IP Law Daily, TRADE SECRETS—Fla. App.: Auto rental company’s trade secret liability upheld; $864,000 award reduced, (Oct 2, 2026)

By Saurabh Kashyap, B.A., M.A., LL.B., LL.M.

A subsequent acquirer can be liable under Florida trade secret law when it has reason to know that another party obtained the information improperly.

A Florida appellate court upheld findings that an auto rental company, its owner, and affiliated automotive businesses misappropriated a competitor’s confidential customer list, rejecting their argument that Florida’s Uniform Trade Secrets Act (FUTSA) limits acquisition-based liability to the person who initially obtains a trade secret improperly. A subsequent acquirer may also be liable when it knows or has reason to know of the improper acquisition. The court upheld joint and several liability for unjust enrichment damages but reduced the award from $864,000 to $734,400 because only 85% of the competing company’s gross profits were sufficiently connected to the customer list (North Palm Motors, LLC v. Custom Fleet Services, Inc., No. 4D2025-0167 (Fla. App. Sept. 30, 2026)).

Competing businesses. North Palm Motors, LLC, doing business as Napleton, operated a Florida car rental business offering seasonal long-term, daily, limousine, and black-car rentals. It maintained a confidential customer list in a web-based TSD system containing contact information, rental preferences, credit-card information, and other details.

Richard Boyce managed Napleton’s rental business, while Amanda Homyak served as office manager and Joan Mantovi as receptionist. Charles Schumacher owned various automobile franchises, including Schumacher Automotive Group (SAG), where George Bengston served as national fleet manager. SAG began developing an in-house rental business in 2015 through Custom Fleet Services, Inc., operating as Auto Rentals of the Palm Beaches.

After Napleton discussed scaling back its rental operations, Boyce told Bengston that the business was closing and he would lose his job. Schumacher and Bengston hired Boyce in August 2015, although he continued working for Napleton.

Auto Rentals later created its own TSD account. Temporary workers copied information from Napleton reservation cards and TSD printouts into the system, while Homyak accessed Auto Rentals’ account from Napleton computers thousands of times. A computer expert later located Napleton’s customer list on an Auto Rentals computer.

Napleton sued in February 2016. After an 11-day bench trial in 2024, the trial court found that its TSD customer list was a protected trade secret and that Boyce, Homyak, and Mantovi knowingly misappropriated it. Auto Rentals, Schumacher, Bengston, and SAG were also liable because they had reason to know of the misappropriation. The court awarded $864,000 in unjust enrichment damages jointly and severally but found Napleton’s claimed actual losses too speculative.

Napleton appealed the denial of actual-loss damages, attorney fees against the Schumacher defendants, and punitive damages. The Schumacher defendants cross-appealed their liability and the unjust enrichment award.

Subsequent acquisition. The Schumacher defendants argued that FUTSA’s acquisition provision applies only when the same person initially acquires a trade secret and knows that improper means were used. The appellate court rejected that interpretation.

Section 688.002(2)(a) defines misappropriation to include acquisition of another’s trade secret by someone who “knows or has reason to know” that it was acquired through improper means. The statute’s passive wording did not limit liability to the initial wrongdoer. A subsequent recipient may also be liable when it acquires information knowing or having reason to know of its improper acquisition.

Relying in part on Thermodyne Food Service Products, Inc. v. McDonald’s Corp., 940 F. Supp. 1300, 1308-09 (N.D. Ill. 1996), the court explained that a business may face liability when it acquires confidential information through a former employee under circumstances giving it reason to know of a confidentiality breach.

The evidence supported that finding here. Boyce simultaneously worked for both businesses; Auto Rentals generated substantial revenue despite initially having no employees, marketing, or website; and customers disputed charges from Schumacher Chevrolet because they believed they were renting from Napleton.

Knowledge standard. The appellate court also rejected the argument that the trial court improperly substituted a “should have known” standard for FUTSA’s “reason to know” requirement.

The standards are legally distinct. “Reason to know” concerns information already possessed from which a reasonable person would infer a fact, whereas “should know” can require ascertaining additional facts. Although the trial court occasionally used “should have known,” its judgment repeatedly identified and applied the statutory standard and imposed no independent duty to investigate.

Enhanced damages. Napleton failed to show that the Schumacher defendants engaged in willful and malicious misappropriation, as required for attorney fees under FUTSA. The trial court credited testimony that Schumacher and Bengston believed Boyce’s statements that Napleton intended to close. No direct evidence established that they actually knew before the lawsuit that Boyce had misappropriated the customer list.

Punitive damages were also properly denied. Although Boyce committed willful and malicious misappropriation and fraud, FUTSA provides that a court “may” award exemplary damages. Such an award remained discretionary, and the trial court could conclude that compensatory damages and attorney fees against Boyce sufficiently served deterrent purposes.

Actual loss. Napleton also failed to overturn the denial of actual-loss damages. Its expert calculated more than $6.2 million in lost profits, but the trial court found the analysis speculative because it did not adequately distinguish losses caused by misappropriation from other factors, including the loss of a major livery customer and changes to General Motors’ vehicle buyback program.

Napleton also could not rely on the defense expert’s $441,000 business valuation after vigorously attacking that methodology at trial. The trial court reasonably found an insufficient causal connection between the misappropriation and Napleton’s eventual losses.

Unjust enrichment. The appellate court upheld unjust enrichment as a measure of FUTSA damages and joint and several liability. Unjust enrichment under FUTSA is not a separate common-law cause of action but a statutory remedy preventing wrongdoers from retaining profits caused by misappropriation.

Relying on Compulife Software, Inc. v. Newman, 111 F.4th 1147, 1164 (11th Cir. 2024), the court explained that defendants acting together to cause a single trade secret injury may face joint and several liability despite differing levels of culpability.

The $864,000 award, however, lacked full evidentiary support. Napleton’s expert established that at least 85% of Auto Rentals’ reservations involved Napleton customers but could not connect the remaining 15% to the misappropriated list. FUTSA permits flexibility in calculating damages, but not speculation.

The appellate court therefore affirmed in all other respects but remanded for the award to be reduced by 15% to $734,400.

The Case is No. 4D2025-0167.

Judge: Gross, R.

Attorneys: Jack R. Reiter (Grayrobinson, P.A.) for North Palm Motors, LLC. Kara Rockenbach Link (Link & Rockenbach, P.A.) for Custom Fleet Services, Inc.

Companies: North Palm Motors, LLC; Custom Fleet Services, Inc.

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