General Civil Litigation

In the past few years, the strangest things have started appearing in appellate decisions: images. That has been seen as so revolutionary that it has been widely covered in the legal press, with 7th Circuit opinions authored by Judge Richard Posner (as is often the case) drawing the most attention. The question is: why are judges now inserting images into their opinions?

The answer may be that astute judges are responding to the changing environment in which their opinions are being read. Appellate court opinions have been accessible online for years, and they are now more commonly read on “screens” — computers, iPads/tablets, and smartphones — than in books. And studies have shown that we read differently when looking at a screen than when looking at printed text on paper.

For example, here’s how scientists say our eyes track the data on a webpage:

http://www.usability.gov/images/fpattern.JPG

Notice the concentration of red on the left hand border of the page created by the eye searching down the page for its structure. Note also how the eye tends to skip around.

Astute legal writers — especially appellate lawyers — would be wise to take note of how different the reading experience is on a screen, and to take it into account when drafting court submissions. That point was persuasively made during a presentation at the Florida Conference of District Court of Appeal Judges last fall (which I and other members of the Florida Bar’s Appellate Practice Section were fortunate enough to attend).

Judges (and their clerks) are increasingly reading appellate briefs and other court submissions on computer screens, and when travelling, on iPads, Kindles and other e-readers, or on smartphones. (An informal survey during another presentation at the conference revealed Florida appellate judges to be tech-savvy and partial to iPhones and iPads, although Android phones were also represented).

The trend toward screen-reading will only increase now that e-filing is replacing paper filing.

In order for an appellate brief or any piece of legal writing to be persuasive, it must command the reader’s attention. And to get and keep a reader’s attention when he or she is reading on a screen, attorneys need to adopt the format of their documents to fit the environment.

How? In much the same way as one makes a webpage easy to read and engaging. Here are some suggestions:

  • Add spacing — Text is easier to read when it is surrounded by white space. Increase margins.  Large block paragraphs extending from margin to margin are a relic of book reading. They are difficult to digest when read on a screen, particularly when read on a Kindle or similar e-reader.
  • Shorten the paragraphs. Not only do shorter paragraphs make the document more palatable to the eye (and increase white space), but they also account for the attention span issues that have been engendered by the digital age.
  • Use headings more liberally. Effective headings are alot like soundbites — they grab the reader’s attention and drive home the point quickly before that attention is lost. Hopefully, they also encourage the reader to continue to read and pay attention.
  • Insert document bookmarks. If you’ve opened a .pdf of a recent Florida Supreme Court opinion, you may have noticed a menu bar on the left hand side mapping out the sections of the opinion. Document bookmarks help the reader to get a feel for the overall structure of the document. They also help the reader to easily navigate between sections and arguments. When the reader must scroll up and down the screen to find sections, a traditional table of contents is a much less helpful roadmap than a bookmarks bar, where the reader can click right on the section he or she is looking for.

And finally there’s the most radical idea: illustration with images. This practice is the most obvious concession to the effect the internet and it remains relatively unorthodox and somewhat controversial. So a fair amount of tact and judgment is needed.

But when used appropriately, tactfully, and sparingly, images can be highly effective. (If the picture is worth 1000 words, it can also help to make the brief shorter, which judges always appreciate). If nothing else, images command attention. Just ask Judge Posner. 

The Supreme Court of Florida has created quite a stir among the less tech-savvy members of the legal community (and who don’t practice in federal court) with its June 2012 announcement that Florida courts are about to join the electronic age. Preparation for these moves has been ongoing for over a year, as noted on this blog here. Here’s a quick overview of the imminent changes, and the dates they become effective.

Email Service to Replace Service by Mail & Fax

Mandatory service of all filings by email instead of snail mail will begin September 1, 2012 (pushed back from the originally announced July 1, 2012). Until the electronic filing system at the clerks’ offices is up and running, filings will be served by sending them as attachments (which must be less than 5 MB in size) to an email addressed to opposing counsel. Lawyers will be required to designate an email address for service in each case. Mandatory service by email will not go into effect in criminal, traffic, and juvenile cases, however, until October 1, 2013.

Pro se litigants are exempt from the email service requirement, but may choose to opt in. There is also an out for lawyers that don’t have an email account and don’t have Internet access to move to be excused from email service. Are there really still attorneys out there that can honestly say, and would openly admit, that neither they nor anyone else in their office has email or Internet access? The Supreme Court seems to think so.

E-discovery

Also going into effect on September 1, 2012 are the Court’s amendments to the Florida Rules of Civil Procedure to formally address discovery of electronically stored information. The gist of the new e-discovery procedures is as follows:

(1) Electronic information is officially discoverable.

(2) In non-complex cases, e-discovery may, and in complex cases, it must, be addressed during a case management conference.

(3) E-discovery requests can be objected to based on the burden or cost of accessing the information or producing it in the requested form, but the resisting party has the burden to prove the validity of the objection, and the court can order production if good cause is shown even if that showing is made. Courts are also authorized (encouraged?) to place limits on e-discovery.

(4) Electronic information must be produced in the form in which it is stored or in a reasonably usable form. The requesting party may also specifiy the form in which the information should be produced.

(5) A party can’t be sanctioned for failing to preserve electronic information if it is destroyed through routine, good faith processes. But the committee notes make clear that if the party is put on notice via a request to preserve, a court order, or agreement, destruction through routine processes is less likely to be considered in good faith unless it occurs notwithstanding the party’s good faith efforts to prevent the routine destruction.

(6) Electronically stored information can be subpoenaed.

(7) Resolving e-discovery issues by agreement is highly encouraged.

The amendments appear to be modeled on the e-discovery provisions in the Federal Rules of Civil Procedure. As has been the case in the federal system, it will probably take some time — and litigation — before the Rules’ general provisions are given enough shape to provide clear guidance. In the interim, it’s a good idea to make every effort to reach an agreement with opposing counsel on the scope of e-discovery, if at all possible.

Electronic Filing

Electronic filing of documents with the courts will take a little longer to implement. Except for the few trial courts in which electronic filing is already in place, electronic filing will go into effect according to a staggered schedule depending on the type of case/court:

Appeals and original proceedings in District Courts of Appeal:          October 1, 2012

Appeals and original proceedings in the Supreme Court of Florida:   October 1, 2012

(Clerks of court, however, will not be required to transmit the record on appeal electronically until January 1, 2013).

Civil division of trial courts:                April 1, 2013

Probate division of trial courts:           April 1, 2013

Small claims division of trial courts:    April 1, 2013

Family division of the trial courts:       April 1, 2013

Appeals to the circuit courts (in the types of cases identified above):  April 1, 2013

Criminal division of the trial courts:     October 1, 2013

Traffic division of the trial courts:        October 1, 2013

Juvenile division of the trial courts:     October 1, 2013

Appeals to circuit courts in criminal, traffic, or juvenile cases:  October 1, 2013

Note, however, that these dates are being set as the latest times for implementation of e-filing, and do not prevent individual courts from starting e-filing sooner. Courts that have the technical capability will undoubtedly implement e-filing sooner than October 1, 2013.

For example, the Palm Beach County Clerk’s Office recently announced that e-filing will be phased in, beginnin with e-filing in residential foreclosure cases in Palm Beach County Circuit Civil Division AW right after labor day, on September 4, 2012. The Broward County Clerk’s Office, which initiated e-filing in certain complex civil cases in January 2012, and has had voluntary e-filing in probate cases in place for more than a year, is likely to phase in e-filing in other types of cases before October 2013 as well.

Be sure to check the clerks’ websites periodically to stay abreast of new e-filing developments.

No doubt family law disputes can result in some of the most acrimonious litigation. If France v. France, No. 5D11-1477, a decision handed down by Florida’s 5th DCA last week, is any indication, they can also result in highly complex issues of jurisdiction and conflicts of law among states.

Generally, if you’re injured while in Florida, due to negligent, reckless, or intentional conduct of someone else in Florida, Florida courts have jurisdiction, and Florida law applies. It becomes more complicated when the person who causes your injury is not in Florida at the time they do whatever it is that causes your injury. And what happens if that person is not only in another state at the time of the event that causes your injury, but he/she is in a state where it is perfectly legal and proper to engage in the conduct, even though it is unlawful in Florida?

The issue in France is even more complicated than that. The case involves Florida’s Security of Communications Act, § 934.03, Florida Statutes, which makes it illegal to record a telephone conversation without the consent of the other parties to the call. Under federal law, and in the majority of states, including North Carolina, it is not unlawful to record a telephone conversation in which you’re a participant, because only one party’s consent is necessary, so your consent counts.

But in a minority of states, including Florida, it is unlawful to record a telephone conversation unless every participant in the call consents. In France, the former husband sued his former wife for recording phone calls without his consent. He was in Florida during the calls. She was in North Carolina. The words she recorded were spoken in Florida, but recorded in North Carolina. His rights were unlawfully violated in Florida, but she acted lawfully according to North Carolina law.

Can he sue her in Florida? Maybe. The Fifth District said it felt constrained to find that the answer is yes, but the judges weren’t happy about it.

The court framed the issue as one of jurisdiction rather than of conflicts of law. Two showings are required before a Florida court can assert jurisdiction over a non-Floridian alleged to have injured a Florida resident through a negligent, reckless or intentional act or failure to act. The first requirement is to satisfy Florida’s long arm statue, which can be met if the person committed “a tortious act within” Florida. The second is to satisfy the constitutional requirement of having “minimum contacts” with the state, i.e., that the person acted in such a way that they could “reasonably have anticipated being haled into court” in Florida.   

The trial court in France dismissed the complaint based on its conclusion that the former wife had not committed a tortious act within Florida. To analyze that issue on appeal, the Fifth District looked to two decisions dealing with this issue from the 2nd DCA. In the first, Koch v. Kimball, 710 So. 2d 5 (Fla. 2d DCA 1998), the Second District said an insurance company employee who was in Georgia when she recorded a call with her supervisor, who was in Florida at the time, could be sued in Florida. Even though the tape recorder was in Georgia during the call, the court based its holding on case law saying words are captured where they are spoken, not where they are heard. So even though the employee was in Georgia, she committed a tortious act in Florida by recording words spoken in Florida.

In the second decision, Kountze v. Kountze, 996 So. 2d 246 (Fla. 2d DCA 2008), the 2nd DCA, sitting en banc, overruled Koch, and held that Florida courts did not have jurisdiction over a person who was in Nebraska while recording a phone call with his cousin, who was in Florida. That decision was based on concerns about the constitutionality of Florida asserting its police powers over persons in other states.

But 5 years before Koch was overruled by the 2nd DCA, in Acquadro v. Bergeron, a 2003 decision, the Florida Supreme Court said it approved of the holding in Koch in the course of holding that Florida’s long arm statute was satisfied where an out-of-state defendant made telephone calls into Florida in which she allegedly defamed the plaintiff.

In a footnote in Acquadro, the Florida Supreme Court said it “approve[d] the Second District’s decision in Koch because like [Wendt v. Horowitz, 822 So. 2d 1252, 1257 (Fla. 2002)] the decision held that a telephonic communication into Florida can constitute a tortious act.”

Based on that statement of approval, the Fifth District felt that it was bound to follow Koch, and find that the former wife’s conduct brought her within Florida’s long arm statute. But the judges made clear that if writing on a clean slate, they probably would have reached a different conclusion. The court certified conflict with Kountze, making it more likely that the Florida Supreme Court might take its own look at the issue.

The 5th DCA said the analysis in Wendt seems to support the opposite result in France, because in Wendt the Supreme Court said in order for a telephonic communication into Florida to confer jurisdiction, “the cause of action must arise from the communications,” and the cause of action in France arose from “the act of recording communications, not the communications themselves.” Maybe, but that seems like a strained reading of Wendt to me.

Wendt also cited Koch with seeming (though not explicit) approval, as an example of one of two lines of cases — the line of cases it ultimately agreed with. And the holding in Wendt is two-fold. First, a defendant doesn’t have to be in Florida to commit a tortious act in Florida.

Second, the defendant in that case was found to have committed a tortious act in Florida by negligently preparing documents while he was in Michigan based on the fact that he intended to, and did, send them to Florida. One could just as easily argue that the tortious act in that case didn’t arise from the communications themselves but from the negligent preparation of them (with the intent to send them to Florida), which occurred in Michigan, just as the 5th DCA intimated that the tort didn’t arise from the communications but from recording them.

It seems to me that the statement in Wendt about the tort arising from the communications was intended to address situations such as the following: An out-of-state defendant has business dealings with a Florida resident, and at a meeting in Texas, the defendant is alleged to have fraudulently induced the plaintiff to purchase property in Texas. After the contract is signed, the defendant participates in phone calls with the plaintiff while the plaintiff is in Florida, but the alleged fraud occurred before those calls took place. In that situation, the mere fact that the defendant called the plaintiff in Florida doesn’t give Florida courts jurisdiction over the defendant, because the tort was committed in Texas. 

And I think a different distinction can be made. What’s interesting is that while approving Koch in Acquadro, the court said it was doing so because the 2nd DCA had “held that a telephonic communication into Florida can constitute a tortious act.” On the other hand, the Supreme Court doesn’t seem to have adopted the underlying premise of Koch.

Recall that the logic of Koch was that interception of the call actually occurred in Florida because it’s where the words are spoken that matters, not where they’re heard. By contrast, in Acquadro and Wendt, the place where the words were heard is what mattered.

So it might be that although the Supreme Court agreed with the general principle in Koch that one can commit a tort in Florida over the phone, it might reach a different result if confronted with a situation squarely raising the issue of where a call is recorded.

As I mentioned in my last post, the Florida Supreme Court’s decision to approve the Florida Senate’s amended redistricting plan wasn’t the only late April 2012 decision to bring a measure of closure to unsettled legal issues. The stars seem to have aligned such that our state appellate courts as well the U.S. Court of Appeals for the 11th Circuit all released decisions in late April bringing a measure of closure on prominent, unsettled issues.

First, in Geico General Insurance Co. v. Virtual Imaging Services, Inc. (a/a/o Maria Tirado), No. 3D11-581,the 3rd DCA went a long way toward finding closure on the hotly contested issue of whether PIP insurers can take advantage of the reimbursement rate caps provided in the 2008 amendments to Florida’s No Fault/Personal Injury Protection Law if their policies don’t expressly state that the caps will be used. That issue, on which the 4th DCA had the first word among Florida appellate courts in its 2011 decision in Kingsway Amigo Insurance Company v. Ocean Health, Inc., has pre-occupied PIP lawyers ever since. I’ve also written multiple posts about it, including this one, this one, and this one.

In its Tirado decision, the Third District did a tremendous favor for opponents of the rule set down in Kingway Amigo (PIP insurers and their lawyers chief among them) by certifying the issue as a question of great public imporance. You may recall that the lack of an express and direct conflict among the District Courts of Appeal on the issue has prevented the Florida Supreme Court from stepping in end the controversy.

But now the issue has been certified as a question of great public importance, the Florida Supreme Court can exercise jurisdiction to review Tirado even without a conflict among the DCAs. If the Supreme Court chooses to do so, as the ultimate arbiter of Florida law, it can bring closure to this ongoing PIP battle. I’m guessing that it will.

Second, in the parallel cases of Calder Race Course, Inc. v. Florida Department of Business and Professional Regulation, West Flagler Associates, Ltd. v. Fla. DBPR, and Florida Gaming Centers, Inc. v. Fla. DBPR, the Florida Supreme Court brought closure on the issue of whether the legislature validly exercised its Constitutional authority in enacting 2009 legislation that allowed Hialeah Race Track to operate slot machines. That legislative enactment had been challenged by the three Miami-Dade facilities that were already licensed to operate slot machines prior to the legislation, as discussed in this post. On the same day as its redistricting decision was released, the Supreme Court declined to exercise its discretionary jurisdiction over the competitors’ appeal from the 1st DCA’s decision upholding Hialeah Race Track’s authorization to operate slot machines.

Third, the 11th Circuit released its long awaited decision in FTC v. Watson Pharmaceuticals, Inc., (a/k/a In re: Androgel Antitrust Litigation) addressing the prominent antitrust/patent/health care law issue of the validity of so-called “reverse payment” or “pay for delay” settlements between pharmaceutical patent holders (i.e. name brand drug makers) and competing drug makers seeking to market generic alternatives. The FTC and the Antitrust Division of the DOJ, in addition to certain academics have fretted for years about such arrangements, and their effects on drug prices…

Continue Reading April Showers Bring Closure On Unsettled Legal Issues Too

Appellate courts often struggle with the tension between allowing for consideration of the individual circumstances of each case and establishing clear dividing lines between conduct that violates the law and conduct that does not. Courts have assigned varying amounts of weight to each of these considerations at different points in history. Particularly in recent years (and particularly in U.S. Supreme Court decisions), the goal of line-drawing and predictability has been increasingly emphasized.

Yesterday, the 11th Circuit released its opinion in Mulhall v. Unite Here Local 355 (No. 11-10594), a case involving union-employer relations, that appears to be a step in the opposite direction. The first thing that jumps out about Mulhall is that, unlike in many cases involving employer-union relations, the litigation did not result from the failure of an employer and union to reach an agreement, but from the fact that they did reach an agreement. The problem, according to Mulhall (who worked for the employer, Mardi Gras Gaming) was that the agreement allegedly violated the Labor Management Relations Act (a/k/a the Taft-Hartley Act).

The essential facts are these: The union wanted to organize Mardi Gras employees. Mardi Gras wanted support for a ballot initiative regarding casinos. They entered into an agreement under which Mardi Gras would give the union access to and information about employees and would remain neutral about unionization. In return, the union promised not to strike if the employees chose to unionize, and to provide financial support for the ballot initiative.

Mulhall didn’t want Mardi Gras employees to unionize. So he sued the employer and union, claiming their agreement violated the LMRA’s prohibition on “any employer…pay[ing], lend[ing], or deliver[ing] any money or other thing of value…to any labor organization…[that] seeks to represent” its employees. The purpose of this prohibition is to prevent corruption, i.e., unions being bought off by employers.

The issue in Mulhall was whether the access, information, and neutrality Mardi Gras promised to the union could amount to a “thing of value” paid, lent, or delivered to the union. The district court said it could not, and dismissed the complaint.

Subsumed within that issue was the question of how to define “thing of value.” The majority of the 11th Circuit panel (consisting of Judges Wilson and Fay) held that it was for the jury to decide whether the “organizing assistance” (access, information and neutrality) promised by Mardi Gras had monetary value and was therefore a “thing of value.” In so holding, the 11th Circuit acknowledged that it was creating a circuit split with the 3rd and 4th Circuits, both of which have held that, as a matter of law, an employer’s promise of neutrality and cooperation does not violate the LMRA.

The majority partly based its conclusion on 11th Circuit decisions interpreting the phrase “thing of value” in other statutes as well as on a recent 6th Circuit decision finding that an intangible benefit can be a “thing of value.” But its decision was more heavily influenced by an old 2nd Circuit opinion explaining that courts should use common sense in deciding whether a benefit is a “thing of value” because value is in the eyes of the beholder. Applying the 2nd Circuit’s “common sense” test, the majority said that intangible benefits cannot be categorically exempted from the LMRA.

Whether a cooperation and neutrality agreement violates the LMRA depends on the circumstances, the majority concluded. Most important is the intent underlying the agreement, as “innocuous ground rules can become illegal payments if used as valuable consideration in a scheme to corrupt a union or to extort a benefit from an employer.” So it was for the jury to decide whether the agreement between Mardi Gras and the union crossed that line. Thus, the court majority rejected the 3rd and 4th Circuits’ categorical rule for a case-by-case analysis of the surrounding circumstances.

The dissent went the other way. Judge Restani of the U.S. Court of International Trade, sitting on the 11th Circuit by designation (as she does on a fairly regular basis), agreed with the 3rd and 4th Circuits’ reasoning. She also took issue with the majority’s focus on intent as the deciding factor, and noted that even if intent was the polestar, Mulhall’s complaint did not allege facts showing corrupt intent.       

Mulhall is a good illustration of the trade-off between line-drawing and situational justice, and the reason for the tension between them. It’s hard to argue with the majority’s common sense insight that depending on the circumstances, an intangible benefit can be either innocuous or corrupt. And the benefit of its case-by-case approach is that it does not give immunity in situations where there is a corrupt bargain.

But the countervailing consequence is that employers and unions within the 11th Circuit’s jurisdiction are now left without clear guidance about the legality of entering into cooperation and neutrality agreements. Lacking such predictability, they may forego entering into such arrangements entirely, even when to do so would be beneficial and entirely legal.

Of course, given the circuit split, there’s a decent chance that Mulhill will wind up before the U.S. Supreme Court. And if recent history is any guide, the Court may well choose to elevate clear line-drawing over consideration of individual circumstances. Or not. 

Despite the annual slow down in appellate courts (as in the rest of the world) at this time of year, December 2011 has seen a spate of major antitrust decisions being handed down. As I know from experience, antitrust cases are about as complex as it comes, and as a result, they often require long opinions to decide. It may be that these decisions’ release dates might have something to do with busy judges putting off these time-consuming decisions to the end of the year, but wanting to get them out before they became part of year-end unresolved case statistics. But that would only be a guess.

In any event, major decisions have recently come down at the federal level from the 3rd and 11th Circuits, and on the state level from Florida’s 4th District Court of Appeal.

The 4th DCA’s decision in MYD Marine Distributor, Inc. v. International Paint Ltd. (released on December 14, 2011) takes on the U.S. Supreme Court’s major decisions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), which requires plaintiffs pleading claims based on antitrust conspiracies to include detailed factual allegations supporting the assertion that the defendants entered into an unlawful agreement, and Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (2007), which set down standards for pleading that a conspiracy harmed competition. The 4th DCA held that both decisions apply to cases filed in Florida state court asserting claims under the Florida Antitrust law. But it also held that MYD’s complaint, which alleged that its competitor marine paint distributors had conspired with one another as well as with the manufacturer of a premium paint for boats to have MYD cut off as a distributor of that paint because MYD was undercutting their prices. 

The 11th Circuit’s decision, FTC v. Phoebe Putney Health System, Inc. (released on December 9, 2011) threw a wrench in the Federal Trade Commision’s campaign to take on consolidation among large healthcare facilities that threaten competition and contribute to rising healthcare costs. In the Phoebe Putney case, the FTC sought to enjoin the acquisition by a public hospital of its only competitor in Dougherty County, Georgia, and thereby create a monopoly in that market.

In an opinion authored by Judge Tjoflat, the 11th Circuit agreed that the transaction would create a monopoly but affirmed the dismissal of the FTC’s case, holding that the “state action doctrine” made antitrust laws inapplicable and rendered the FTC powerless to challenge the transaction. In essence, the court held that in authorizing public hospitals like Phoebe Putney to acquire other hospitals, the Georgia legislature had contemplated and authorized even acquisitions that created monopolies. The state action doctrine therefore exempted the transaction from antitrust scrutiny. This decision essentially forecloses the FTC and DOJ from challenging any merger in Georgia involving a public hospital, and its reasoning could result in foreclosing challenges to acquisitions involving public hospitals in other states as well. 

The 3rd Circuit’s en banc decision in Sullivan v. DB Investments, Inc. (released on December 20, 2011), is a significant decision dealing with antitrust class actions brought by alleged “indirect purchasers” of price-fixed goods. The en banc court held that it is appropriate (at least in the settlement context) to certify a nationwide class of indirect purchasers asserting antitrust claims under the laws of all 50 states, even though class members from certain states did not have the right to sue for damages for antitrust violations.

A more thorough discussion of Sullivan follows. 

Continue Reading ‘Tis the Season for Antitrust

Losing at trial hurts. Getting hit with the bill for your adversary’s attorney’s fees makes it hurt ever-so-much more. That’s why fee-shifting under Florida Statutes Section 768.79 — available to parties that make a proposal for settlement under Rule 1.442 — can be such a powerful tool. It’s probably also why lawyers who refuse an offer for settlement – and get burned – fight so hard to avoid the consequences.

Many courts, including the Florida Supreme Court, aren’t too keen on this kind of fee-shifting either. Although common in many foreign legal systems, fee-shifting is an exception to the so-called “American Rule” that each party generally bears its own fees. That – and the fact that Rule 1.442 and Section 768.79 can be used to play “gotcha” – explains the judicial resistance.

Thus, Rule 1.442 in its current form contains very precise requirements for what must be included in a settlement proposal. Under longstanding precedent, specificity is required as to each of the required elements, and any ambiguity can nullify fee-shifting.

Proposals to settle the claims or liabilities of multiple parties, known as “joint proposals”, have proven particularly troublesome. Subsections (c)(3) and (c)(4) of Rule 1.442 specify how the Rule applies to such proposals:

3) A proposal may be made by or to any party or parties and by or to any combination of parties properly identified in the proposal. A joint proposal shall state the amount and terms attributable to each party.

(4) Notwithstanding subdivision (c)(3), when a party is alleged to be solely vicariously, constructively, derivatively, or technically liable, whether by operation of law or by contract, a joint proposal made by or served on such a party need not state the apportionment or contribution as to that party. Acceptance by any party shall be without prejudice to rights of contribution or indemnity.

Do Florida Supreme Court Decisions Make Joint Proposals Impossible?

The Florida Supreme Court has addressed these subsections in a series of cases since the current form of the Rule was adopted in 1996. It has concluded that a settlement offer made by or to multiple parties must always specify the amount attributable to each party, so that each party can individually decide whether to accept or reject the offer.

In a 2005 case, Lamb v. Matetzschk, 906 So. 2d 1037, the Court held that even in vicarious liability cases (to which subsection (c)(4) applies), a plaintiff’s offer to multiple defendants must still specify the amount attributable to each defendant. Then last year, in Attorneys’ Title Insurance Fund, Inc. v. Gorka, 36 So. 3d 646 (Fla. 2010), the Court held that a joint proposal from a defendant to multiple plaintiffs must allow each plaintiff to individually decide whether to settle.  So a proposal can’t condition the settlement of one plaintiff’s claims on the other’s agreement to settle as well.

In the wake of these cases, the 1st DCA recently wondered aloud [in Schantz v. Sekine, 60 So. 3d 444 (Fla. 1st DCA 2011)] whether a joint proposal to multiple plaintiffs can ever satisfy Rule 1.442. Agreeing with Justice Polston’s suggestion in his Gorka dissent, the Court lamented that the decision’s practical effect was to excise joint proposals from Rule 1.442 entirely.

Can A Proposal Release Claims Against Multiple Parties Without Being a Joint Proposal?

But pending word from the Florida Supreme Court (which is likely within the next year), there’s at least one context in which claims against multiple parties can be released in a single settlement proposal.  Relying on 2009 decisions of the 3rd and 4th DCAs, the Fifth District recently held in Andrews v. Frey, No. 5D10-2068 (released on July 29, 2011), that if one defendant is only alleged to be vicariously liable for the acts of a primary defendant, a settlement proposal by the primary defendant can provide for the release of the vicarious defendant as well.

Of course the 5th DCA didn’t characterize the proposal as a “joint proposal.”  Indeed, the court framed the dispositive issue as whether in that particular context, the proposal made by a single defendant, but requiring the release of a second defendant, is a “joint proposal” under Rule 1.442. The 5th DCA found that it was not, so the offering party was entitled to collect attorney’s fees after the trial resulted in a verdict of less than the amount offered in the settlement proposal. But since it wasn’t a “joint proposal,” the vicariously liable party, who would also have been released under the proposal, was not entitled to attorney’s fees.

Will the Supreme Court Embrace Individual Proposals That Release Multiple Parties?

Despite the holding in Andrews, fee-shifting based on these multi-party release, individually offered, settlement proposals may not survive for very long.  Andrews itself may end up in the Florida Supreme Court, as the 5th DCA certified  the question of whether a proposal made by one party that requires a release of claims against multiple parties is in fact a “joint proposal” under Rule 1.442(c)(3).

And the same question is included among three certified to the Florida Supreme Court by the 11th Circuit in Auto-Owners Insurance Co. v. Southeast Floating Docks, Inc., 632 F.3d 1195 (11th Cir. 2011), which the Court has set for oral argument on October 4, 2011. With 3 certified questions at issue, it’s possible that the Court may not reach the question that the 5th DCA was concerned with.  It’s also possible that the Court will reframe the certified questions.

And, of course, it’s possible that the Court will answer the question, but will be fine with imposing attorney’s fees on parties that refuse an individual proposal that requires a release of multiple parties. I wouldn’t count on it, though.

Real electronic filing may finally make its way to Florida courts in the not-too-distant future.  But before that happens, the Florida Supreme Court wants to make sure that there isn’t too much private information in court filings for the public to access.

On June 30, 2011, the Court adopted sweeping new rules about what information can and can’t be put in the court file.  Florida litigators who want to avoid the sanctions that can be imposed for violating the new rules shouldn’t wait too long to become familiar with them — they are going into effect on October 1, 2011.

For the time being, the privacy rules don’t affect criminal cases, for the most part, but they affect all civil cases.  And the reprieve in criminal cases isn’t likely to last very long.

Here is a breakdown of the Rule changes you need to know:

Florida Rule of Judicial Administration 2.425

Rule of Judicial Administration 2.425, which was added by the Court’s June 30, 2011 Amendments, contains the overarching principles. So if you learn that Rule (and remember to apply it in whatever context you find yourself) you’ll be most of the way there. But one caution: Rule 2.425 only states a default rule — it gives way to conflicting Rules, statutes, and orders.

This chart spells out the types of information that are subject to Rule 2.425:

Restricted Info:     Can include in a filing?           Exceptions:

Child’s Name           Initials only                        Orders re: time-sharing, parental
                                                                   responsibility, or child support. 
                                                                   Any document re: child’s ownership of real property.
Birthdates               Year only                           Any party’s full birthdate in writ of attachment
                                                                   or notice to payor. Child’s full birthdate when
                                                                   necessary for jurisdiction.
Social Sec. #s              No                               General exceptions
Bank Account #s           No                               General exceptions
Credit/Debit Card #       No                               General exceptions
Charge Account #          No                               General exceptions
Drivers License #          Last 4 digits only            General exceptions
Passport #                   Last 4 digits only            General exceptions
Taxpayer ID #              Last 4 digits only            General exceptions
Employee ID #             Last 4 digits only            General exceptions
Phone #                      Last 4 digits only            General exceptions
Insurance Policy #         Last 4 digits only            General exceptions
Loan #                        Last 4 digits only            General exceptions
Patient/health care #      Last 4 digits only            General exceptions
Customer Accont #        Last 4 digits only            General exceptions
Email address               Truncated                      General exceptions
User name                   Truncated                      General exceptions
Password                     Truncated                      General exceptions
PIN #s                        Truncated                      General exceptions
Other sensitive info:      Truncated as per court order

General Exceptions:

  • Statute, Rule or Order authorizes the inclusion of the information in a filing
  • Account number is necessary to identify property at issue in a case.
  • Information that is “relevant and material to an issue before the court.” [!!! This looks to me like an exception that you could drive a truck through.  It’ll be interesting to see how courts interpret it.]
  • Records in an administrative, agency, appellate, or review proceeding.
  • Information used by the clerk or the court for file and case management purposes.
  • Criminal cases are temporarily exempt.
  • Traffic court cases are temporarily exempt.
  • Small claims cases are temporarily exempt.

A Few Other Notes:

What effect does Rule 2.425 have on parties’ ability to obtain a protective order?  According to the Rule itself, none.  But I’d be surprised if judges’ opinions on what information should be kept private were not influenced by the views of the Supreme Court as expressed in Rule 2.425.

The Rule also claims that it “does not affect the application of constitutional provisions, statutes, or rules of court regarding confidential information or access to public information.”  I’m not sure how that could be so, but again, we’ll see how courts interpret that subsection.

The Court is also amending quite a few other Rules to accomodate Rule 2.425.  Changes are being made to the Rules of Civil Procedure, particularly with regard to filing discovery documents, the Family Law Rules of Procedure, the Rules of Appellate Procedure, Probate Rules, and to a lesser extent, Criminal Procedure and Small Claims Rules, as well as several forms.

The amendments to those rules and forms are listed below. 

Continue Reading A Primer on the New Privacy Rules for Florida Court Filings

2011 will surely go down as the Year of the Class Action in the Supreme Court of the United States.  If you were surprised at the potential effects of Concepcion v. AT&T Mobility LLC for consumer class actions (unlike many observers, I didn’t see it as their end), then you might want to sit down before reading the Court’s decision in Walmart v. Dukes — which has far greater implications for employment discrimination class actions.

In my first entry on this blog back in April, I wondered where the Court was going with Dukes.  Was it looking to address when (if ever) the easier-to-satisfy Rule 23(b)(2) can be used to certify a class seeking monetary relief?  Plaintiffs’ burden of proof in showing that a class satisfies the requirements of Rule 23?  Or was the Court bothered by an issue specific to Title VII class actions only — the theory that allowing “excessive subjectivity” in hiring decisions can be a “pattern or practice” that may be actionable in an employment discrimination suit if the plaintiffs show a disparate impact on women?

And correspondingly, would the decision’s effects extend to: (a) only civil right cases; (b) all (b)(2) classes; or (c) all class actions?  While many think the answer is all of the above, I think the decision is for the most part confined to (a) and (b).

The Basics of the Decision

The thrust of the Dukes decision can be gleaned from this comment by J. Russell Jackson (who makes his living defending corporations against class actions) on his blog Consumer Class Actions and Mass Torts: “”it’s like an 8-year-old’s Christmas morning in my office!”

Lawyers on the plaintiffs’ side, on the other hand, must feel like they found coal in their stockings, despite what they told the National Law Journal when it called for their reactions.

A description of the background, facts, and procedural hisory of the case can be found in my earlier post, so I’ll focus on the holding.

The Court was unanimous in rejecting the court of appeals’ conclusion that Rule 23(b)(2) certification was appropriate.  The Court also addressed Rule 23(a), with a 5-4 majority rejecting the 9th Circuit’s finding that the class members shared “common issues of law or fact” satisfying Rule 23(a)(2)’s “commonality” requirement.

Either holding would have been sufficient to reverse the decision on appeal, and appellate courts generally try to confine their analyses to what is necessary to decide the case before the court, so it’s somewhat surprising that the Court addressed both points.  Perhaps it did so to ensure that the case wouldn’t wind up back before the Court if the plaintiffs tried another route to certification on remand.  Then again, the Court may have simply felt that since the issues were already teed up, it would be more efficient to decide them now than to wait for them to be brought up again in some future case.

Defense lawyer Jackson goes on to say that the Court fulfilled 5 of the 8 wishes on his wishlist.  I personally think he overstates it a bit.  At least 2 of his wishes — that courts must perform a rigorous analysis at class certification, and can’t use Rule 23 to abridge substantive rights — had been granted by the Court long ago.  And the courts of appeals had already unanimously endorsed another of his wishes: that courts must decide merits issues where necessary to the Rule 23 analysis.

That said, it’s hard to argue with the notion that Dukes embraces many positions advanced by class action defense lawyers.  And I think the decision has the potential to all but eliminate private enforcement class actions under Title VII, as well as the use of Rule 23(b)(2) in cases involving monetary claims (i.e., it will not be used in most cases brought by for-profit law firms).

What About Other Types of Class Actions?

The impact on class actions that don’t involve civil rights is not as clear to me.  Many commentators are saying that the Court’s description of commonality will impact all class actions.  But I’m not so sure.

Cases Like Dukes Are Highly Individualized

One thing to remember when reading appellate decisions is this:  context always matters.  And that is particularly true in Dukes.  As in many Title VII class actions, Dukes is an effort to try very individualized legal claims through representative plaintiffs.  In the absence of an explicit written policy to discriminate or a test designed to achieve the same goal, decisions to hire or promote an employee are extremely individualized.  They’re based not only on an applicant’s qualifications and performance, but also on the qualifications and performance of competing applicants.

So proving that a particular hiring or promotion decision was unlawful is often inseparable from the individual circumstances of that decision.  The “excessive subjectivity” theory was an attempt to get around that problem through statistics.  But statistics in such a case may tell you something about the employer’s overall hiring, but they still can’t say with certainty whether any particular person was adversely impacted.

I’ve always felt that plaintiffs in Title VII cases were held to a lesser standard than in other class actions.  That was likely attributable to the the historical bond between class actions and civil rights actions — Brown v. Board of Education is probably the most famous class action to this day — as well as the understanding that Rule 23’s drafters had civil rights class actions in mind.

After Dukes, forget the Advisory Committee Notes to Rule 23(b).  They may say that provision is meant to apply to “various actions in the civil-rights field where a party is charged with discriminating unlawfully against a class…”  But the text of the rule specifically refers to cases involving “declaratory or injunctive relief.”

So courts’ traditional understanding that Rule 23(b) also encompassed other forms of “equitable relief” in civil rights cases (i.e., backpay) even though monetary in nature, was misgurided, according to the Court.  But in a nod to Brown, perhaps, the Court clarified that when the Advisory Committee notes speak of civil rights cases, they are referring to desegregation cases and the like, where only non-monetary relief is at issue.

So I think one major lesson of Dukes is that civil rights cases are to be treated the same as any other class action.

The Court’s Rule 23(a)(2) Analysis Is Not A Major Change

Which brings us back to the principle that context always matters.  In my view, the Court’s discussion of commonality is inseparable from its rejection of the “excessive subjectivity” theory.  And the Court’s finding that the class didn’t satisfy commonality loses much of its significance when removed from that context.

So I don’t think that the Court’s analysis of the requirement of commonality under Rule 23(a)(2) will have quite the impact on other types of cases that many are predicting.  In fact, I don’t think the Court really changed the standard that generally applies in determining whether the class members share common issues of law or fact.  To satisfy commonality, the Court said:

[The class members’] claims must depend upon a common contention…That common contention, moreover, must be of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.

What’s new about that?  In the types of cases that I’ve always understood to be good candidates for class action treatment, which is to say where the substantive claims are defendant-centered, that commonality standard would appear to be satisfied.

Take, for example, a price-fixing case.  A “common contention” that is “central to the validity of each one of the claims” is the existence of a price-fixing scheme among the defendants.  And if one plaintiff proves that such a scheme existed, it generally will have resolved that contention class-wide, “in one stroke.”

The same is true in a 10b-5 securities case.  When a plaintiff resolves the central issue of whether the defendants made false or misleading statements, that issue is resolved class-wide.  So too in an Enron-style ERISA cases alleging imprudent investment in an employer’s stock.  When a plaintiff resolves the central contention that it was imprudent for plan managers to invest plan assets in the investment vehicle at issue, the validity of that contention is established class-wide, “in a single stroke.”

              The Court’s Rule 23(b)(2) Holding is Significant, But Mostly for Title VII Cases

There’s no denying that the Court severely restricted the use of the Rule 23(b)(2) accross the board.  The Court nominally left open the possibility that (b)(2) might be used where monetary relief is “incidental to requested injunctive or declaratory relief” and “damages…flow directly from liability to the class as a whole on the claims forming the basis of the injunctive or declaratory relief,” as the 5th Circuit held in Allison v. Citgo Petroleum Corp.

But at the same time, the court strongly implied that allowing a non-opt-out class to pursue monetary relief violates due process.  So I wouldn’t expect to see any such classes certified anytime soon.  Nor are many plaintiffs likely to request it, as the Court made it as difficult to certify a (b)(2) class as a (b)(3) class, in concluding that (b)(2) applies only when “predominance and superiority are self-evident.”

Yet, again, this holding would seem to primarily impact class actions brought under Title VII and other civil rights statutes.  Plaintiffs in most other cases seek monetary relief and certification under Rule 23(b)(3).  Courts, after all, have rarely found that injunctive and declaratory relief predominated in a case where plaintiffs also sought monetary relief.  Outside of the civil rights context, at least.

 

 

 

Sometime around 2004, I heard that consumer class actions were dead. Why? Companies were inserting into consumer contracts mandatory arbitration clauses that waived the right to proceed as a class action. Courts were upholding them – arbitration clauses are, after all, pretty much inviolate – and surely every company would soon be using them. Fast forward seven years or so, and as April 27, 2011 at 9:00 AM, the consumer class action business was booming.

What happened? For one, state supreme courts, led by the California Supreme Court in Discover Bank v. Superior Court, started holding that class action waivers, at least in certain contexts, could be unconscionable and unenforceable. And federal courts of appeals, led by the 9th Circuit, began enforcing those state court holdings and precluding the enforcement of class action waivers. Section 2 of the Federal Arbitration Act (FAA) “preempts” state laws and rules that prohibit (whether directly or indirectly) enforcement of arbitration agreements. But arbitration agreements can be invalidated “upon such grounds as exist at law or in equity for the revocation of any contract.” Courts reasoned that Discover Bank rule was not preempted because it was based on unconscionability, a defense that is applicable to all contracts, so if a state would also invalidate a class action waiver if it was found in a non-arbitration contract, it could invalidate class waivers contained in arbitration clauses without being preempted.

Since 2005, the 9th Circuit has applied the Discover Bank rule in at least a dozen cases. The same principle was applied under Washington state law. The Eleventh Circuit invalidated class waivers under similar circumstances based on Florida and Georgia law. The 3rd Circuit had done the same based on New Jersey law. The 1st Circuit and 2nd Circuit had even held that class waivers were unenforceable in the arbitration context under the “federal common law” of arbitration.

Yesterday the U.S. Supreme Court quashed that line of reasoning in AT&T Mobility LLC v. Concepcion, No. 09-893, holding that the Discover Bank rule (and by extension, similar rules in other states) is preempted by FAA Section 2.

Although the rule invalidates class action waivers in non-arbitration contracts as well as in arbitration contracts, the Court reasoned, the rule disproportionately affects arbitration agreements. And its operative effect is much the same as a rule that bans arbitration, because companies would never agree to class arbitration.

Moreover, the Court explained, there is a fundamental disconnect between class adjudication, which is public, lengthy, and procedurally complex on the one hand, and arbitration, which is supposed to be private, quick, and laid-back, on the other.

A Few Observations:

  • The outcome, in my view, was all but inevitable. Last June, the Supreme Court held in Stolt-Nielsen S.A. v. Animalfeeds International that the FAA prohibits arbitrators from allowing class arbitration unless the parties signed an arbitration agreement that specifically allows it. In other words, under the FAA, arbitration clauses are assumed to disallow class arbitration. Under the Discover Bank Rule, arbitration clauses must allow class arbitration. So the holding in Concepcion may have been fore-ordained by the reasoning of Stolt-Nielsen.
  • The only real possibility of a different conclusion would have been if the Court had viewed the consumer adhesion contracts in Concepcion as fundamentally different from the commercial contracts in Animalfeeds. In law school they probably still teach the concept of adhesion contracts, and that courts are more hesitant to enforce them against the party in the weaker bargaining position. But that notion doesn’t carry the weight with courts these days that it used to, at least since Carnival Cruise Lines v. Shute. The majority made short shrift of the adhesion contract aspect of the case, so I’d expect that trend to continue.
  • The lawyers for the Respondents/Plaintiffs focused their briefs and oral argument on trying to win over Justice Thomas based on his federalism/states’ rights jurisprudence. Justice Thomas did disagree with the majority’s reasoning, and he wrote a concurrence stating that he had serious reservations joining the majority opinion. But not based on federalism. Instead, Justice Thomas wrote that the plain meaning of the language of Section 2 allows arbitration agreements to be invalidated only when there is a defect in making the agreement. In his view, other rules that can preclude enforcement of contracts generally simply don’t apply to arbitration agreements.
  •  There are many headlines today like “After At&T Ruling, Should We Say Goodbye to Consumer Class Actions?” (Ashby Jones, WSJ Law Blog). It feels like déjà vu all over again. But I don’t think the death of the consumer class action is coming any time soon. For one thing, many consumer class actions are brought by plaintiffs who have not signed any contracts with the defendant they’re suing, so they can’t have signed an arbitration agreement. Nor would I be surprised to hear that lawyers have come up with some new reason why class waivers can’t be enforced. And initiatives – legislative or otherwise – to undo the effect of this decision are sure to come. Indeed, Daniel Fisher reported yesterday that a legislative work-around may already be in place, at least regarding contracts under the Consumer Finance Protection Bureau’s jurisdiction.

In short, the outcome of Concepcion is not a huge surprise.  And while it may slow down consumer class actions for a while, it’s hardly their death knell.