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.   

It is not easy to get the Supreme Court of Florida to hear a case. That is by design: the Florida Constitution was amended in 1980 to curtail the Supreme Court’s jurisdiction so that it may only review a limited number of cases that fall into discrete categories. 

But the Court has a catch-all jurisdictional authority known as “All Writs” jurisdiction. All Writs jurisdiction is derived from Article V, Section 3(b)(7) of the Florida Constitution, which allows the Florida Supreme Court to “issue all writs necessary to complete exercise of its jurisdiction.”     

This constitutional provision has traditionally been interpreted narrowly. It has been understood to confer something akin to supplemental jurisdiction, rather than an independent basis for jurisdiction, and is invoked only in rare cases. 

But disputes involving exceptionally important issues with great time sensitivity appear to fall into the category of rare cases in which the Florida Supreme Court is willing to invoke its All Writs power. In The League of Women Voters of Florida v. Data Targeting, Inc., released May 27, 2014, the Florida Supreme Court was asked to weigh in in a pre-trial dispute in litigation over whether the 2012 apportionment of Florida’s congressional districts was designed to advance partisan political objectives in violation of the Fair District Amendments to the Florida Constitution.  

A week before trial was to begin, the trial judge ruled that documents obtained from a political consultant, which the plaintiffs wanted to use to show that political consultants participated in the redistricting process, could be used as evidence in the trial but would remain confidential. On appeal, the First DCA issued a short order ruling that the documents could not be admitted into evidence, and stating that it would issue an opinion explaining its reasoning.

The plaintiffs filed an emergency petition asking the Florida Supreme Court to stay the 1st DCA’s order so that the evidence could be presented at the trial and the trial court could decide the dispute with the aid of that evidence before the 2014 midterm elections. With the trial about to begin, the Court would need to act immediately if its decision was going to have any impact.

But while the Court said it had reason to believe it would have jurisdiction to review the 1st DCA’s decision, it could not be certain as yet.  Because the First DCA had not explained its reasoning in a full opinion, the Florida Supreme Court could not determine whether it had jurisdiction to hear the petition under its more commonly used bases, such as when there are conflicting rulings between districts on a point of law.

Nonetheless, the Court predicted that the district court opinion was likely to construe a provision of the Florida or federal constitution. And it noted that the Court had previously exercised jurisdiction in the same case based on the direct effect on a class of constitutional officers, but said that it could not say for sure whether jurisdicition to review the 1st DCA’s decision on the admissibility of the documents could be obtained on that basis. In addition, there was a chance that the 1st DCA would certify a question of great public importance, given “the statewide importance of this litigation and the lack of Florida precedent regarding the associational privilege,” which the 1st DCA appeared to have relied on based on its citation to a 9th Circuit case addressing that issue.

Although the All Writs doctrine does not prove an independent basis for jurisdiction, the Supreme Court explained, “this Court may utilize the constitutional all writs provision as a means of ‘protecting jurisdiction that likely will be invoked in the future.'” Thus, due to the likelihood that the Supreme Court would have jurisdiction, and that it would not be able to provide effective relief by exercising jurisdiction after the 1st DCA issued its opinion (and the trial likely already completed, the Supreme Court held that it was appropriate to stay the 1st DCA’s order under the All Writs doctrine:

In order to maintain the status quo during the ongoing trial, preserve this Court’s ability to completely exercise the eventual jurisdiction it is likely to have to review the First District’s decision, and prevent any irreparable harm that might occur if the Petitioners are prevented from using the challenged documents, we conclude that we must grant the petition and stay the enforcement of the First District’s reversal of the circuit court, pending the completion of the trial.

Justice Lewis issued a concurring opinion to explain his view that the litigation’s importance to the “democratic system of government in Florida–and public faith in that system,” combined with the fact that the Court had to act now in order to issue effective relief, made the case a rare instance in which All Writs jurisdiction was appropriate. Chief Justice Polston dissented in an opinion joined by Justice Canady, explaining that in his view it was inappropriate to exercise All Writs jurisdiction because “an independent basis for jurisdiction does not currently exist.”

The 1st DCA apparently agreed that the Florida Supreme Court should review the case. As a twist, the 1st DCA’s opinion never came. Before the Supreme Court issued its decision, a 1st DCA judge had filed an internal motion for the court to review the panel’s order en banc. A majority of the judges ultimately voted to grant en banc review, and ruled that “the appeal should have been passed through to the supreme court,” as had been requested.

The court vacated the prior order and certified an issue of great public importance for immediate review by the Florida Supreme Court. And the Florida Supreme Court has accepted jurisdiction.

Meanwhile, the trial has ended, and the trial court has ruled on the merits. Although the ruling invalidated 2 congressional districts, the legislature has announced that it does not intend to appeal.

But the legislature has also asked that the congressional districts not be redrawn until after the 2014 midterm elections. Will the Florida Supreme Court have jurisdiction if it asked to rule on whether the map must be redrawn before the midterms? Given the importance of the issues and the time sensitivity, that seems likely.  

(UPDATED)

Courts’ power to do justice in civil cases depends on their ability to enforce their judgments, i.e., to compel parties to pay up when they are found liable. But courts are also wary of extending their power outside of their own territory, and thus encroaching on the power of courts in other states and countries.   

In a pair of March 2014 decisions, the latter consideration prevailed, as a Florida appellate court narrowly interpreted the power of Florida courts to exercise jurisdiction over assets located outside of Florida.

In the first case, Sargeant v. Al-Saleh, decided March 5, 2014, the Fourth District Court of Appeal (based in West Palm Beach) reversed an order of the 15th Judicial Circuit, which had required that stock certificates evidencing ownership of corporations located abroad be turned over to satisfy a judgment.

The judgment in Sargeant resulted from litigation over a failed oil shipping deal, in which a jury awarded $28.8 million in favor of Mohammed Al-Saleh (reportedly the brother-in-law of the king of Jordan, according to the Palm Beach Post). To satisfy the judgment, Al-Saleh sought to compel the defendants, businessmen Harry Sargeant III and Mustafa Abu-Naba’a, to turn over stock certificates for corporations they owned. The defendants countered that Florida courts do not have jurisdiction to order the turnover of the stock certificates to the corporations they own, because they are located in the Bahamas, Jordan, the Isle of Man, and the Dominican Republic.

On appeal, the 4th DCA agreed. Finding no controlling Florida cases on point, the court was swayed by policy considerations, which it said favor letting courts in foreign jurisdictions determine rights to property located in those jurisdictions.

UPDATE: The Sargeant case has garnered considerable attention in the legal community and the media. Paul Sullivan of the New York Times has a great write-up about the potential impacts of the decision in his May 9, 2014 column, with insights and reactions from several Florida lawyers, including me. The article also notes that, unsurprisingly, the appellees (who were denied access to the defendants’ foreign assets as a result of the decision on appeal) plan to ask the Supreme Court of Florida to hear the case. Whether the Court will agree to take up the case is anyone’s guess.  

In the second case, Edelsten v. Mawardi, decided March 19, 2014, the court dealt with a slightly different attempt to take control of assets located outside of Florida. The plaintiff in that case sued a Florida parent company and its Ohio subsidiary in connection with a failed business deal involving an apartment complex in Dayton, Ohio, which was owned by the Ohio subsidiary. A circuit court appointed a receiver to manage the apartment complex until the dispute was resolved. The 4th DCA reversed.

Just as the court had held that Florida courts cannot order the transfer of foreign stock certificates, the 4th DCA held that Florida courts are not empowered to exercise jurisdiction to appoint a receiver over a corporation located in another state. It is true that the circuit court was empowered to appoint a receiver over the Florida parent corporation, but that does not mean that it can exercise control over an Ohio subsidiary and its property in Ohio. Showing wariness of trampling on another jurisdiction, the 4th DCA was particularly troubled by the fact that appointing a Florida resident as a receiver over an Ohio corporation was in direct contravention of Ohio law, under which only an Ohio resident may be appointed as a receiver over an Ohio corporation. The court, thus, remanded to the circuit court to terminate the appointment of the receiver over the Ohio corporation and the apartment complex. 

These decisions are sure to have a significant impact on litigation in Florida. With so much interstate and international business taking place in Florida, litigation involving out of state and foreign corporations and assets located outside of Florida is far from uncommon.

But while the court’s deference to other jurisdictions has resulted in limiting the power of Florida courts, the decisions do not mean that out of state and foreign assets can never be reached. They do mean, however, that after obtaining a judgment, litigants may need to resort to courts in other jurisdictions to enforce them.   

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.