (brother-in-law of former Quirch Foods president Bill Quirch), was named president. Together with Ralph Perez (vice-president of sales), Sabater (CFO), and Anthony Schneider (director of purchasing), they took over control and management of the company.

Previously during their time at Quirch, and as a condition of the three individual defendants’ continued employment, the individual defendants signed restrictive covenant agreements with Quirch, which included non-competition, non-solicitation, and non-disclosure covenants. After Palladium invested in Quirch, the individual defendants agreed to sign the latest agreement, the Management Interest Grant Agreement (the Agreement) dated March 11, 2019. Only Quirch's most senior managers signed these agreements. The Agreement also provided the three individual defendants with stock incentives linked to Quirch's growth and expansion.

Section 5 of the Agreement contained restrictive covenants of non-compete, non-solicit, and non-disclosure. Section 5.2 "Non-Compete" of the Agreement states, in pertinent part:

[F]or a period of twelve (12) months following the Employment Period (the "Non-Compete Period"), Participant shall not directly or indirectly acquire or hold, beneficially or otherwise, any economic, financial or other interest (whether an equity interest or otherwise) in, act as an equity holder or employee, director/manager, independent contractor or representative of, manage, control, operate, consult with or otherwise participate in (as defined below) any Person (including any division, group or franchise of a larger organization), other than the Company Group, which engages in, or engages in the management or operation of any Person that engages in, any business that competes with or otherwise engages in any aspect of the Business anywhere in the United States, the Caribbean region, Central America, and South America. For purposes of this Agreement, the term "participate in" shall mean any direct or indirect interest in any corporation, partnership, joint venture or other entity, whether as a sole proprietor, owner, stockholder, partner, joint venturer, creditor or otherwise, or rendering any direct or indirect service or assistance to any Person (whether as a director, officer, manager, supervisor, employee, agent, consultant or otherwise).

The non-solicitation covenant, in Section 5.3 "Non-Solicit," of the Agreement states, in relevant part:[F]or a period of twenty four (24) months following the Employment Period (the "Non-Solicit Period"), Participant shall not directly or indirectly through another Person (other than the Company Group) either individually or acting in concert with another Person or Persons (i) request, induce or attempt to influence any distributor, provider, payor, supplier, customer of goods or services, or other business relation of Holdco or any of its Subsidiaries to curtail, cancel or refrain from maintaining or increasing the amount or type of business such distributor, provider, payor, supplier, customer of goods or services, or other business relation is currently transacting, or may be transacting during the Non-Solicit Period, with Holdco or any of its Subsidiaries or modify its pricing or other terms of business with the Business (including by making any negative or disparaging statements or communications regarding the Company), (ii) solicit for employment or retention any Person who is, or at any time during the six (6) months prior to the termination of Participant's employment was, an officer, employee or independent contractor of or consultant to Holdco or any of its Subsidiaries, other than through general solicitations or advertisements not intended to be specifically directed at such Person, or (iii) request, induce, influence or attempt to influence any Person who is, or at any time during the six (6) months prior to the termination of Participant's employment was, an officer, employee or independent contractor of or consultant to Holdco or any of its Subsidiaries to terminate his or her employment by or services to Holdco or any of its Subsidiaries or in any way interfere with the relationship between Holdco or any of its Subsidiaries and any employee, officer or independent contractor thereof....

Section 5.6 "Additional Acknowledgments" of the Agreement states, in relevant part:

In

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