Head Kandy LLC v. McNeill
0:23-cv-60345
| S.D. Fla. | Apr 23, 2025Background
- Kayla McNeill, former owner of "Lashed Out LLC" (doing business as "Head Kandy"), sold her business assets and goodwill to Head Kandy, LLC in 2018 for over $2.8 million, joined as 20% owner, and served as Creative Director under an Executive Employment Agreement containing restrictive covenants (non-compete, non-solicitation, non-disparagement, etc.).
- Head Kandy terminated McNeill in early 2023 for cause, citing misuse of company resources, self-dealing, personal charges to the company, use of employees for personal errands, and promotion of her unrelated businesses with company assets.
- After termination, McNeill used social media to promote competing haircare companies, directed her substantial online follower base (many of whom were former Head Kandy customers) to these competitors, hired former Head Kandy employees, and repeatedly disparaged Head Kandy and its leadership online.
- Head Kandy filed suit seeking damages and injunctive relief, asserting McNeill violated the restrictive covenants and breached her fiduciary duty as a member and officer.
- The case was tried in a bench trial in April 2025, focusing on whether Head Kandy was entitled to damages and a permanent injunction due to McNeill’s alleged contract and fiduciary breaches.
- The court found in favor of Head Kandy, awarding damages and granting a permanent injunction enforcing the restrictive covenants for the agreed period.
Issues
| Issue | Plaintiff's Argument (Head Kandy) | Defendant's Argument (McNeill) | Held |
|---|---|---|---|
| Enforceability of restrictive covenants | Covenants valid, reasonable, supported by consideration, and necessary to protect goodwill/customer base. | Claimed covenants are vague, unenforceable, and an unreasonable restraint on trade; asserted equitable defenses and challenged enforceability. | Covenants are enforceable and reasonable in scope, time, and territory. |
| Breach of restrictive covenants (post-termination) | McNeill promoted competitor products, solicited customers/employees, made disparaging remarks in violation. | Denied that her social media activity or employment actions violated enforceable provisions. | McNeill breached non-compete, non-solicitation, and non-disparagement clauses. |
| Breach of fiduciary duty | McNeill used company assets for personal gain, self-dealing, and concealed use of company resources. | Asserted actions were approved, in good faith, and protected by business judgment rule/corporate shield doctrine. | McNeill breached fiduciary duty through self-dealing and misuse of company resources. |
| Damages, Injunctive Relief & Attorney’s Fees | Entitled to actual damages, fees incurred defending restrictions, and permanent injunction. | Claimed Head Kandy owed her set-offs/bonuses and failed to mitigate damages. | Plaintiff awarded damages ($627K) and permanent injunction; set-off/mitigation defense failed. |
Key Cases Cited
- Rauch, Weaver, Norfleet, Kurtz & Co. v. AJP Pine Island Warehouses, Inc., 313 So. 3d 625 (Fla. 4th DCA 2021) (recited the elements and standards for breach of restrictive covenants).
- USI Ins. Servs. of Fla. Inc. v. Pettineo, 987 So. 2d 763 (Fla. 4th DCA 2008) (supported reasonableness and enforceability of non-competes in asset purchase context).
- Infinity Home Care, LLC v. Amedisys Holding, LLC, 180 So. 3d 1060 (Fla. 4th DCA 2015) (established evidence needed to show necessity for restrictive covenants).
- Capelouto v. Orkin Exterminating Co. of Fla., 183 So. 2d 532 (Fla. 1966) (injunction period begins after entry when breach continues during litigation).
- Ferrero v. Associated Materials Inc., 923 F.2d 1441 (11th Cir. 1991) (defined loss of goodwill and customers as irreparable injury).
- Bay Ctr. Apartments Owner, LLC v. Emery Bay PKI, LLC, 2009 WL 1124451 (Del. Ch. 2009) (explained members of LLC owe fiduciary duties of care and loyalty).