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Discovery is a powerful tool in litigation which can be used to acquire information necessary to resolve the case.  However, the discovery process is susceptible to abuse.  Parties can request material that is not necessary, simply to increase the costs for their adversary or expose private or embarrassing information.  Whether financial discovery should be ordered is often disputed. A party who is the target of an inappropriate discovery request can block this discovery by seeking a protective order.  A party propounding discovery will often claim that the material is important for the disposition of the case while the party subject to discovery will often argue that it is irrelevant.  Florida employers will benefit from the holding in a recent case before Florida’s Fourth District Court of Appeal, which held that financial discovery may be limited in cases involving the Florida Civil Rights Act (FCRA).  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, employment litigation, trademark litigation, and other legal disputes in federal and state courts and in arbitration.

Discovery in Florida courts is limited to matters which are relevant to the resolution of the business litigation dispute or could lead to evidence concerning the resolution of the dispute.  Fla.R.Civ.P. 1.280 (describing the bounds of discovery).  In business litigation, special rules apply when financial discovery is requested, such as a party’s tax returns.  Florida recognizes “the disclosure of personal financial information may cause irreparable harm to a person forced to disclose it, in a case in which the information is not relevant.” Friedman v. Heart Inst. of Port St. Lucie, 863 So.2d 189 (Fla.2003).  But, “where materials sought by a party ‘would appear to be relevant to the subject matter of the pending action,’ the information is fully discoverable.” Bd. of Trs. of the Internal Improvement Trust Fund v. Am. Educ. Enters., LLC, 99 So.3d 450 (Fla.2012).  “[T]he general rule in Florida is that personal financial information is ordinarily discoverable only in aid of execution after judgment has been entered, [however], where materials sought by a party ‘would appear to be relevant to the subject matter of the pending action,’ the information is fully discoverable.”  Friedman v. Heart Inst. of Port St. Lucie, Inc., 863 So. 2d 189, 194 (Fla. 2003); see Woodward v. Berkery, 714 So.2d 1027 (Fla. 4th DCA 1998). (“[T]he constitutional right of privacy undoubtedly expresses a policy that compelled disclosure through discovery be limited to that which is necessary for a court to determine contested issues[…]”).

The limitations on financial discovery changes when punitive damages are at issue.  Financial discovery may be proper in business litigation where punitive damages are involved because the court or the jury is permitted to considered how much money the defendant has in its punitive damages analysis.  Under an earlier standard, savvy plaintiffs would claim punitive damages without a basis merely to justify the imposition of financial discovery.  The Florida legislature sought to curb this practice when it enacted § 768.72, Florida Statutes.  This rule requires a plaintiff to first request from the court permission to make a punitive damages claim.  If granted, the plaintiff may then seek financial discovery.

There is an exception to the requirement that a plaintiff seek leave before claiming punitive damages.  Employees suing their employer for discrimination under the FCRA need not go through the § 768.72 process before seeking financial discovery because the FCRA is exempt from the requirement.  § 760.11(5), Florida Statutes (“The provisions of ss. 768.72 and 768.73 do not apply to this section. The judgment for the total amount of punitive damages awarded under this section to an aggrieved person shall not exceed $100,000”).

The recent case, Vital Pharmaceuticals, Inc. v. Cheryl Ohel., 4D20-1407, 2020 WL 6053313 (Fla. 4th DCA Oct. 14, 2020), addressed whether the FCRA’s terms provided employee’s carte blanche opportunity to seek financial discovery in discrimination cases.  In that case, the plaintiff employee sought financial discovery on the basis that there was a claim for punitive damages.  The defendant employer asserted that the information was not important because it was a large company and was capable of paying a punitive damages award.  The plaintiff persisted on the basis that the jury should be allowed to consider the financial condition of the employer for punitive damages.  The trial court agreed with the plaintiff employee because punitive damages were at issue.

Florida’s Fourth District Court of Appeal in Vital disagreed and reversed the trial court.  Vital recognized that the procedural safeguards found in § 768.72 (which FCRA claims are exempt from) are not the sole limitation on discovery when punitive damages are at issue.  Vital essentially held that trial courts should not consider requests for financial discovery in FCRA matters the same way as cases where the court found that punitive damages are appropriate under § 768.72.  Instead, the applicable safeguards were those limitations which were in place before § 768.72 was enacted.  Vital explained:

We doubt that the legislature intended to allow broad and intrusive financial worth discovery in every case brought under the FCRA. In the absence of any statutory change, however, trial courts must exercise discretion and consider the circumstances of each case when determining the appropriate scope of discovery. Trial courts should exercise their discretion to prevent overly burdensome discovery, reduce litigation costs, and preserve confidence in the judicial process.

Vital Pharmaceuticals, Inc. v. Cheryl Ohel., 4D20-1407, 2020 WL 6053313 (Fla. 4th DCA Oct. 14, 2020).

Employers defending claims under the FCRA may defend against requests for financial discovery by showing that it is not justified.  Peter Mavrick is a Fort Lauderdale business litigation attorney who also practices business litigation in Miami, Boca Raton, and Palm Beach.  This article does not serve as a substitute for legal advice tailored to a particular situation.

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