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Litigation Update

The Litigation Privilege

As noted by the Florida Supreme Court in Levin, Middlebrooks, Mabie, Thomas, Mayes & Mitchell, P.A. v. U.S. Fire Insurance Co:,[i] “absolute immunity must be afforded to any act occurring during the course of a judicial proceeding, regardless of whether the act involves a defamatory statement or other tortuous behavior … so long as the act has some relation to the proceeding.”[ii] 

Several recent cases have focused what constitutes a “judicial proceeding”[iii] or what constitutes “a statement made in connection with a judicial proceeding.”[iv]  For example, in Ross v. Blank,[v] the Fourth District Court of Appeal held that a psychologist involved in a divorce proceeding was entitled to absolute immunity for allegedly defamatory statements made about one of the parties to the court appointed psychologist involved in the custody dispute and to the guardian ad litem. In LatAm v. Holland and Knight,[vi] the Third District held that the litigation privilege applied even though the court in which the proceedings were instituted lacked subject matter jurisdiction.[vii]

In Ball v. D’Lites Enterprises, Inc.,[viii] the Fourth District held that allegedly defamatory statements made by a party on its commercial website regarding the subject of the litigation were not made “in connection with the litigation.”[ix]  The Court analogized “the publication of statements on internet to calling a press conference with the media or otherwise publishing defamatory information to the newspapers or other media” for which the Court noted there was no litigation privilege.[x]

Currently pending before the Florida Supreme Court is Delmonico v. Traynor[xi] in which the Fourth District Court of Appeal held that allegedly defamatory statements made by an attorney, while acting as defense counsel during interviews of potential witness, were absolutely privileged as a matter of law,  because “the statements bore ‘some relation” to the proceeding.”[xii] The Court opined that the attorney “should receive the same absolute immunity in questioning potential witnesses before their appearance at deposition or in the courtroom, as if the questioning were during a formalized judicial proceeding.”[xiii] 

In dissent Judge Warner, noted that that:

If the purpose of absolute immunity is to preserve the attorney and party’s right to present their case at trial without fear of intimidation, I do not think that policy is advanced by protecting a lawyer who is defaming a party to a witness outside of a proceeding at a time when both parties are not present and do not have an opportunity to be heard.  In fact, rather than enhance the truth-seeking function at trials, such conduct as alleged here may taint the entire process by influencing with false and defamatory information about an adversary.[xiv]

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[i] 639 So. 2d 606 (Fla. 1994).

[ii] Id. at 608. 

[iii] Echevarria, McCalla, Raymer, Barrett & Frappier v. Cole, 950 So. 2d 380, 385 (Fla. 2007), Justice Pariente concurring.

[iv] Ball v. D’Lites Enterprises, Inc., 65 So. 2d 637, 638 (Fla. 4th DCA 2011).

[v] 958 So. 2d 437 (Fla. 4th DCA 2007).

[vi] Case No. 3D10-3042 (Fla. 3d DCA October 19, 2011).

[vii] Id. slip opinion at pp. 9-10.

[viii] 65 So. 2d 637 (Fla. 4th DCA 2011).

[ix] Id. at 639.

[x] Id. at 639-640.

[xi] 50 So. 3d 50 (Fla. 4th DCA 2010); Case No. 10-SC1397 (Fla.).  This case was argued on June 9, 2011 and a video of the oral argument can be viewed at: http://wfsu.org/gavel2gavel/archives/flash/10-1397.php  

[xii] 50 So. 3d at 6-7.

[xiii] 50 So. 3d at 7. 

[xiv] 50. So. 3d at 12.

Health Law Update

Florida Supreme Court Invalidates Nursing Home  Arbitration Agreement as Against Public Policy

By: Melanie R. Leitman, Associate Attorney

Edward Clark was admitted to OP Winter Haven, a nursing home, by his niece, Gayle Shotts. Ms. Shotts signed all of the relevant paperwork on behalf of her uncle, who had suffered brain damage as a result of a car accident many years prior. One of the documents Ms. Shotts signed on behalf of her uncle contained a clause requiring arbitration in accordance with the American Health Lawyers Association arbitration rules for “any dispute that might arise”[1] during Mr. Clark’s stay at the nursing home. The arbitration agreement also prohibited the arbitrators from awarding punitive damages and provided that the terms of the agreement were severable. Upon Mr. Clark’s death in 2003, Ms. Shotts, as personal representative, filed suit against the nursing home and several other related parties alleging negligence and breach of fiduciary duties. The defendants responded to the complaint by moving to compel arbitration and Ms. Shotts objected, arguing that the agreement was void and unenforceable as against public policy. The trial court, concluding that the agreement containing the arbitration clause was “enforceable, not severable and not repugnant to the public policy of the State of Florida[,]”[2] found in favor of the defendants and granted their motion to compel.

Ms. Shotts appealed the trial court’s decision and the Second District Court of Appeal affirmed the trial court’s ruling with respect to the motion to compel but found error in the trial court’s holding that the agreement was not severable.  Additionally, the Second DCA found that the agreement could potentially violate public policy because of its provision prohibiting punitive damages, although because this portion could be severed by the arbitrators, the agreement as a whole was not unenforceable for public policy. Ms. Shotts then appealed to the Florida Supreme Court, raising six issues. The court granted her request for discretionary review and addressed three of her claims.

First, Ms. Shotts contended that under relevant law, the court, not the arbitrator, must decide whether or not an arbitration agreement violates public policy. A review of federal and state law found that when the enforceability argument goes to the arbitration clause itself, courts are the more appropriate entity to resolve the dispute because it goes to the making of the agreement as opposed to the contract generally. Decisions on public policy concerns regarding arbitration agreements fall under the jurisdiction of the courts because if the arbitration agreement is violative of public policy, then no valid agreement exists and there is nothing for the arbitrator to decide.

Second, Ms. Shotts claimed that it was error for the Second DCA to fail to find that the agreement’s limitation of remedies (excluding punitive damages) violated public policy. A review of Florida cases found that all districts but one have found limitation of remedies clauses in nursing home contracts to be either violative of public policy or unconscionable. More specifically, the Legislature provided for certain remedies in the Nursing Home Resident’s Act and the American Health Lawyers Association rules contain provisions which are inconsistent with and thus undermine these statutory remedies.  Thus, the Florida Supreme Court held that “any arbitration agreement that substantially diminishes or circumvents [the statutory] remedies stands in violation of the public policy of the State of Florida and is unenforceable.”[3]

The third of Ms. Shotts’s claims that the Florida Supreme Court addressed involved the severability of the limitation of remedies provision. The district court found that the relevant provision’s potential to violate public policy did not render the entire agreement unenforceable because it was severable. Ms. Shotts disagreed. The Florida Supreme Court first conducted a review of relevant Florida law and found that generally, [w]hether a contract is entire or divisible depends upon the intention of the parties.”[4] More specifically, nearly all of the DCAs have ruled on the issue of public policy implications and severability of limitation of remedies provisions in nursing home contracts, reaching varying results.[5] In examination of the facts of the present case, the Court found that the limitation of remedies clause invoking the American Health Lawyers Association rules to be so inextricably intertwined with the essence of the agreement that it could not be severed without the trial court being forced to re-write the agreement, which is not an appropriate role for the court to take.[6]

Finally the Court addressed the facts of this case in light of the recent United States Supreme Court holding in Rent-A-Center, West, Inc. v. Jackson, where the U.S. Supreme Court held that the arbitrator must decide whether or not an arbitration agreement is unconscionable. The Florida Supreme Court, however, found Jackson to be distinguishable from the case at hand because the agreement that Ms. Shotts signed, unlike the agreement in Jackson, contained no delegation provision.

Justice Polston dissented from the majority opinion, reasoning that the agreement’s language providing for arbitration of “any dispute” is a delegation provision, thus bringing this case under the scope of the Jackson holding. Consequently, the enforceability of the agreement, he argued, along with other disputes arising under same, should have been determined by the arbitration panel and not by the court.

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[1] Shotts v. OP Winter Haven, Inc., 36 Fla L. Weekly S665, S674 (2011).

[2] Id. at S666 (quoting Shotts v. OP Winter Haven, Inc., 998 So. 2d 639, 640-41 (Fla. 2d DCA 2008)).

[3] Id. at S671.

[4] Id. at S672 (quoting Local No. 234 v. Henley & Beckwith, Inc., 66 So. 2d 818, 821-22 (Fla. 1953)).

[5] The First DCA held that such a provision is severable so long as the agreement contains a severability clause. Alterra Health Care Corp. v. Estate of Linton, 953 So. 2d 574, 578 (Fla. 1st DCA 2007). The Second DCA, in the present case and in other cases, has held that severability exists, even in the presence of a nonseverability clause. See e.g., Manor Health Care Servs. v. Stiehl, 22 So. 3d 96 (Fla. 2d DCA 2009). The Fourth and Fifth DCAs both have held that regardless of the presence of language addressing severability, limitation of remedies clauses are not severable. Place at Vero Beach, Inc. v. Hanson, 953 So. 2d 773 (Fla. 4th DCA 2007); Fletcher v. Huntington Place Ltd. P’ship, 952 So. 2d 1225 (Fla. 5th DCA 2007).

[6] The Court relied heavily on the reasoning in Hanson as support for its conclusion on this issue. Id. at S672-73.

First DCA Update

Legislative Powers At Issue  

The nature and extent of legislative power has been the focus of three recent cases decided by the First District Court of Appeal.

In the first case, Graham v. Haridopolis,[i] at issue was the power of the Legislature to establish and expend state university tuition and fees in light of the adoption of Article IX, Section 7(d) of the State Constitution by the electorate at the November 2002 general election.  The appellants argued that the amendment effectively transferred the power to set and expend university tuition fees from the Legislature to the Board of Governors, which under the amendment was empowered to “operate, regulate, control, and be fully responsible for the management of the whole university system.”[ii]

The Court rejected this argument, noting that “[t]he Florida Constitution vests the ‘power of the purse’ in the Legislature by granting it exclusive and plenary authority to raise[iii] and appropriate[iv] state funds.”[v]  The Court further noted:

The legislative power to raise funds is not limited to the imposition of taxes; it includes the power to impose fees necessary to offset the costs of using state government services,  Likewise, the power to appropriate is not limited to certain types of funds; it extends to all funds in the State Treasury from whatever source.[vi]

 (Emphasis in text.)  “University tuition and fees are unquestionably state funds; they are collected by state universities for the use of their services and the monies collected are deposited into the state treasury.”[vii]

In the second case, Florida Gaming Centers, Inc. v. Florida Department of Business and Professional Regulation,[viii] at issue was the power of the Legislature to regulate slot machine gambling, in light of the adoption of Article X, Section 23 of the State Constitution by the electorate at the November 2004 general election.  The appellants argued that the amendment limited slot machine gambling to certain facilities in Miami-Dade and Broward Counties.[ix]

The Court rejected this argument, noting that “the only thing that Article X, section 23 limited was the Legislature’s authority to prohibit slot machine gaming in certain facilities in the two counties.”[x]  The Court further noted:

… Article X, section 23 provides no indication that Florida voters intended to forever prohibit the Legislature from exercising its authority to expand slot machine gaming beyond those facilities in Miami-Dade and Broward Counties meeting the specified criteria, Nor is there any indication that Florida voters intended to grant the seven entities who met the criteria a constitutionally-protected monopoly over slot machine gaming in the state.

Thus, it appears that the Court opened the door to the Legislature to exercise its near plenary powers over gambling to authorize slot machine gambling beyond those facilities in Miami-Dade and Broward Counties referenced in Article X, Section 23 of the State Constitution.[xi] 

In the third case, Haridopolis v. Citizens for Strong Schools, Inc.,[xii] at issue are “significant, but unsettled questions about Florida’s ‘paramount duty’ to provide ‘for the education of all children residing within its borders’” in accordance with Article IX, Section 1(a) of the State Constitution.[xiii]  The question before the Court is whether the educational adequacy provisions in the State Constitution are judicially enforceable. 

In denying a petition for a writ of prohibition, a sharply divided First District Court of Appeal deciding case en banc concluded that the trial court did not act outside of its jurisdiction in denying a motion to dismiss complaint because it “raises only nonjusticiable ‘political’ questions … questions which the trial court – and, indeed, any court (according to petitioners – lacks jurisdiction to entertain.”[xiv]  While noting that the trial court had jurisdiction to grant declaratory relief on the complaint, the majority cautioned that it was “uncertain as to whether – and do not decide that – the trial court has any ability to grant relief beyond that point.”[xv] 

Recognizing the significance of the issue presented in this case, the majority certified the following question to the Florida Supreme Court as being a question of great public importance:

Does Article IX, Section 1(a), Florida Constitution, set forth judicially ascertainable standards that can be used to determine the adequacy, efficiency, safety, security, and high quality of public education on a statewide basis, so as to permit a court to decide claims for declaratory judgment (and supplemental relief) alleging noncompliance with Does Article IX, Section 1(a), Florida Constitution?[xvi]

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[i] Case No. 1D11-384 (Fla. 1^st DCA October 12, 2011).

[ii] See Article IX, Section 7(d) of the State Constitution, cited at slip opinion p. 3.

[iii] Case No. 1D11-384 (Fla. 1^st DCA October 12, 2011), note 3 in slip opinion:  “Article VII § 1(d), Fla. Const. (“Provision shall be made by law for raising sufficient revenue to defray the expenses of the state for each fiscal period.”).

[iv] Id. note 4 in slip opinion:  “Article VII § 1(d), Fla. Const. (“No money shall be drawn from the state treasury except in pursuance of appropriation made by law.”).

[v] Id. slip opinion p. 4.

[vi] Id. slip opinion p. 5.

[vii] Id. slip opinion p. 6.

[viii] Case No. 1D10-6780 (Fla. 1^st DCA October 6, 2011).

[ix] Id. slip opinion p. 6.

[x] Id. slip opinion p. 6.

[xi] The appellants before the District Court have sought to have the Florida Supreme Court exercise its discretionary jurisdiction to hear this case.  See Florida Gaming Centers, Inc. v. Florida Department of Business and Professional Regulation, Case No. 11SC-2182 (Fla.).

[xii] Case No. 1D10-6285 (Fla. 1^st DCA November 23, 2011).

[xiii] Id. slip opinion p. 2.

[xiv] Id. slip opinion p. 3.

[xv] Id. slip opinion p. 15.

[xvi] Id. slip opinion p. 16.