You may have gone to pay for a purchase and been told by the store owner that there was an extra charge to pay by credit card. And you’ve undoubtedly gone to a gas station with two sets of prices: lower prices for cash and higher prices for credit cards.

Is there any difference between the two practices? Under Florida law, there is. Under section 501.0117, Florida Statutes, the store owner actually committed a misdemeanor by imposing a “surcharge” for paying by credit card:

A seller or lessor in a sales or lease transaction may not impose a surcharge on the buyer or lessee for electing to use a credit card in lieu of payment by cash, check, or similar means, if the seller or lessor accepts payment by credit card. A surcharge is any additional amount imposed at the time of a sale or lease transaction by the seller or lessor that increases the charge to the buyer or lessee for the privilege of using a credit card to make payment.

On the other hand, section 501.0117 says it “does not apply to the offering of a discount for the purpose of inducing payment by cash, check, or other means not involving the use of a credit card…” So it’s perfectly legal for gas stations to have lower cash prices.

In other words, under section 501.0117, businesses may offer a discount for using cash, but may not add an extra charge for using a payment card. Is there any real difference between charging less for not using a payment card (legal) and charging more for using a payment card (illegal)? Or is it merely a semantic difference?

Those are the questions at the heart of the 11th Circuit’s opinion in Dana’s Railroad Supply v. Attorney General, State of Florida, decided November 4, 2015. We’ll get back to the 11th Circuit’s answer, but first some background.

The Campaign Against State Anti-Surcharge Prohibitions

Dana’s is one of a series of lawsuits that have recently been brought by small businesses challenging state law prohibitions on credit card surcharges. Nine states have such laws. A Washington, D.C. law firm known for consumer rights advocacy, Gupta Beck, has filed suits challenging the surcharge prohibitions of the four largest–California, New York, Texas, and Florida–on first amendment grounds.

What’s behind the challenges? While the anti-surcharge statutes may appear, at first glance, to be consumer protection statutes intended to protect consumers from extra charges, the plaintiffs say the laws are actually intended to protect the ability of major credit card issuers (Visa, Mastercard, and American Express) to charge merchants excessive card processing (swipe) fees, which they say are two to three times higher in the U.S. than in other countries.

It was the major credit card issuers that lobbied for anti-surcharge statutes. In the late 1970s and early 1980s, Congress passed a federal anti-surcharge statute, but it expired and was not renewed. After its expiration, the plaintiffs say, the major credit card issuers lobbied state legislatures to pass state laws like section 501.0117.

Until recently, Visa and Mastercard’s merchant agreements prohibited merchants, even in states without statutory prohibitions, from charging customers extra for paying by credit card. But in a class action settlement resolving an antitrust case against the issuers, Visa and Mastercard agreed to remove those prohibitions from their merchant agreements. (The settlement has not yet become final, as certain class members have objected to the settlement. An appeal of the district court’s approval of the settlement is currently pending before the U.S. Court of Appeals for the 2nd Circuit.) But the removal of such provisions in merchant agreements can’t affect merchants’ practices in states where surcharges are still prohibited by statute.

What’s So Bad About Surcharges?

Why would Visa and Mastercard want to ban surcharges? As a matter of economics, the higher prices are, the fewer items consumers tend to buy. So if credit cards are more expensive to use, consumers are less likely to use them.

How do anti-surcharge laws hurt consumers? Merchants must pay credit card processing fees, but can’t charge credit card users directly for the fees. So credit card use raises the merchants’ overall costs. And because they are prohibited from passing on the costs of credit card processing directly to credit card users, the charges are instead reflected in higher prices charged to all customers to cover the costs.

(For example, suppose 50% of a merchant’s customers use credit cards and the merchant is charged 4% per transaction. With surcharges allowed, the merchant could charge 4% extra to the credit card users to cover the processing. With surcharges prohibited, the merchant must charge all customers 2% higher prices to cover the processing fee.) In this sense, anti-surcharge laws help one group of customers (credit card users) at the expense of another group (cash-paying customers). That transfer is magnified due to the prevalence of rewards cards (which often cost merchants the most to process), as cash customers are essentially paying (through higher prices merchants must charge across the board to cover credit card processing) for the rewards a subset of customers receive for using their credit cards.

But in another sense, anti-surcharge prohibitions hurt all consumers, as well as all merchants. They do so by increasing credit card usage, which leads to higher merchant costs, which lead to higher prices across the board.

And they do so by allowing Visa and Mastercard to charge higher processing fees than they otherwise could. Due to the lack of surcharges, consumers don’t know how much of the price of the items they buy is attributable to credit card processing charges (just as they don’t know what portion of an item’s price is attributable other items of overhead), so consumers, the card companies’ customers, don’t put any pressure on card issuers to charge lower transaction fees.

But recall that while merchants can impose surcharges for using credit cards, they can offer cash discounts. Why wouldn’t allowing merchants to give discounts for cash-paying customers have the same effect as allowing merchants to charge credit card users a surcharge? According to the merchants (and the economics research on which they rely), consumer behavior is more likely to change to avoid a loss than to avoid missing out on a benefit. So if paying with a credit card results in a surcharge (a loss), consumers will be less likely to choose to use a credit card than if paying with a credit card simply means missing out on a cash discount (a potential gain).

Speech or Conduct?

The challenges to anti-surcharge statutes are premised on the assertion that those statutes regulate speech, rather than conduct. That is because the 1st Amendment only applies to speech.

Structuring a transaction is generally thought to be conduct, not speech, and many statutes regulate such activities without any suggestion that they are regulating speech. So how is section 501.0117’s prohibition on surcharges any different?

According to the 11th Circuit, section 501.0117 doesn’t prohibit the conduct it appears at first glance to govern, which the court characterized as “dual pricing,” i.e., charging higher prices to credit card users than to cash buyers. That can’t be the function of the statute because it allows cash discounts, which are the functional equivalent of credit card surcharges.

Presuming that the statute must do something, the court pondered whether it might prohibit surcharges that are not disclosed before the transaction occurs. But it concluded that conduct could not be what the statute prohibits, due to the language of section 501.0117 as well as because it is already prohibited by another statute.

If the statute doesn’t prohibit dual-pricing, and prohibits “surcharges” but not “discounts,” then its focus can only be on speech, i.e., the words merchants may use to describe the fact that consumers must pay extra to use a credit card. Merchants are allowed to call higher credit card prices standard prices, and lower cash prices “discounts,” but are prohibited from calling cash prices standard and credit card prices “surcharges.”

But whether you call the lower price a discount and the other price standard or call one price standard and the other a surcharge doesn’t change the conduct, only the words used to describe it. So section 501.0117 regulates–and prohibits–certain speech. The court analogized the statute to a state law prohibiting restaurants from serving half-empty glasses of water but permitting them to serve half-full glasses.

Once finding that the statute regulates speech rather than conduct, it was not a large jump to conclude that it violates the 1st Amendment. The 1st Amendment allows some leeway for the government to regulate commercial speech. But commercial speech restrictions must relate to “misleading or related to unlawful activity,” the government must have a substantial interest at stake, and the regulation must advance that interest, in a way that does not prohibit more speech than necessary.

Given the court’s understanding of section 501.0117 as merely regulating semantics, telling merchants words they can and can’t use to describe dual pricing, it followed that section 501.0117 could not past muster. Arguably, the statute actually requires misleading speech rather than prohibiting it. The reason for dual pricing, after all, is to allow the merchant to charge more (surcharge) for credit card transactions to pay for the credit card processing fees.

Will Credit Card Surcharges Become the Norm?

For now, it would seem that merchants in Florida are free to impose surcharges for credit card transactions. But it remains to be seen whether this decision will have any real effect on the marketplace.

There’s also a chance the November decision may not be the final word. In the case challenging New York’s anti-surcharge law, the 2nd Circuit unanimously rejected the argument that the statute regulated speech.

And Judge Carnes reached the same conclusion about section 501.0117 in his vigorous dissent from the 11th Circuit’s decision in Dana’s. So there’s a non-trivial possibility that the 11th Circuit might reconsider the case en banc, or even that the Supreme Court might review it, if requested.

Continuing from my last post, this post (also excerpted/adapted from my CLE presentation o the Florida Bar Appellate Practice Section) outlines some unique legal issues that arise in foreclosure appeals.  

Attorney’s Fees

Particularly in residential mortgage cases, fee structures in foreclosure appeals can be different from other cases. On both sides of the aisle, flat fee arrangements are much more common than in other types of civil cases, and reduced hourly rate arrangements are also prevalent.

Successful clients also have the opportunity to collect fees from the opposing party. Most mortgages and loan documents include a prevailing party attorney’s fee provision, generally specifying only that the lender can recover its fees. But borrowers can recover their fees as well.

In Nudel v. Flagstar Bank, FSB, 60 So. 3d 1163 (Fla. 4th DCA 2011), the 4th District Court of Appeal held that under §57.105(7), such provisions in mortgages are deemed to provide for attorney’s fees to foreclosure defense counsel as well as plaintiffs’ counsel. And under §59.46, prevailing party fees are deemed to apply to appellate fees for the prevailing party on appeal. However, when cases are remanded for further proceedings (one of two possible results of a reversal, as will be discussed), appellate fees to appellants are generally awarded conditioned on ultimately prevailing in the litigation.

Whether charging a flat fee or hourly fee, lawyers need to be aware that they have the same obligation to justify the reasonableness of their fees. In Raza v. Deutsche Bank Nat’l Trust Co., 100 So. 3d 121 (Fla. 2d DCA 2012), the 2nd DCA cautioned that even when charging a flat fee, counsel cannot establish the reasonableness of its fees without satisfying the requirements of Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985), to show a reasonable number of hours spent at reasonable rates.

Stays Pending Review

As mentioned earlier, we’ve seen many recent published opinions about many aspects of foreclosure litigation. One area where the DCAs have been very quiet, however, is regarding stays pending review in foreclosure cases. In fact, I’m not aware of any new precedent addressing stays pending review in the foreclosure context.

That is surprising. Chief among the concerns of many appellant foreclosure defendants is to retain their property pending the outcome of the appeal. The dearth in case law may be partly attributable to the fact that in many cases, plaintiffs will opt to postpone the sale until after the appeal is resolved, thereby avoiding the complications that can arise if the judgment is reversed after the property is sold to a third party, as well as the possibility that the cloud of the pendency of the appeal will drive down the amount potential buyers are willing to pay for the property. 

When the plaintiff chooses to go ahead with the sale while the appeal is pending, and the defendant seeks a stay, the only guidance comes from older cases addressing stays pending review in foreclosure cases.

Since a foreclosure judgment is not a judgment “solely for the payment of money,” a defendant cannot obtain an automatic stay by posting a bond for the amount of the judgment plus twice the statutory rate of interest under Rule 9.130(b)(1). As a practical matter, most foreclosure defendants would be unable to afford such a bond in any event.

So Rule 9.310(a) governs, making it discretionary with the court based on likelihood of success and likelihood of harm. Courts can also require a bond. But what is the appropriate amount of a bond?

According to the 3rd DCA in Fidelity & Deposit Co. v. Atlantic National Bank, 234 So. 2d 736, 738 (Fla. 3d DCA 1970), it’s not the difference between the market value of the property and the amount of the final judgment. So how should the amount be set?

The best indication may come from the 4th DCA’s decision in Cerrito v. Kovitch, 406 So. 2d 125, 127 (Fla. 4th DCA 1981), in which the court said it could not determine the propriety of the amount of the bond because:

No facts have been brought forward to this Court establishing the present fair market value of the property, the extent of other liens, if any, or waste or other damages which may be occasioned by delay. The trial court, on remand, will necessarily consider each of those factors and perhaps others in determining the amount of bond and conditions to be imposed.

That statement, too, is pretty vague, though. So the law remains unclear as to the appropriate amount of the bond.

Or perhaps it’s more accurate to say that it remains within the discretion of trial court judges. And there is considerable variation among trial judges. Some will grant a stay conditioned on posting a bond equal to what it costs to maintain the property for one year. Others will not grant a stay unless a bond is posted for the full amount of the judgment. Until a new published opinion is issued on this issue, expect the variance to persist. 


In the absence of a stay pending appeal, some foreclosure defendants who are appealing the final judgment file for bankruptcy to stop the public sale of their properties. (I wouldn’t deem to judge whether that is proper from a bankruptcy perspective, but it is certainly not uncommon.)

The question that is of interest to appellate lawyers is what effect does a debtor’s bankruptcy filing have on the defendant/debtor’s appeal? The answer, in Florida, depends on where the appeal is pending.

After the Bankruptcy Code was revised in the early 80s, the 3rd DCA was the first DCA to weigh in on the issue in Shop in the Grove, Ltd. v. Union Federal Savings & Loan Association of Miami, 425 So. 2d 1138 (Fla. 3d DCA 1982), and held that where the debtor is the appellant, proceeding with the appeal is not affected by the automatic stay of the bankruptcy code, and the appeal proceeds as if bankruptcy had not been filed. The 3rd DCA continues to adhere to Shop in the Grove today.

By contrast, the 1st DCA, in Taylor v. Barnett Bank, N.A., 737 So. 2d 1105, 1105 (Fla. 1st DCA 1998), the 2nd DCA, in Crowe Group, Inc. v. Garner, 691 So. 2d 1089 (Fla. 2d DCA 1993), and the 4th DCA, in Florida Eastern Development Co., Inc. of Hollywood v. Len-Hal Realty, Inc., 636 So. 2d 756 (Fla. 4th DCA 1994), have held that the automatic stay applies to the appeal even when the debtor is the appellant. The 4th DCA had initially adopted the view expressed in the 3rd DCA’s Shop in the Grove decision, but later reversed course based on developments in federal case law on the issue. I’m not aware of a published opinion from the 5th DCA on this issue.

Despite the 20+ year persistence of the intra-district conflict on this issue, the Florida Supreme Court has yet to weigh in to resolve it. So while a defendant’s bankruptcy filing may temporarily delay the public sale of the property, it does not substitute for a stay pending review, because no review can happen while the stay is in place. Except in the 3rd DCA. 

Effect of Reversal

Most stays pending review are obtained by agreement between the plaintiff and defendants. One reason foreclosure plaintiffs may agree to such stays is due to the consequences of the judgment being reversed after the property has been sold and title transferred.

If there is no stay, the sale takes place and the property is sold to a third party, and the judgment is subsequently reversed on appeal, what happens to the property? Here again, we do not have the benefit of a recent published opinion.

In 2013, the legislature enacted §702.036, under which if a final judgment of foreclosure is set aside, property that has been acquired from a third party cannot be returned to the borrower. There is a misconception that this statute resolved the issue by entitling third party buyers to retain the property if the final judgment is reversed.

But by its terms, the statute appears to apply only to requests to set aside a final judgment after “[a]ll applicable appeals periods have run as to the final judgment of foreclosure of the mortgage with no appeals having been taken or any appeals having been finally resolved,” i.e., when a Rule 1.540 motion to set aside a final judgment is brought, not when the judgment is reversed on direct appeal from the final judgment.

So the issue of whether a property purchased by a third party must be returned to the defendant upon reversal of the final judgment remains open. According to some old cases, it appears the property must be returned to the borrower. In a 1941 case, Bridier v. Burns, 4 So. 2d 853 (Fla. 1941), the Florida Supreme Court held that:

When a foreclosure sale is set aside by an order of court for any fatal irregularity, the title acquired by the purchaser is thereby vacated. The law subrogates the purchaser at the void foreclosure sale to all the rights of the mortgagee in the indebtedness and the mortgage securing the payment of the same.

The court further held that the purchaser should be reimbursed for improvements he/she/it may have made to the property in the interim.

In an even older case, Macfarlane v. Macfarland, 50 Fla. 570, 580-81, 39 So. 995, 998 (1905), the Florida Supreme Court held that any “rents and profits” the purchaser made from the property while it was in his/her/its possession should be offset against the amount to be repaid to the purchaser due to the property reverting to the borrower.

But other cases, such as Sundie v. Haren, 253 So. 2d 857, 859 (Fla. 1971), suggest that when a defendant’s property is purchased by a third party and the final judgment is reversed, the third party retains title to the property, with the defendant entitled to receive only monetary compensation. In the absence of recent precedent on this issue, the issue remains open for the time being.

[The following is excerpted/adapted from a Continuing Legal Education (CLE) presentation I gave earlier this year for the Florida Bar Appellate Practice Section’s Monthly CLE Teleconference. Because the lecture was too long for one post, I’m breaking it down into several posts.]

Foreclosure cases are not what many think of as being the sexiest cases. But I have come to enjoy them. A major reason for that is that it is an area in which the law is evolving: much new law has been made over the past few years, and continues to be made.

It is undeniable that as the appellate courts have grappled with the issues in foreclosure cases, the emerging landscape has profoundly affected the litigation of the body of foreclosure cases that still remain in the system. But I believe there will an even greater impact on non-foreclosure litigation, as appellate court decisions in foreclosure cases that have analyzed more generally applicable principles, such as contract law and evidence law, are applied in other types of civil litigation.

Given the quantity of foreclosure cases that have been filed since the foreclosure crisis began, it was inevitable that appellate courts would eventually be hit with an influx of foreclosure appeals. And we have seen that over the past few years.

By my calculations, Florida District Courts of Appeal published about four times as many reported opinions in foreclosure cases between 2010 and 2014 as they did between 2000 and 2004. And I’ve heard second-hand reports that in recent months, foreclosure appeals have accounted for as much as half of all new appeals filed in the DCAs.

The huge number of foreclosure appeeals is, in part, a natural result of there being so many foreclosure cases filed in trial courts. But it’s also because foreclosure cases are more likely to wind up on appeal than other cases, which are most often resolved before there is any trial or appeal.

Foreclosure cases are different. For one thing, at least when the defendants are represented by counsel, foreclosure cases are much more likely to go to trial than other civil cases. Despite court-directed mediation programs and federal incentives encouraging loan modifications, a relatively small number of foreclosure cases settle. 

Second, foreclosure cases are more likely to have appealable issues. The trial courts have been instructed to move cases through the system as quickly as possible to clear the backload of foreclosures out of the court system and off the real estate market. And we all know the expression “haste makes waste.”

Volume also plays a role. Judges have many cases to decide, large banks have a high volume of foreclosures to process, and lawyers on both sides typically are dealing with a large number of cases at once. So mistakes are almost inevitable.

Counsel for foreclosure plaintiffs initially tried to get to judgment more quickly through motions for final summary judgment. Foreclosure trial judges were willing to grant such motions. But in a series of decisions, the district courts reversed many final summary judgments. Most of those reversals were due to the fact that for a plaintiff to obtain summary judgment, it must conclusively refute all of the defendant’s affirmative defenses.

Affirmative defenses are, of course, hugely important in foreclosure cases. Technical defenses are among the primary weapons in foreclosure defendants’ arsenals, and litigation over them can be more complicated than over the plaintiff’s establishment of its cause of action. So at this point, it seems lawyers representing foreclosure plaintiffs have deemed it advisable to go to trial and leave it to the defendants to try to prove their affirmative defenses, rather than trying to carry the burden of disproving them at summary judgment.

That’s why most of the more recent opinions coming out of the DCAs deal with judgments entered after trial. Due to the number of judgments after bench trial being reviewed and the centrality of technical defenses and arguments to foreclosure litigation, what seems like whole new bodies of case law have emerged from foreclosure appeals. More on the emerging case law in my next post.   

Three times was too many for Miami Heat star Dwayne Wade’s ex-wife. Four years ago, an Illinois court entered a 102-page (!) judgment after a 38-day (!) trial, detailing D-Wade and his ex-wife’s custody and timesharing arrangements. D-Wade was given sole custody and permission to relocate the minor children to Florida, with his ex-wife granted timesharing/visitation rights.

D-Wade registered and domesticated the judgment in the Miami-Dade Circuit Court in 2012. When he did that, under the Uniform Child Custody Jurisdiction Enforcement Act (UCCJEA), jurisdiction over custody issues was relinquished from the Illinois court to the Family Division of the Miami-Dade County Circuit Court.

Three years later, Wade and his ex-wife are still fighting over visitation. D-Wade’s ex has filed three separate appeals to the 3rd District Court of Appeal. In her first two appearances before the 3rd DCA, D-Wade’s ex-wife successfully challenged an order by a Miami-Dade Circuit Court judge requiring her to submit to a psychological evaluation, and successfully petitioned for the judge to be disqualified from presiding over the case.

By the former Mrs. Wade’s third appeal, however, the 3rd DCA was disturbed that the parties were continuing to fight it out in court instead of resolving their differences — suggesting that their lawyers may be responsible for unnecessarily prolonging the battle. In an opinion released on March 25, 2015, the court rejected the former wife’s argument that the circuit court had impermissibly modified the Illinois court’s custody judgment when it ordered that she give more advance written notice be given for time-sharing and declined to award “make-up days” to her to compensate for lost visitation days.

But the substance of the dispute, which was over a pretty minor issue, seemed to have been of secondary importance to the 3rd DCA. Most of the opinion is dedicated not to that issue, but to critiquing the conduct of both parties’ lawyers. The court chastised both sides’ lawyers for sending “abrasive and accusatory” emails to each other instead of working to resolve the issues.

Even more concerning to the court, however, was the lawyers’ apparent lack of attention to the custody judgment’s requirement that a Parenting Coordinator be consulted to minimize and resolve disputes. Although the originally appointed Parenting Coordinator had resigned, the lawyers should have arranged for the appointment of another, the court felt. Doing so could have avoided continued litigation — and kept the star player’s family out of the news — by providing “a path of confidentiality and non-judicial resolution for the benefit of the children and, by benefiting the children, the parties.”

Anticipating future court battles and appeals — this dispute centered on visitation for the summer of 2014, so similar disputes ostensibly could arise over time-sharing over future summers — the 3rd DCA made clear that it would not welcome future appeals over similar minutiae:

In a high-conflict, high-profile case such as this, the parties and their counsel have the resources to appeal every adjustment of time-sharing procedures based on particular occurrences, but it does not follow that every such adjustment warrants the comprehensive appellate review accorded a substantive post-judgment modification.

In other words, do not waste your money or our time appealing again over relatively trivial issues.                    

There’s no denying that public opinion on the dangerousness of cannabis has changed dramatically in recent years. Florida has not taken the steps that some states have taken to legalize cannabis for medical purposes, let alone for general use. But there’s evidence of a change in public opinion in Florida as well.

Florida has legalized “Charlotte’s Web,” a low-THC version of cannabis, for use by patients with certain serious medical conditions. And although a 2014 ballot initiative to legalize marijuana for medical use failed to reach the 60% threshold necessary for enactment, it did garner the majority of the vote (with more than 57% in favor), reflecting that Floridians’ attitudes are changing along with the rest of the country.

Is this changing public opinion impacting judicial decision-making? The February 20, 2015 decision of Florida’s Fifth District Court of Appeal in Agresta v. City of Maitland, gives a hint that that it may be. At issue in Agresta was whether forfeiture of a house used to cultivate cannabis violated the Excessive Fines Clause of the Eighth Amendment to the U.S. Constitution.

Under the Florida Contraband Forfeiture Act, property used in the commission of a crime can be seized. But the 8th Amendment to the U.S. Constitution limits seizure of property, in that it prohibits “excessive fines.”

Joseph Farley (now deceased; the appellant, Agresta, was the representative of Farley’s estate) was convicted of cultivating cannabis in a house he owned in in Maitland and of stealing electricity in doing so, as well as of misdemeanor possession of cannabis. After the convictions, the City of Maitland filed suit to seize his house, which was within 1,000 feet of a school. The trial court ordered the house forfeited to the city.

On appeal, Agresta argued that seizing the house was unconstitutionally excessive and disproportionate to Farley’s crimes. A majority of the 5th DCA panel agreed.

The key issue in the case was the extent of harm caused by Farley’s crimes. To the majority, the main factor was that he had pleaded guilty to crimes for which the maximum monetary punishment was an $11,000 fine. Farley’s house, on the other hand, was valued at between $238,000 and $295,000. 

In the majority’s view, there was no basis to punish Farley with a forfeiture of property that was worth much more than the maximum fine he could have faced. Society’s valuation of the harmfulness of the crimes was critical, and “consideration of the fines approved by the legislature indicates the monetary value society places on the harmful conduct.” 

So it was improper to impose on Farley a forfeiture of property with a much greater value than the maximum fine. In what may (or may not) be a reflection of changing societal views on the harmfulness of marijuana, the majority stated that there was “no evidence that Farley caused harm beyond his commission of the offenses underlying his convictions.” (It’s impossible to know whether the judges in the majority would have reached a different conclusion if Farley had been convicted of using the house to manufacture some other type of illegal drug.)   

a consideration of the fines
approved by the legislature indicates the monetary value society places on the harmful

One need look no further than Judge Berger’s dissenting opinion in Agresta to see a much harsher view of the harmfulness of Farley’s conduct, and a resulting contrasting conclusion. Part of Judge Berger’s disagreement with the majority was over whether to consider not only the crimes for which Farley was convicted (by way of a plea deal), but also the crimes with which he was originally charged.

But part her disagreement with the majority appears to have been based on her view of the harmfulness of Farley’s crime of cultivating cannabis:

In determining the harm caused by the defendant, we cannot ignore the public safety concerns posed by trafficking in drugs….While the actual harm Farley caused may not be able to be quantified, the potential harm caused by the magnitude of his enterprise is certainly great and cannot be discounted….Farley was a drug grower, cultivator, and dealer who used the property forfeited solely for the purpose of continuing his criminal enterprise.

Accordingly, Judge Berger did not feel seizure of the house to be grossly disproportionate to the crime, despite the disparity between the value of the house and the maximum fine Farley could have faced for the crimes of which he was convicted.

Cultivation and possession of cannabis, (except for Charlotte’s Web in very limited circumstances), of course, remains illegal under Florida law as well as under federal law. Judges will undoubtedly continue to faithfully apply the law as written, even when it’s unpopular to do so. But there are times when public opinion can impact legal analysis (such as in determining the monetary value society places on the harmfulness of a crime, as in Agresta), so if public opinion continues to change regarding cannabis, it will be no surprise to see effects on appellate courts’ jurisprudence. 

There’s been considerable teeth gnashing about a 2013 Florida law allowing politicians to hold their assets in blind trusts, and withhold from public disclosure specification of the assets held in those trusts. But the debate is only theoretical at this point, according to Florida’s First District Court of Appeal. For that reason, in its opinion issued today in Apthorp v. Detzner, the 1st DCA punted on the merits of a challenge to the constitutionality of the blind trust provisions.

Apthorp was an aide to former Governor Rubin Askew, who pushed the passage of the Sunshine Amendment, the first successful ballot initiative in Florida, which is now Article II, section 8 of the Florida Constitution. Among other things, the Sunshine Amendment requires full disclosure by public office-holders of their financial interests, to avoid conflicts of interest in their decision-making. With financial holdings public, if a politician voted in a way that benefitted his/her financial interests, that fact would be known to the public and subject to public scrutiny.  

In 2013, the Florida legislature passed section 112.31425, Florida Statutes, which allows public officials to hold their assets in “qualified blind trusts,” for ostensibly the same purpose — to avoid conflicts of interest. A statewide grand jury convened in 2010 had recommended the use of blind trusts for that purpose.

A public office-holder uses a blind trust by placing his/her money with a manager who has full power to buy and sell assets. In theory, then, the public office-holder would not know whether a decision affects his/her financial interests because he/she doesn’t know the identity of the companies in which the assets of the trust are currently invested.

According to the legislature, “if a public officer creates a trust and does not control the interests held by the trust, his or her official actions will not be influenced or appear to be influenced by private considerations.” Correspondingly, the legislature permitted public office-holders to publicly disclose only the total value of the assets held in a blind trust, and not the individual investments of the blind trust.

Apthorp apparently did not see the blind trust provisions as a positive development. He saw the blind trust reporting provisions as a way for public office-holders to essentially hold on to the assets and avoid public disclosure. Soon after the new provisions were enacted, Apthorp sought to block candidates from taking advantage of them by filing a Petition for Writ of Mandamus to the Supreme Court of Florida.

When the Supreme Court ruled that the case should be heard in circuit court, Apthorp sought a declaratory judgment from the circuit court that the blind trust provisions violated the Sunshine Amendment. The trial court ruled that they do not.

Apthorp challenged that ruling on appeal. But the 1st DCA didn’t reach the constitutional issue. Instead, the 1st DCA vacated the trial court’s declaratory judgment after finding that the trial court lacked jurisdiction to entertain the case at all because there was no justiciable controversy.

A bedrock principle of the court system is that courts are constitutionally empowered only to decide actual disputes between the parties. With few exceptions, courts don’t have jurisdiction to issue “advisory opinions,” i.e., to say how they would rule if a certain set of circumstances were presented to them. The plaintiff must assert an actual controversy: that the defendant violated (or is currently violating) the law, that the plaintiff has been injured by the alleged violation, and must seek redress for the alleged injury.

Suits for declaratory judgment are somewhat of an anomoly because they seek a declaration about a future action — before anyone has been harmed — rather than relief for an injury caused by a past or present harm. For example, in a common type of suit for declaratory judgment, an insurer seeks a declaration that its contract doesn’t require it to cover certain damages. That contrasts with the more traditional paradigm suit, in which, for example, an insured might sue the insurer after it had refused to cover damages, claiming the insurer had breached the contract in doing so.

But there are limits to courts’ ability to hear declaratory judgment suits as well, the 1st DCA explained. Under the Florida Supreme Court’s decision in Martinez v. Scanlan, 582 So. 2d 1167 (Fla. 1991), there must still be an actual controversy, “a bona fide, actual, present practical need for the declaration…” (Applying this principle to the insurer’s declaratory judgment suit, there’s a need for a declaration because there’s a present dispute between the insurer and insured over whether the insurer is required to pay for the damages. But if, for example, an insurer sought a declaration that a certain provision in its contract doesn’t require it to ever cover a certain type of damages, without reference to specific damages incurred by a specific insured, under Martinez, there would appear to be no actual present need for a declaratory judgment.)     

The 1st DCA held that there was no actual present need for a declaration regarding the constitutionality of the blind trust provisions because no candidate or public office-holder had yet sought to take advantage of those provisions. “Not only has no public officer ever used the type of ‘qualified blind trust’ authorized by the statute Apthorp is challenging, but his brief concedes that he knows of no constitutional officer or candidate who incorporated a blind trust in the most recent financial statements.” Until that happened, there would be no justiciable question for the court to decide, only a theoretical issue that might arise in the future.

Because it found the courts lacked jurisdiction to decide the issue, the 1st DCA vacated the trial court’s judgment as improperly entered, leaving the constitutional question open for challenge in a later case. In a special concurrence, Judge Thomas emphasized that the opinion should not be read to take a position on the constitutional issue, and hinted that he saw potential constitutional problems. But that issue will need to await a case in which the concerns are not merely theoretical.   

The Supreme Court of the United States has agreed to step in to resolve a long-running dispute between Florida and Georgia. As noted in my previous post, it is the second Florida case on the Supreme Court’s docket this term that involves Florida’s commercial fishing industry.

Profound economic implications are at stake for each state.

For Georgia, the outcome could determine the sustainability of continued growth of the state’s largest metropolitan area. For Florida, the outcome may impact the economic prospects of commercial fishermen and a region of the panhandle.

Environmental concerns are also in play. Hanging in the balance is the welfare of a biodiverse natural area, protected species of mussels, and spawning grounds for Gulf sturgeon, a threatened species.

Apalachicola vs. Atlanta

As is true of many disputes between states, water rights are at issue in Florida v. Georgia. More specifically, the dispute centers around Georgia’s consumption of water from the Chattahoochee River (as well as Lake Lanier, which feeds the Chattahoochee) and the Flint River. Both rivers flow south from the Atlanta area before converging near the Georgia-Florida border to form the Apalachicola River:     

ACF Region.jpgFrom there, the Apalachicola River flows south through the Florida panhandle into the Apalachicola Bay and the Gulf of Mexico. Due in significant part to freshwater inflow from the river, the Apalachicola River and Apalachicola Bay are rich in biodiversity, so much so that the bay and a large section of the river and its floodplain have been designated a National Estuarine Research Reserve.

Among the many wildlife species making their homes in the Apalachicola Bay are endangered and threatened species of mussels. The bay also serves as spawning habitat for Gulf Sturgeon, a threatened species.

And the inflow of fresh water from the Apalachicola River has made the Apalachicola Bay fertile breeding ground for oysters. Historically, the bay has been Florida’s prime location for commercial oyster harvesting.

But that has changed in recent years. Oyster harvests were down 60% in 2013, leading the U.S. Secretary of Commerce to declare a commercial fishery failure. This year, the Florida Fish and Wildlife Conservation Commission (FWC) has implemented severe restrictions on harvesting, and is considering closing the oyster harvest in the bay altogether.

The loss of oysters in Apalachicola Bay coincides with decreasing inflows from the Apalachicola River, resulting in increased salinity in the bay, making conditions less favorable for oysters. According to Florida, the decreased inflow is the result of Georgia taking more than its fair share of water upstream, resulting in smaller quantities of water flowing downstream.

As the Atlanta metropolitan area has grown, Georgia has steadily increased consumption of water that would otherwise flow from the Chattahoochee and Flint Rivers into the Apalachicola River and Bay. But Georgia denies that its consumption has harmed the Apalachicola. In opposing Florida’s request for the Court to hear the case, Georgia asserted that Florida’s real issue is with the Army Corps of Engineers, which controls water releases upstream dams. It also said the decreased flow to the Apalachicola is attributable to droughts in recent years, not Georgia’s consumption of water.

The dispute has been building since 1989, when the Army Corps of Engineers first proposed allocating more water to Georgia. Georgia, Florida, and Alabama reached temporary agreements for water use to maintain an uneasy status quo for a time. It was followed by litigation involving (but not directly between) all three states, the Army Corps of Engineers, and a group of power customers that buy power generated from a dam on Lake Lanier.

Finally, in 2013, Florida opted to sue Georgia directly, and asked the Supreme Court to intervene. With the Supreme Court’s recent decision to accept the case, Florida will now get its day in court. By extension, so will the Apalachicola Bay and its commercial oyster fishing industry.

Not Your Typical Supreme Court Case

Florida v. Georgia is an original proceeding, which means the Supreme Court will be the first and last court to address the dispute. In most cases, the Supreme Court serves as an appellate court reviewing the decision of a lower appellate court. It generally decides purely legal issues, with facts developed long before a case reaches the Supreme Court.

Disputes between states are a different animal. Under Article III, Clause 2 of the United States Constitution, in “all Cases…in which a State shall be a Party, the Supreme Court shall have original Jurisdiction.” Based on that constitutional provision, Congress has enacted 28 U.S.C. section 1251(a), under which the Supreme Court’s jurisdiction is exclusive (meaning it is the only court in which suit may be brought) in any suit in which one state is suing another.

But the Supreme Court has discretion to decide whether such a suit is appropriate for resolution by the Court. A state wishing to sue another state must ask the Court for permission to file its complaint, which Florida did in October 2013.

Before deciding whether to take Florida’s case, the Supreme Court asked the Solicitor General of the United States (the federal government’s Supreme Court counsel) for its views on whether the case should be accepted. Although the Solicitor General suggested waiting to hear the dispute until after the Army Corps of Engineers has revised its own procedures, the Supreme Court decided that the case should be heard now.

The litigation will now begin in earnest, beginning with Georgia filing an answer to the complaint. Because the Supreme Court is not a trial court generally engaged in deciding disputed facts, the Court generally appoints a special master to conduct initial proceedings. The special master prepares a report, with findings and recommendations, either party can object to the report, and the Supreme Court reviews the special master’s report, considers any objections, and issues an opinion.

Ultimately, the question for the Supreme Court is how to equitably apportion the rivers’ water. In other words, it will decide the fairest way to allocate water among the states’ competing interests. That decision will affect the future of natural resources, industry, and citizens of both states.

Florida commercial fishing industry, meet the Supreme Court of the United States. The Supreme Court has agreed to hear three cases from Florida in its current term, two of which involve commercial fishing.

In the most recently granted case, the state of Florida is set to do battle with the state of Georgia, in a dispute over Georgia’s consumption of water from two rivers that flow south through Georgia before converging and flowing through northwest Florida into the Gulf of Mexico. On November 3, 2014, the Supreme Court granted Florida’s motion for leave to file its complaint against Georgia, which is tantamount to the Supreme Court agreeing to hear the case. I will preview that case in my next post.  

This post focuses on a second case from Florida involving commercial fishing, Yates v. United States, which has been on the Supreme Court’s docket since late April. Oral argument has been set for today, November 5, 2014. While affecting fewer Floridians, the case has drawn participation from a host of amici curiae (literally, “friends of the court,” parties not directly involved with the case that want to weigh in to assist the Court in reaching its decision), indicating that it is seen as having the potential to have significant legal consequences.

Is Throwing Fish Overboard a Federal Crime?  

In Yates, the Supreme Court is reviewing the Eleventh Circuit’s interpretation of a federal statute that, at first blush, would seem to have nothing to do with commercial fishing. But the 11th Circuit concluded that it is fully applicable to commercial fishermen.

The statute, 18 U.S.C. section 1519, was passed in the wake of the Enron scandal, as part of the Sarbanes Oxley Act (SOX). Intended to avoid a repeat of the type of fraud perpetrated by Enron on investors and employees, SOX imposed more stringent accounting and financial reporting requirements for public companies, as well as other reforms.

Section 1519 was intended to close a loophole that allowed Enron to avoid punishment for its concerted efforts to destroy evidence and thwart investigation of its fraud. Accordingly, the statute makes it a crime to destroy or conceal “any record, document, or tangible object with the intent to impede, obstruct, or influence” a federal investigation. 

Other than federal prosecutors, few would have thought that Congress had John Yates in mind when it passed section 1519. Yates was the captain of a commercial fishing boat that was fishing for red grouper in the Gulf of Mexico in August 2007, when an FWC Officer boarded his vessel to inspect for compliance with fishing regulations. (At the time, Yates’ boat was fishing in federal waters, and the FWC officer had been deputized by the National Marine Fisheries Service.)

The FWC officer measured red grouper he suspected were shorter than 20 inches long, the minimum size then-current regulations allowed to be harvested. He found 72 undersized red grouper, issued a regulatory citation, and placed the undersized red grouper in wooden crates in the fish box on Yates’ boat, instructing Yates and his crew not to disturb them.

After returning to shore, the FWC officer measured the crated fish in the fish box, and found only 69 red grouper to be undersized, three fewer than before. He believed Yates and his crew had replaced the original fish with other fish. A member of Yates’ crew said Yates had instructed the crew to throw some undersized fish overboard.

As a result, prosecutors charged Yates with violating section 1519. Harvesting undersized fish is a civil regulatory violation, which could have subjected Yates only to paying a fine and having his fishing license suspended.

But because he had allegedly thrown undersized fish overboard, he faced criminal penalties under section 1519. He was eventually convicted and sentenced to spend 30 days in jail. Due to the conviction, he has been unable to find work as a captain.

The issue in the case before the Supreme Court is whether throwing fish overboard falls within the conduct made illegal by section 1519. More precisely, the issue is whether throwing fish overboard amounts to destroying or concealing a “tangible object” as that term is used in section 1519.

The 11th Circuit had little trouble concluding that it does. Its reasoning was simple. The Supreme Court has instructed that statutes should be interpreted according to the plain meaning of their terms. Unless the words are ambiguous, courts aren’t supposed to look to the intent behind the law. The term “tangible object” doesn’t appear to be ambiguous. And it literally means any physical object. A fish is a physical object. So the statute would seem to apply to Yates, even though Congress may not have intended it to apply to him.

There is no circuit split on the issue to resolve, which is the primary basis on which the Supreme Court generally agrees to hear cases. No other court of appeals is known to have confronted the issue whether a fish is a “tangible object” under section 1519. And the language of the statute seems clear enough.

So why would the Supreme Court take up the case? The answer may be that the case cries out for placing some limits on the doctrine of blindly applying federal criminal statutes, without any consideration of legislative intent, practical outcomes, or the appropriateness of making conduct a federal crime — at least in some circumstances.

The Supreme Court’s 2014 decision in Bond v. United States may provide a clue as to the Court’s thinking. In that case, the government invoked a statute dealing with chemical warfare to prosecute a woman who had tried to poison her former best friend, after discovering that she was pregnant with the woman’s husband’s child. Although the woman’s conduct fell under the literal meaning of the statute, the Supreme Court looked further. The statute’s wording may not have been ambiguous in itself, but Congressional overreach made it ambiguous in a sense:

[T]he ambiguity derives from the improbably broad reach of the key statutory definition given the term—“chemical weapon”—being defined; the deeply serious consequences of adopting such a boundless reading; and the lack of any apparent need to do so in light of the context from which the statute arose—a treaty about chemical warfare and terrorism. We conclude that, in this curious case, we can insist on a clear indication that Congress meant to reach purely local crimes, before interpreting the statute’s expansive language in a way that intrudes on the police power of the States.

Similar concerns about making it a federal crime to throw fish overboard may have motivated the Supreme Court to take up Yates. Most of the large contingent of amici curiae–including libertarian and pro-business groups, professors, criminal defense lawyers, and former House Financial Services Committee Chairman Michael Oxley, the Oxley in Sarbanes Oxley–urge the Court to go in a similar direction in Yates as it did in Bond. Many of the amicus briefs focus on what they call “overcriminalization” of conduct under federal law, and ask the Supreme Court to impose limits on the permissible reach of federal criminal law.

SOX seems like a good statute to use to advance that argument. It was controversial when passed, with some saying its requirements are too onerous, and it is highly disliked by Wall Street and others in the business community.   

But the question remains whether the majority of the Supreme Court will consider prosecuting a commercial fisherman under SOX a “curious” enough case to justify looking beyond the unambiguous words of the statute. If so, the bigger issue will be how the Court draws the line as to when courts may look behing the plain meaning of statutory terms when determining the scope of conduct made illegal by a federal criminal statute.    

Avenues of communication have dramatically expanded over the past few decades, with email, social media, the proliferation of mobile phones, and text messaging making it easier and easier to make contact with the vast majority of people. Whether they want to be in contact with us or not.

Rules for service of process in most jurisdictions were written long before these developments. It remains the rule that when serving process (notifying a defendant that a lawsuit has been filed against him/her/it), personal service (hand delivery) is required. And that requirement is not likely to go away anytime soon, for the simple reason that there is no more effective way to ensure that someone is informed that he/she/it is being sued than to deliver the lawsuit into that person’s hands.

But sometimes a process server can’t find the defendant for personal service. If the plaintiff has made a diligent search for the defendant and still can’t find him/her/it, the rules in most jurisdictions allow for substitute service of process, where service of process can be transmitted to the defendant by some means other than in-person delivery.

In the realm of substitute service of process, the reality that so many forms of communication are now available is beginning to have an impact. Despite that rules of court have not changed, courts are now taking into account the availability of modern forms of communication when considering both whether a plaintiff has made sufficient efforts to locate the defendant before resorting to substitute service of process, and the means that should be used to deliver the lawsuit to the defendant when substitute service of process is appropriate.

Coastal Capital Venture, LLC v. Integrity Staffing Solutions, Inc., a recent decision of Florida’s Second District Court of Appeal (2nd DCA) in Lakeland, Florida, illustrates how modern forms of communication have impacted the search a plaintiff must make before resorting to substitute service of process. In that case (in which Bushell Appellate Law, P.A. represents the defendants/appellants) the plaintiff obtained a default judgment after using substitute service of process by mailing a copy of the lawsuit to the Secretary of State.

The plaintiff contended that substitute service of process was appropriate, because it had conducted a diligent search. It had tried multiple times to serve the defendants at a condominium they owned, and had hired an investigator to conduct a “skip trace,” which did not uncover another address for them.

But the defendants/appellant argued, and the 2nd DCA agreed, that the search was inadequate because the plaintiff had failed to look to the most obvious source to find out where the defendants could be served. Here’s where modern communication came into play: the plaintiff’s president and one of the defendants (who was the principal of the two corporate defendants and the husband of the other individual defendant) had been exchanging text messages during the time period when the plaintiff was trying to serve process. And despite text messages from the defendant saying he was in California, the plaintiff didn’t ask the defendant where he could be located and served with process.

Coastal Capital stands as a lesson that if a plaintiff has a defendant’s cellphone number (as is frequently true in commercial and family litigation and some other types of disputes), the plaintiff must try calling and texting the defendant before resorting to substitute service. And there is no reason to think that the result would have been different if the plaintiff had had the ability to contact the defendant via social media rather than text messaging.      

On the other side of the coin are some recent decisions on how substitute service should be carried out. The goal of service of process, after all, is to make sure the defendant has notice of the lawsuit. So courts have understandably begun recognizing that communication via social media can be an effective way to accomplish substitute service of process. For example, a New York family court judge recently issued an order allowing service of process to be made via Facebook (in conjunction with service by regular mail to the last known physical address) after attempts to locate the defendant at her last known physical address were unsuccesful.

And a few federal court decisions have also authorized substitute service of process via email and social media, but so far they have been confined to substitute service on international defendants. One such decision authorized substitute service of process via Facebook in conjunction with email, while another authorized substitute service via Facebook and Linkedin in conjunction with email. 

Service of process rules may not have changed as means of communication have expanded. But as court are increasingly recognizing, newer means of communication should not be ignored when deciding whether substitute service is appropriate, or in deciding the best way to effectuate substitute service when it is appropriate.