Jeff's August 2024 Legal Roundup Newsletter

Jeff’s August 2024 Legal Roundup[i]

Just a couple cases and rules that have caught my eye this month that I wanted to share. This month’s edition includes: Miranda rights, certified conflict on what makes a bank account an account held as a tenancy by the entireties, whether Florida’s 90-day time limit to vacate an arbitration award is preempted by federal law, the result of failing to timely object to appraiser partiality, a refresher on when precedent of DCAs binds a Florida trial court located in another district, the doctrine of finality in appeals, proposed amendments to the Federal Rules of Appellate Procedure and Federal Rules of Evidence, and the setting aside of FTC’s Non-Compete Rule.

Couple of longer blogs in this one because I found the cases very interesting. We cover criminal law, appellate procedure, evidence, arbitration, insurance law, creditor rights, administrative law, and more in this one!

1.?????????? Marotta v. State of Florida, No. 4D2023-0448 (Fla. 4th DCA July 31, 2024).

The Fourth District provides a refresher course on Miranda and holds that the lower court did not abuse its discretion by denying a motion to suppress pre-Miranda inculpatory statements defendant had made to a co-defendant when defendant was placed alone in a room with co-defendant at the police station after co-defendant had confessed and implicated defendant in the crime.

This case stems from a murder, robbery, and burglary. After a co-defendant was arrested and confessed, the co-defendant told the lead detective he could get Marotta to confess if Marotta and the co-defendant were placed in the same room.

The detective placed co-defendant in the same room with Marotta to confirm whether co-defendant was telling the truth. Before placing Marotta in the same room, detective told him the co-defendant wanted to speak with him. Marotta was placed in the room with co-defendant prior to reading Marotta his Miranda rights. During Marotta’s conversation with co-defendant, Marotta made incriminating statements that were recorded.

Marotta maintained that he did not know he was recorded and moved to suppress these statements and a subsequent post-Miranda confession stemming from these statements. In denying his motion, the lower court noted: i) the detective placed Marotta in the room to determine whether the co-defendant’s allegations were truthful; ii) Marotta was not forced to go in to the room with co-defendant; and iii) Marotta’s statements to co-defendant were not obtained in violation of Miranda despite co-defendant’s role as a state agent. Marotta appealed.

In affirming, the Fourth District provided an excellent refresher on the scope of Miranda’s interrogation prong. “The safeguards provided by Miranda apply only if an individual is in custody and subject to interrogation. Where either the custody or interrogation prong is absent, Miranda does not require warnings.” Slip Op. at 5 (quotation omitted). “Interrogation occurs when a state agent asks questions or engages in actions that a reasonable person would conclude are intended to lead to an incriminating response.” Id. (quotation omitted).

The Fourth District explained that “[u]nless police provide specific or deliberate assurances of privacy, suspects generally have no expectation to privacy while in police custody.” Id. The Court explained that “Miranda warnings are not required when the suspect is unaware that he is speaking to a law enforcement officer and gives a voluntary statement.” Id. at 6 (quotation omitted). As such, “Miranda forbids coercion, not mere strategic deception by taking advantage of a suspect’s misplaced trust in one he supposes to be a fellow prisoner.” Id.? The Court further explained that this rationale not only applies to conversations between suspects and undercover officers, but also to conversation between suspects and private citizens who act as agents of law enforcement—such as co-defendant. Id.

Here, Miranda was not offended because: i) Marotta had no reason to believe co-defendant was acting on behalf of the police; and ii) the police did not recruit and direct co-defendant to be a false friend and coerce a confession out of Marotta; instead, co-defendant volunteered to speak with Marotta and Marotta volunteered a confession.

2.?????????? Loumpos v. Bank One, No. 2D2022-3908 (Fla. 2d DCA Aug. 2, 2024).

Certified conflict alert! The Second District holds that common law requirements that a tenancy by the entireties account must be established in accordance with the unities of possession, interest, time, title, survivorship, and marriage have not been displaced by either the Florida Supreme Court’s decision in Beal Bank, SSB v. Almand & Associates, 780 So.2d 45 (Fla. 2001) or § 655.79(1), Florida Statutes. In so holding, the Second District certified conflict with Versace v. Uruven, LLC, 348 So. 3d 610, 613-14 (Fla. 4th DCA 2022) which held that under Beal Bank, a signature card alone—without reference to the unities—determines whether a spousal account is held by the entireties if the account signature card contains an express designation that it is an entireties account.? Put those 1L property law hats on, it’s time to review tenancy by the entireties.

Below, a creditor of Appellant sought to garnish a bank account titled in her name and the name of her husband. The account was originally opened in the husband’s name only in February 2017. In October 2017, husband and Appellant executed new signature cards that stated the account belonged to “Peter Maragoudakis & Linda Maragoudakis, Ten by Enty.” The signature card also had the “Joint Tenants by Entirety” box checked.

In opposing garnishment, Appellant argued the account was not garnishable because it was a tenancy by the entireties account. The creditor opposed arguing that regardless of the signature card, the account was not properly classified as a tenancy by the entireties account because Appellant’s name was not on the account at the time the account was opened by her husband. Thus, the unities of time and title necessary under common law to create a tenancy by the entireties was not present.

Appellant replied arguing that under the Florida Supreme Court’s decision in Beal Bank, if a signature card expressly designates the account as a tenancy by the entireties account, that ends the inquiry as to the form of ownership of the account regardless of whether the unities of time and title exist. Appellant also argued that § 655.79(1) codified Beal Bank and extended its holding to all spousal accounts. Appellant argued that § 655.79(1) provides that all spousal accounts shall be considered tenancies by the entireties unless otherwise specified in writing, regardless of the presence or absence of the common law requirement of unities.

The trial court ruled that the account was subject to garnishment due to the absence of the unities of time and title. Appellant appealed.

In affirming, the Second District found that Appellant misread Beal Bank and that her interpretation of section 655.79(1) was not supported by the statute’s text. The Count noted that under Florida common law, six requirements were necessary to establish a tenancy by the entireties: (1) unity of possession (joint ownership and control); (2) unity of interest (the interests in the account must be identical); (3) unity of title (the interests must have originated in the same instrument); (4) unity of time (the interests must have commenced simultaneously); (5) survivorship; and (6) unity of marriage (the parties must be married at the time the property became titled in their joint names). Slip Op. at 3-4.

However, the Court explained that—although tenancy by the entireties applies to both real and personal property—presumptions under common law as to ownership were treated different. Real property is presumed to be held as a tenancy by the entireties if titled in both spouses names absent express language stating otherwise. Pre-Beal Bank, personal property was only presumed to be held as a tenancy by the entireties where the personal property so expressly designated it was a tenancy by the entireties. For those instances where personal property was jointly titled but did not so expressly state, the court was required to determine the parties intent in creating the joint account.

The Second District explained that Beal Bank receded from this differing standard of proof and intent inquiry. However, the Court explained that Beal Bank did not do away with the unities requirement. Instead, the Court explained that Beal Bank expressly noted that “if the signature card of the account does not expressly disclaim the tenancy by the entireties form of ownership, a presumption arises that a bank account titled in the names of both spouses is held as a tenancy by the entireties as long as the account is established by husband and wife in accordance with the unities of possession, interest, title, and time and with right of survivorship.” Slip Op. at 6 (quoting Beal Bank, at 58-59) (emphasis supplied by Second District).

In rejecting Appellant’s reliance on Versace, the Court explained that Versace’s analysis was flawed because it took the language of Beal Bank out of context. The Second District further explained that adopting Versace’s logic would require the Court to presume that the Florida Supreme Court sub silentio dispensed with established common law, and that such logic does not make sense because the Beal Bank Court expressly stated in its opinion what part of the common law it was receding from.

In rejecting Appellant’s and Versace’s position that § 655.79(1) abrogated the common law, the Second District held that “section 655.79(1) lacks the "clear expression" the case law requires to change the common law. Rather than abrogating the common law, the last sentence of subsection (1) appears to have simply codified Beal Bank.” Slip Op. at 10.

Unless and until the Florida Supreme Court clarifies the issue, practitioners must be aware of what District they are practicing in when seeking garnishment.

3.?????????? Martinez v. Ring-Central, Inc., No. 4D2023-2175 (Fla. 4th DCA Aug. 7, 2024).

The Fourth District holds that the 90-day time limit to move to vacate an arbitration award under the Florida Arbitration Code is not preempted by the Federal Arbitration Act (“FAA”). The case also serves as a reminder of the three types of preemption: i) express, ii) field, and iii) conflict preemption.

Here, the parties entered into an agreement that provided for arbitration in accordance with Florida law. After arbitration, Appellee moved to confirm the award. On the ninety-first day after service of the final arbitration award, Appellant moved to vacate the award. Appellee argued Appellant’s motion was untimely. Appellant argued that Florida’s 90-day time limit was preempted by the FAA. In rejecting that argument and in denying the motion vacate as untimely, the lower court found that the Florida deadline was not preempted by the FAA because it did not frustrate the purposes and objections of the FAA. Appellant appealed.

In affirming, the Fourth District explained that under Florida law, an arbitration clause involving interstate commerce is subject to the Florida Arbitration Code to the extent that the code is not in conflict with the FAA. The Court further explained that because the FAA itself neither contains an express preemption provision nor reflects Congress’s intent to occupy the entire field of arbitration, Florida law is only preempted to the extent that it actually conflicts with the FAA. The test for preemption of a state arbitration provision is whether the state law would conflict with or undermine the goals and policies of the FAA. Slip. Op. at p. 3.

The Fourth District noted that although the FAA has a three-month filing deadline and Florida law has a 90-day deadline, several courts around the country have held that state procedural rules—such as the 90-day filing deadline—are not preempted by the FAA because there is no federal policy favoring arbitration under a certain set of procedural rules. Instead, the federal policy is “‘to ensure the enforceability, according to their terms, of private agreements to arbitrate.’” Slip Op. at p. 3 (quoting Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Standford Junior Univ., 489 U.S. 468, 476 (1989). The Court also explained that the Florida Supreme Court has held that a state statute is not preempted by the FAA where the parties agree that their agreement would be governed by state law. Id. Thus, the Fourth District held that Florida’s “90-day deadline does not stand as an obstacle to the accomplishment of any policy underlying the FAA. A different procedural time limit under Florida law for filing a motion to vacate an arbitration award does not interfere with the federal policy favoring enforcement of arbitration agreements.” Slip Op. at p. 4.

4.?????????? Biscayne Beach Club Condo. Ass'n, Inc. v. Westchester Surplus Lines Ins. Co., No. 23-10467 (11th Cir. Aug. 6, 2024).

The Eleventh Circuit holds that where an appraiser discloses a financial stake in the outcome of the appraisal, and the other party continues the appraisal without objection, that party waives its right to vacate the appraisal award on grounds of partiality.

This case stems from a first party property insurance case between a condo association and the insurer. The parties proceeded to appraisal. During the appraisal process, on the day the panel met for final negotiations and 15 months after his retention, the condo association’s appraiser disclosed that he thought that he had a financial stake in the award because he was retained on a contingency fee. Despite this disclosure, the appraiser made assurances that “no influence or bias” would affect his judgment. At the time of the disclosure, the insurer did not object to the appraiser on grounds of partiality. Ultimately, the appraisal panel appraised the loss at $14 million.

Two months after the appraiser’s disclosure and a month after the award, the insurer moved to reopen the action and to conduct discovery concerning the appraiser’s disclosure and partiality. Subsequently, the insurer moved to vacate the award. The lower court denied the insurer’s motion finding it waived the right to object to any partiality on the appraiser’s part and granted the condo association’s motion to confirm. The insurer appealed.

In affirming the lower court’s decision, the Eleventh Circuit explained that the “‘general rule’ is that a party who knows of an arbitrator’s bias must object to his partiality before the award issues.” Slip Op. at 6. “Absent ‘exceptional circumstances,’ courts do not address partiality claims that could have been, and were not, raised during arbitration proceedings.” Id. The Court further explained that “[w]hen a party discovers an arbitrator’s conflict, it must contest the partiality at that time or else waive the right to object in the future. The party may not sit idle, see whether the award is favorable, and then collaterally attack the proceedings on a ground that it declined to flag sooner.” Thus, by failing to object prior to the award, the insurer waived its right to move to vacate on grounds of partiality.

5.?????????? State of Florida v. Lyons, No. 2D2023-2358 (Fla. 2d DCA Aug. 9, 2024).

The Second District grants the State’s petition for writ of certiorari and quashes an order of the lower court finding that the retroactive application of changes to section 921.141(2)(c)—changing the number of jurors required to recommend the death penalty—constitutes an unconstitutional ex post facto law. In quashing the lower court order’s precluding the application of section 921.141(2)(c), the Second District provides a refresher on when decisions of the appellate court constitute binding precedent.

Below, Defendant argued application of section 921.141(2)(c) constituted an unconstitutional ex post facto law. In agreeing, the lower court explained that although the Second District had not yet rendered an opinion on the issue, the Fifth District found that the changes were merely procedural and thus, retroactive application would not constitute an ex post facto law. However, the lower court did not apply the Fifth District’s holding because it reasoned the opinion was not binding precedent upon the trial court because the Fifth District’s decision was not yet final. The State filed a petition for writ of certiorari seeking review.

In quashing the lower court’s order, the Second District found that the lower court departed from the essential requirements of law in failing to apply the Fifth District’s decision.

First, the Second District explained when a decision of a district court is binding on a trial court located in another district. Where “the only case on point on the district court level is from a district other than the one in which the trial court is located,” it is considered binding on the trial court, and “the trial court [is] required to follow that decision.” Slip Op. at p. 7.

Second, the Court explained that an appellate court decision becomes binding from the date the opinion is issued. The fact that it is not yet final—meaning a party could seek rehearing—does not change the analysis because the decision is considered controlling until altered or overturned. Slip Op. at p. 8.

Here, because binding precedent at the time of the lower court’s decision held that the statute’s retroactive application was not an unconstitutional ex post facto law, the lower court departed from the essential requirements of law in failing to follow precedent.

6.?????????? Gomez v. Tamiami Youth Basketball, Inc., No. 3D23-1094 (Fla. 3d DCA Aug. 14, 2024).

An interesting case out of the Third District concerning whether the denial of a motion to reopen was proper. The case provides a good reminder of how Florida appellate courts must review orders to determine whether the order is “final” and appealable.

In this case, Appellants and a third plaintiff sued multiple defendants in August 2017. In October 2017, the third plaintiff filed a voluntary dismissal against all defendants. Between 2017 and 2019, all defendants were dismissed except Tamiami. On December 16, 2020, the lower court denied Tamiami’s motion for judgment on the pleadings. No record activity occurred from the December 16, 2020, motion until February 22, 2023, when Appellants moved to reopen.

In moving to reopen, Appellants argued that notwithstanding that no docket entry evidenced the dismissal of their claims against Tamiami, the circuit court clerk showed the file as closed. Appellants asked that the case be reopened and set for trial. Although the court initially set the case for trial, it subsequently denied the motion to reopen making three pertinent findings: (1) “Plaintiff filed a Voluntary Dismissal Without Prejudice on October 3, 2017[;]” (2) “Plaintiff filed a Stipulation for Dismissal on June 25, 2019, and an Order of Dismissal was entered on June 27, 2019[;]” and (3) “There was no record activity on the file between December 15, 2020, and January 11, 2023.” The Final Order states: “This matter shall remain CLOSED without prejudice to Plaintiff filing a new action.” Appellants appealed after the denial of their motion for rehearing directed at the order.

In reversing, the Third District first addressed whether the order denying the motion to reopen constituted a final order. In analyzing whether an order is “final”, the District Court determines whether the order constitutes the end of judicial labor on the case. Here, despite the order not expressly dismissing Appellants’ claims against Tamiami or Tamiami’s counterclaims, the order states the case was dismissed “without prejudice” and that the case could only proceed upon the filing of a new action. Thus, the Third District concluded that the order ended the judicial labor of the case and was appealable.

Ultimately, the Court reversed finding that the lower court erred in failing to reopen because claims remained pending. In reversing, the Court also rejected the argument that the lower court’s actions were proper due to the lack of prosecution of the matter between 2020 and 2023. Although a lower court has the authority to dismiss for failure to prosecute, the record did not reflect that Appellants were given notice required under rule 1.420(e) prior to the dismissal. Thus, the Third District held that any dismissal based on 1.420 for failure to prosecute would have violated Appellants’ due process rights.?

7.?????????? Proposed Amendments to Fed. Rules of Appellate Procedure and Federal Rules of Evidence (Aug. 15, 2024).

The Committee on Rules of Practice and Procedure has proposed changes to Federal Rules of Appellate Procedure 29 and 32 and to the Federal Rule of Evidence 801. The comment period is open and runs through February 17, 2025.

The Committee proposes changes to Rule 29 which concerns amicus briefs. The amended rule would state that the purpose of an amicus brief is to bring to the court’s attention relevant matters not already mentioned by the parties which may help the court and that “amicus brief[s] that do[] not serve this purpose—or that [are] redundant with another amicus brief—[are] disfavored.” Rule 29(a)(2).

The amendment would change when briefs are permitted. Currently, amicus curiae other than the United States, its officers, agencies, or a state are permitted to file briefs when either the amicus is given leave of court or when all parties consent. The proposed amendment would eliminate amicus by consent of the parties and would only allow for such briefs when leave of court is given. Rule 29(a)(2).

The amendment also revises what information must be included in a motion for leave to file. Such information includes disclosures of any relationship between amicus and the parties. Rule 29(a)(3).?

Additionally, the amendment would provide a word limit on amicus briefs at 6,500 words and revises the contents of amicus briefs. Rule 29(a)(4),(5).

The proposed amendment to Rule 801(d)(1)(A) would remove the requirement that a prior inconsistent statement be made under penalty of perjury at a trial, hearing, other proceeding, or deposition. The amendment would make all prior inconsistent statements of a testifying witness admissible as a non-hearsay exclusion. The amendment would treat prior inconsistent statements the same as the rule treats prior consistent statements in that the statement does not have to be under oath.

8.?????????? Ryan, LLC v. Federal Trade Comm’n, No. 3:24-CV-00986-E, --F.Supp.3d--, 2024 WL 3879954 (N.D. Tex. Aug. 20, 2024).

On August 20, 2024, in Ryan LLC v. Federal Trade Commission, No. 3:24-CV-00986-E, --F.Supp.3d--, 2024 WL 3879954 (N.D. Tex. Aug. 20, 2024), the United States District Court for the Northern District of Texas struck down FTC’s ban on Non-Compete agreements, the so-called Non-Compete Rule, 16 C.F.R. § 910.1-.6, finding the Rule was promulgated in excess of FTC’s rulemaking authority and was arbitrary and capricious. As a result of the Court’s decision, the Non-Compete Rule shall not be enforced or otherwise take effect on its effective date of September 4, 2024. The decision has nationwide effect under the terms of the Administrative Procedure Act. The Order is appealable to the United States Court of Appeal for the Fifth Circuit.

Background

FTC first published its final Rule on May 7, 2024. Generally speaking, although limited exceptions were created, the Non-Compete Rule would have prohibited non-competition agreements as unfair methods of competition. The Non-Compete Rule—which supersedes state laws that otherwise permit or authorize non-compete agreements, was set to go into effect September 4, 2024.

Ryan and the intervenors filed suit to set aside the Rule arguing several grounds including: i) the FTC lacked statutory authority to issue substantive unfair competition rules such as the Non-Compete Rule; and ii) the Non-Compete Rule is arbitrary and capricious.

In July, the lower court entered an injunction staying the effective date of the Non-Compete Rule and enjoining enforcement against Plaintiffs. The parties subsequently filed cross-motions for summary judgment. For the reasons set forth below, the Northern District granted Ryan’s motion for summary judgment and denied FTC’s cross-motion.?

FTC lacks authority to promulgate substantive rules on unfair methods of competition.

FTC argued that its authority to promulgate the Non-Compete Rule came from sections 5 and 6(g) of the Federal Trade Commission Act. FTC asserted that because non-compete clauses are unfair methods of competition under Section 5 of the FTC Act and Sections 6 and 18 empower the Agency with substantive rulemaking authority, the Agency had the power to create substantive rules regarding unfair methods of competition.

In rejecting this argument, the Northern District analyzed Sections 6 and 18 of the FTC Act. The Court found that Section 6(g) does not expressly provide the agency with substantive rule making powers. Instead, it is designed to empower the FTC to make procedural rules concerning agency organization, procedure, or practice. The Court noted that its reasoning is supported by the fact that there is no statutory penalty associated with violations of rules promulgated under Section 6(g).

As to Section 18, although the FTC Act does expressly provide the agency with substantive rule making power under Section 18, it vests the agency with power to make substantive rules regarding only unfair or deceptive acts or practices, not unfair methods of competition.

Thus, based on the text and structure of the FTC Act, the Court concluded that the FTC lacks substantive rulemaking authority with respect to unfair methods of competition.

The Non-Compete Rule is arbitrary and capricious.

The Court further found that the Non-Compete Rule is arbitrary and capricious for several reasons. First, the Court found that the Rule was unreasonably overbroad and imposed a one-size-fits-all approach. The Court explained that this broad scope was not supported by the record and the FTC offered no evidence why such a sweeping ban was needed targeting all non-competes rather than focusing on harmful non-compete agreements.

Second, the record shows that the FTC failed to consider any less disruptive alternatives. Instead, FTC concluded that case-by-case adjudication of the enforceability of non-competes has an in terrorem effect that would significantly undermine the Commission's objective to address non-competes’ tendency to negatively affect competitive conditions in a final rule. The Court found this reasoning to be an insufficient explanation for the failure to consider less disruptive alternatives.

The Non-Compete Rule is set aside and will not take effect nationwide.

Because the Court found that the Non-Compete Rule was promulgated in excess of FTC’s authority and was arbitrary and capricious, it set aside and enjoined enforcement of the Rule. The Rule will not take effect unless and until an appellate court reverses the Court’s decision. In setting aside the Rule, the Court rejected FTC’s argument that the relief should be limited solely to the named plaintiffs. The Court explained that the Administrative Procedure Act does not contemplate party-specific relief; instead, under the statute, setting aside a regulation has nationwide effect and affects all persons in all judicial districts equally.

The future.

It remains to be seen whether the FTC appeals the decision to the Fifth Circuit and beyond. It also remains to be seen whether Congress closes the loophole in Section 18 of the FTC Act and expressly grants the agency the power to make substantive rules concerning unfair methods of competition. In the meantime, non-competition agreements continue to be enforceable to the same extent they were before the rule’s promulgation. However, employers should continue to follow developments with a keen eye and prepare for potential future regulation.

[i] Jeffrey J. Molinaro, B.C.S., is board certified in appellate practice and chairs the appellate practice group at Fuerst Ittleman David & Joseph. Mr. Molinaro represents clients throughout Florida and the United States on various appellate matters. He can be reached at [email protected] or 305-350-5690.