Business Litigation Perspectives - Insights & Commentary on Business Legal Issues

Encountering the Seminole Tribe of Florida as a litigation opponent presents a number of practical obstacles. Besides being well-funded (recent reports peg their annual gaming revenue in excess of $2 billion), the Seminole Tribe generally enjoys sovereign immunity from suit in the United States courts, unless, of course, they contract it away or it is waived.  So not only can the Tribe outspend their opponents by huge margins, but when the going gets rough, they can claim that they are protected from suit by sovereign immunity.  As a consequence, businesses and individuals are at an extreme disadvantage in litigating disputes with the Tribe. Not so for AECOM Technology Corp., a large multinational contractor which entered into a series of construction contracts with the Tribe to build water and wastewater treatment plants at three of the Tribe's reservations in Florida.  The contracts between AECOM and the Tribe provided for any disputes to be resolved by a Florida state court.  When the Tribe refused to pay change orders totaling approximately $12 million, AECOM sued the Tribe for breach of contract in the Broward County Circuit Court. Despite having contracted away its sovereign immunity, the Tribe nonetheless claimed sovereign immunity from suit, arguing that the tribal representative who had signed the construction agreements lacked the authority to enter into them.  Not exactly a winning argument.  In a significant (but not entirely unexpected) victory for the plaintiff contractor, Judge Jeffrey Streitfeld rejected the Tribe's sovereign immunity defense. The Tribe has appealed his ruling.

Although Florida circuit court decisions are typically unpublished, the Daily Business Review did a nice write up of the case (subscription required). 

What is the lesson to be learned from this?  When suing the Seminole Tribe, be prepared for a sovereign immunity defense, even in the face of a contractual waiver.  Also be prepared to litigate every conceivable issue, as the Tribe will not hesitate to use its vast resources in the hopes of wearing down opponents financially.  With AECOM's annual revenues also measured in the billions, such a tactic obviously was not effective in this case. Finally, it would be naive for parties suing the Tribe to expect full disclosure and cooperation from the Tribe (at least not voluntarily). For example, in the AECOM case, the Tribe claimed that documents were "lost or missing," including tribal ordinances, resolutions, contracts and email correspondence between tribal officials.  This appeared to tip the scales in AECOM's favor (although, quite frankly, the contractual waiver of sovereign immunity should have been more than enough), as Judge Streitfeld found after discovery that the facts warranted "the imposition of adverse evidentiary inferences as well as adverse presumptions against the Tribe."  Judge Streitfeld described this case as one of first impression, and we will be carefully following the appeal for any new developments in the case.

There are some draconian rules in the game of golf.  Take for example what happens if a player signs an incorrect scorecard?

In The 1968 Masters, Roberto De Vicenzo finished the final round with a score that would have gotten him into a playoff for the win – at least that’s how it seemed.  But De Vicenzo signed an incorrect scorecard giving himself a score one stroke higher than his actual score.  And he didn’t really give the score to himself. His playing partner, who kept De Vicenzo’s score, made a mistake on one hole (scoring a 4 instead of a 3) and Roberto did not catch it before he signed.

No harm no foul, right? It was clearly a mistake - so amend the card, post the correct score and let the playoff begin.  Not exactly.  De Vicenzo was forced to take the higher score, did not qualify for the playoff and finished second.  For those who are interested Bob Goalby won the Masters that year (by the way - he played great - final round 66).

The law has draconian rules like that.  They are called jurisdictional deadlines. If you miss it - game over - except where the law gives you a “free drop.”   

What is a free drop?   In golf, under very limited circumstances, a player is entitled pick up his or her ball from the location where it came to rest after the last stroke, drop it in an area defined by the rules and play it from that spot with no penalty.  An example of when a player would be entitled to a free drop is where the player’s ball comes to rest upon a cart path or the golfer's swing or stance is inhibited by the path. 

The recent case of United Funding LLC v. Brandao, 36 Fla. L. Weekly D2469, holds that under certain circumstances, a litigant may be entitled to relief from the otherwise harsh result of missing a jurisdictional deadline. A free drop if you will.

In United Funding, final judgments against United were entered on August 3, 2010.  United did not receive the final judgments until after the time for filing a motion for rehearing had expired and just three days before the deadline for filing a notice of appeal.  United might have described its feeling upon opening the mail that day as a “De Vicenzo moment.”

United filed a motion to vacate the judgments pursuant to Florida Rule of Civil Procedure 1.540. United requested that the trial court vacate the judgments and then re-enter them so that United could timely interpose a motion for rehearing and then appeal if necessary.

United provided undisputed evidence that it did not timely receive the final judgments. The trial court denied the motion.  

The appellate court reversed holding that the trial court had abused its discretion in denying the Motion. The court stated in part:

“We find that the untimely receipt of the trial court’s order, for no cause attributable to United, left United with an unreasonably short time frame within which to determine whether to seek a full appeal.  Further, by receiving the order after the expiration of the ten-day period for filing a motion for rehearing, United was prevented from seeking certain relief available under that rule but not on appeal. See, e.g., Fla.R.Civ.P. 1.530(b) (upon a motion for rehearing, trial court has authority to take additional testimony).

“Because the evidence before this Court supports United’s argument that it did not receive copies of any of the three orders it issued, and no contrary evidence was produced, we find that the trial court abused its discretion in refusing to vacate and re-enter the three final judgments for fees and costs.”

In golf parlance, the court held that United was entitled to a “free drop.”

Certainly, no golf player would ever intentionally hit the ball into a location where he or she would be entitled to a free drop.  But when a player finds that their shot has come to rest in one of the circumstances defined by the rules, the relief is available. 

Under United, when a litigant finds himself or herself in the unfortunate circumstance described in that case; a final judgment has not been timely received (through no fault of the litigant), at a minimum the trial court has the discretion, and perhaps is required, to give the litigant a “Rule 1.540 free drop.”

The Internet, through the hundreds, if not thousands, of complaint boards and review websites, such as ripoffreport.com, has provided an effective means to bad-mouth and degrade a company, or its principals, while reaching an audience of millions of people, and simultaneously being protected by a cloak of anonymity.  However, this cloak of anonymity is not impervious.  If defamatory or libelous material is being posted about you, or your company, then you may obtain the identity of the individual posting such material (the “Poster”) from the website providing the medium on which the material is posted.

By filing what is commonly referred to as a “John Doe suit,” you can compel a website or internet service provider to fork over the Poster’s identity.  Although often executed, this is not as simple as merely filing suit and listing John Doe and the website or posting medium as defendants, and then asking the website or posting medium to divulge the Poster’s identity through discovery requests. 

Rather, as the party requesting the information/identity of the Poster, you must show that you have made reasonable efforts to inform the Poster of the pending discovery request, including the pertinent case information, and inform the Poster of the right to timely and anonymously file and serve a response to the request. You must also attempt to notify the Poster via the same medium used by that Poster. 

Further, you must establish that your action would likely survive a motion for summary judgment, regardless of the Poster’s identity, and that the balancing of the interests of the parties weighs in favor of divulging the Poster’s identity.  Courts will not allow somebody to abuse the system and use a John Doe suit merely to circumvent a speaker’s First Amendment right to anonymous speech, unless the appropriate circumstances are present.  

Keep in mind that the ability to discover the Poster’s identity may not always be as important as bringing an end to the Poster’s behavior and requiring the website to take down the defamatory and libelous information.  However, in some cases knowing the identity of the Poster is crucial, for example, the case of an ex-employee who is violating the terms of their non-compete agreement.

Don’t get me wrong, the prevalence and influence of these complaint boards has its advantages, as these websites have helped uncover scams and can provide the consuming public with important information.  However, inherent in such prevalence and influence is the danger of abuse and utilization for improper motives.  Bad reviews can cause serious damage to a business above and beyond a decrease in revenue, such as hindering investors and lenders who find these reviews during their due diligence process.  The good news is that there is a remedy, and it goes by the name of Doe.

Back in June, we blogged that the U.S. Supreme Court had thrown out a discrimination lawsuit filed on behalf of 1.5 million Wal-Mart female employees.  That lawsuit alleged that the retail giant had systematically discriminated against women in pay and hiring decisions.  However, the Court ruled that the case could not go forward as a class-action because the plaintiffs could not show that Wal-Mart had a common policy of discriminating against women. 

Wal-Mart's victory was short-lived, as last week two more gender discrimination lawsuits were filed against Wal-Mart-one in California and the other in Texas.  The new filings confine their respective allegations to female workers in each of the two states.     

The California lawsuit was the first to be filed.  The proposed class of plaintiffs in the California federal court filing approximates 90,000 current and former female employees.     

Like the California action, the Texas lawsuit alleges that Wal-Mart paid women lower wages for similar work and kept them from being promoted to managerial positions.  The proposed class of plaintiffs in that action exceeds 45,000 women. 

It is anticipated that these latest complaints are the beginning of a number of similar cases that will be filed against our nation's largest retailer in the months to come.  The new class of plaintiffs are optimistic, fueled by the fact that the Supreme Court did not rule on the merits of their action, only the technicalities of class certification.

Among other relief, the recent lawsuits seek class certification, monetary damages, punitive damages, and an injunction against continued unlawful discriminatory practices.  It is expected that these cases will rely upon information and statistical evidence of a pattern of discrimination, not considered by the U.S. Supreme Court.  

Greg Rossitier, a Wal-Mart spokesman, calls the lawsuits "groundless," stating that the claims are unsuitable for class treatment.  The proposed classes are "no more appropriate than the class the Supreme Court rejected," he said, adding further that "Wal-Mart is a great place to work."                                  

Personal jurisdiction.

In which state or states can a person or a business be sued?

The Internet has put a new spin on an age-old question. Where can a company with a national or even regional presence be sued? Can a Florida company, doing business on the Internet, find itself defending a lawsuit in Nevada? In many cases, the answer is a big fat maybe.

Allow me to oversimplify: When a court determines whether a non-resident defendant may be sued in a particular state, it considers (1) state laws, known as “long-arm statutes,” which define when – in the eyes of a particular state - a non-resident of that state can be sued within that state, and (2) the due process requirements of the United States Constitution, as spelled out (albeit sometimes cryptically), in the decisions of the United States Supreme Court.

As the Florida Supreme Court explained in its 1989 decision in Venetian Salami Company v. Parthenais, determination of personal jurisdiction in Florida involves a two-step process. First, the court needs to determine whether the plaintiff’s allegations bring the defendant within the grasp of Florida’s “long-arm” statute, which provides that non-residents who, for example, operate businesses in the state, commit tortious acts in the state, or breach contracts in the state, may be sued in the state.

If the court determines that the defendant falls within the “long arm” statute, the court’s second step is to determine whether sufficient “minimum contacts” exist, between the defendant and the “forum” state (in this case Florida), to satisfy federal due process requirements.

In its landmark 1945 decision in International Shoe Co. v. Washington, the United States Supreme Court ruled that a court may acquire personal jurisdiction over a non-resident, only if the non-resident has “minimum contacts” with the forum state so that forcing the defendant to defend himself in the forum state does not offend “traditional notions of fair play and substantial justice.” In 1958, the Supreme Court modified its ruling, providing, in Hanson v. Denkla, that to find “minimum contacts” with the forum state, the court must first find that the non-resident defendant has “purposely availed himself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.” Then, in 1980, the Court went even further, in World-Wide Volkswagen Corp. v. Woodson, adding a requirement that courts must determine whether the non-resident's “conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there.”

So, even if the plaintiff’s allegations place the defendant squarely within the long arm statute of the forum state, unless the federal due process considerations are met, the forum state will have no personal jurisdiction over the defendant, and the plaintiff will need to sue him someplace else.

But wait, it gets a bit more complicated. There are two types of personal jurisdiction. The first is General Jurisdiction – meaning that the defendant’s activities in the forum state are so substantial, continuous and systematic, that he, she or it is subject to personal jurisdiction in that state, even for causes of action which arise from activities which are unrelated to those activities. In other words, if your business activities in a state are substantial enough, you can be sued there, even if the suit is unrelated to the business you’ve conducted.

The second type of jurisdiction is Specific Jurisdiction – meaning that the defendant has committed a specific act within the forum state, and that the cause of action arises from that specific act. The “minimum contacts” and other related Supreme Court requirements arose in the Specific Jurisdiction context, to insure that defendants were not being “haled into court” in states with which they had little or no contact, and in which they had little or no reasonable expectation of being sued.

The trouble is that terms like “minimum contacts,” “traditional notions of fair play and substantial justice,” “purposely availed,” and “reasonable expectation” are all highly subjective and ill-defined. Add to that the final “reasonableness” requirement, imposed by the Supreme Court in its 1987 decision in Asahi Metal Indus. Co. v. Super. Ct. of Cal., Solano Cnty., addressing such considerations as the burden on the defendant, the interests of the forum state, the plaintiff’s interest in obtaining relief, the interstate judicial system’s interest in obtaining the most efficient resolution of controversies, and the shared interest of the several States in furthering fundamental substantive social policies, and you quickly realize that, for the most part, personal jurisdiction was historically determined on a case-by-case basis.

And then came the Internet.

Next: Are you subject to personal jurisdiction in all 50 states?