Florida Business Litigation Lawyer Blog

As a defense to the enforcement of a contract, a party can claim the affirmative defense that the agreement is “unconscionable.”  The unconscionability defense requires that the party claiming it show that both the substance of the agreement is unreasonably favorable to a party and that the agreement was made procedure by which the parties entered the contract was entered into with an absence of meaningful choice.  The recent case, SHEDDF2-FL3, LLC v. Penthouse S., LLC, 3D19-1100, 2020 WL 6472548 (Fla. 3d DCA Nov. 4, 2020), affirmed this dual requirement.  Peter Mavrick is a Miami business litigation lawyer, and also represents clients in business litigation in Fort Lauderdale, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

“Unconscionability is a common law doctrine that courts have used to prevent the enforcement of contractual provisions that are overreaches by one party to gain ‘an unjust and undeserved advantage which it would be inequitable to permit him to enforce.’”  Basulto v. Hialeah Auto., 141 So. 3d 1145 (Fla. 2014). “Unconscionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.” Basulto v. Hialeah Auto., 141 So. 3d 1145 (Fla. 2014).

In business litigation, a party claiming that its contract is unconscionable has a heavy burden.  When possible, courts will tend to enforce a parties’ agreement in accordance with its terms rather than allow a party to evade his or her contractual duties on the basis that the agreement is not fair.  Conceptually, a party is in the best position to bargain for his or her rights.  Accordingly, a court must find that a contract is both unfair in its substance as well as in the process of how it was agreed to.  Florida Holdings III, LLC v. Duerst ex rel. Duerst, 198 So. 3d 834 (Fla. 2d DCA 2016) (“An agreement […] will be deemed unenforceable on grounds of unconscionability when it is both procedurally and substantively unconscionable”).

The unprecedented COVID-19 pandemic affected many Florida business’ ability to comply with their contractual obligations.  Government quarantine measures as well as changes in economic conditions and consumer demand continue to influence contract compliance.  Mavrick law released two articles at the outset of the pandemic concerning contractual disputes and COVID-19.  The first addressed the contractual defense of force majeure clauses and the second discussed common law defenses of “frustration of purpose” and impossibility.  At that time, there had not been any cases concerning COVID-19 complications in contract law.  Since then, however, several orders have been entered applying the defenses of force majeure and frustration of purpose.  Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also advocates for clients in Palm Beach, Boca Raton, and Miami, Florida. The Mavrick Law Firm represents clients in breach of contract litigation, trade secret litigation, non-compete  agreement litigation, employment litigation, trademark litigation, and other legal disputes in federal and state courts and in arbitration.

“For a breach of contract claim, Florida law requires the plaintiff to plead and establish: (1) the existence of a contract; (2) a material breach of that contract; and (3) damages resulting from the breach.” Vega v. T–Mobile USA, Inc., 564 F.3d 1256 (11th Cir. 2009).  In business litigation, the terms of a contract may sometimes be implied or derived from advertisements and publications.  Salerno v. Florida S. Coll., 8:20-CV-1494-30SPF, 2020 WL 5583522 (M.D. Fla. Sept. 16, 2020) (“It is also generally accepted that the terms and conditions of that contractual relationship may include the publications of the private university”).

Contract law encourages contracting parties to allocate for themselves the risk of certain events which cannot feasibly be mitigated (such as a natural disaster).   This is more easily done when categories of risk are predictable.  For example, leases often describe whether the landlord or the tenant will bear the costs when a natural disaster causes real property to become uninhabitable.  While the COVID-19 pandemic was not entirely unpredictable, it has been more than a hundred years since the United States has experienced a pandemic with a similar scale and scope.  Accordingly, few, if any, contracting parties contemplate how such a risk would be apportioned in their pre-COVID-19 contracts.

The Florida Deceptive and Unfair Trade Practices Act (FDUTPA) provides businesses with a civil cause of action against unscrupulous business practices.  While FDUTPA has limitations, it is applicable in a wide variety of circumstances when a plaintiff can show that a defendant engaged in unfair or deceptive business practices against a consumer.  Peter Mavrick is a Miami business litigation lawyer, and also represents clients in business litigation in Fort Lauderdale, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

FDUTPA, § 501.201, Florida Statutes et seq., is a consumer protection statute which permits consumers to bring civil suits when they are wronged by a company’s unfair or deceptive practices.  While most statutes permit a plaintiff to bring a claim only if that plaintiff was the injured party, FDUTPA permits a plaintiff in business litigation to bring a FDUTPA claim against a defendant company when the defendant company injured customers.  For a plaintiff company to have standing under FDUTPA, it must have been injured by the defendant company’s conduct in addition to consumers.

A non-consumer company’s standing to bring FDUTPA claims against another company was most prominently recognized in Caribbean Cruise Line, Inc. v. Better Bus. Bureau of Palm Beach County, Inc., 169 So. 3d 164 (Fla. 4th DCA 2015).  There, the plaintiff brought suit against the consumer information company, the Better Business Bureau, on allegations that it based its ratings on payments for “accreditation” and kept this information from its customers.  Caribbean held that changes made to the statute permitted non-consumers to bring claims.  Since Caribbean, companies have used FDUTPA to combat unscrupulous business tactics of competitors and other companies whose conduct was harmful to both consumers and other companies.  This was discussed in greater detail in a previous article.

When a party appeals a court order before the conclusion of the case, the appellate court’s decision on the questions of law presented on appeal governs how the trial court decides those questions of law throughout all subsequent stages of the lawsuit. This concept is known as the “law of the case” doctrine. The law of the case can have a substantial impact the ultimate outcome in business litigation, because a party cannot relitigate a legal issue already decided by the appellate court. Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also represents clients in business litigation in Miami, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

One example of this circumstance occurred in the case of Specialty Restaurants Corp. v. Elliott, 924 So. 2d 834 (Fla. 2d DCA 2005). The appellate court affirmed a summary judgment in favor of Specialty Restaurants Corporation (“SRC”) as to all claims brought by Mike Elliott and Mike Elliott & Company (collectively the “Elliotts”). SRC filed a motion seeking appellate attorney’s fees and costs based on its proposal for settlement. A proposal for settlement is a tactic used in business litigation that consists of a written settlement offer which if not accepted can make the opposing party responsible for its attorney’s fees if the monetary outcome of the case is within a specific range of the offer. The Elliotts opposed SRC’s motion for appellate attorney’s fees but did not challenge the legal sufficiency of the proposal for settlement. The appellate court granted SRC’s motion for appellate attorney’s fees based on the unchallenged proposal for settlement.  On remand, the trial court initially determined that SRC was entitled to attorney’s fees and costs for both the trial court and on appeal based on the proposal for settlement. Before the trial court could decide the amount of attorney’s fees and costs to be awarded, the Elliotts filed a motion to reconsider, contending for the first time that the proposal for settlement was legally insufficient.  The trial court entered an order vacating the portion of the order that determined entitlement pursuant to the proposal for settlement. SRC immediately appealed.

The appellate court held that its prior order awarding appellate attorney’s fees found that SRC was entitled to attorney’s fees under the proposal for settlement and that this ruling became the law of the case on the issue of the enforceability of that proposal for settlement. In business litigation, the law of the case doctrine includes not only issues explicitly ruled upon by the court, but also those issues which were implicitly addressed or necessarily considered by the appellate court’s decision. The appellate court held that by awarding fees pursuant to the proposal for settlement, the appellate court necessarily determined the legal sufficiency of the proposal for settlement, and that determination of legal sufficiency was binding on the trial court in any subsequent proceedings. “[W]hatever is once established between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts in the case….” Specialty Restaurants Corp. v. Elliott, supra.

Distinguishing between a franchise relationship and an agency relationship can be difficult in a jury trial. A jury deciding may need to understand the difference between them in business litigation. The two relationships are distinguishable. In a franchise relationship, the franchisor and franchisee are separate businesses. The franchisor licenses its business’ trademark(s) and operating system to a franchisee, in exchange for the franchisee’s agreement to run its business according to the franchisor’s standards and control. In an agency relationship, the agent acts as an extension of the principal as though it were the principal. Florida’s standard jury instruction on agency may be too general to account for contract provisions in a franchise agreement which are intended to protect the franchisor from liability for the negligent acts of the franchisee. Peter Mavrick is a Miami business litigation lawyer, and also represents clients in business litigation in Fort Lauderdale, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

This dilemma occurred in the recent case of Domino’s Pizza, LLC v. Wiederhold, 5D19-2343, 2020 WL 6219551 (Fla. 5th DCA Oct. 23, 2020), where a motorist filed a lawsuit against restaurant franchisor, franchisee, and franchisee employee for injuries sustained when the motorist swerved to attempt to avoid the employee’s vehicle, and lost control of vehicle and eventually resulting in the motorist’s death. Yvonne Wiederhold (Wiederhold), the motorist’s wife and personal representative of his estate, asserted a wrongful death claim. After a jury trial, trial court denied franchisor’s motion for directed verdict and entered judgment on jury’s verdict for the motorist’s estate, and then denied franchisor’s post-trial motions for judgment notwithstanding the verdict or in alternative for new trial. Franchisor immediately appealed.

The appellate court held that Wiederhold offered substantial evidence that supported her position that franchisor was liable because its control over the franchisee, and its employee, went beyond brand maintenance or franchise support. The evidence showed that the franchisor controlled the day-to-day affairs of the franchise in the making and delivery of pizza. Wiederhold presented the Franchise Agreement and Manager’s Reference Guide, as well as witness testimony that the franchisee acted as an agent of franchisor. Franchisor argued that the Franchise agreement specifically referred to the franchisee as an independent contractor and contained exculpatory clauses to avoid legal liability for store operations, with which the franchisee was obligated to be in full compliance. The Franchise Agreement also required the franchisee to carry liability insurance that listed the franchisor as an additional insured. Deliveries could only be performed as authorized in the strict instructions of the Franchise Agreement.

Parties who seek the forensic examination of a personal electronic device (like a computer, tablet or mobile phone) during business litigation need to address the other party’s privacy concerns. A forensic image, otherwise known as a “mirror image” will “replicate bit for bit sector for sector, all allocated and unallocated space, including slack space, on a computer hard drive.” Bennett v. Martin, 186 Ohio App.3d 412, 928 N.E.2d 763 (10th District, 2009). A mirror image “contains all the information in the computer, including embedded, residual, and deleted data.” Bennett v. Martin. Courts balance whether the need for forensic examination is proportional to the needs of the case or to the other party’s privacy concerns. Ramos v. Hopele of Ft. Lauderdale, Ltd. Liab. Co., No. 17-cv-62100, 2018 WL 1383188 (S.D. Fla. 2018). Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also represents clients in business litigation in Miami, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

Electronically stored information (ESI) is discoverable under Rule 34(a) of the Federal Rules of Civil Procedure. Deleted computer files, whether e-mails or otherwise, are likewise discoverable. Bank of Mongolia v. M&P Global Fin. Servs., 258 F.R.D. 514 (S.D. Fla. 2009). “Discovery should ordinarily be allowed under the concept of relevancy unless it is clear that the information sought has no possible bearing on the subject matter of the action.” Devries v. Morgan Stanley & Co. LLC, No. 12-cv-81223, 2015 WL 1623928 (S.D. Fla. 2015). Florida courts have “long held that relevance for discovery purposes is much broader than relevance for trial purposes.” Dunkin’ Donuts, Inc. v. Mary’s Donuts, Inc., No. 01-cv-0393, 2001 WL 34079319 (S.D. Fla. 2001). Parties will often resist conducting a search of computer systems for the information requested during business litigation. The party producing documents, however, has an obligation to search available systems for the information demand. Wynmoor Cmty. Council, Inc. v. QBE Ins. Corp., 280 F.R.D. 681 (S.D. Fla. 2012).

In the case of Wynmoor Cmty. Council, Inc. v. QBE Ins. Corp., plaintiffs served their response to a request for production of documents nearly three months after they were served. Before the responses were served, plaintiffs sent correspondence to Defendant claiming to be “diligently working on the electronic material” and requested more time. Defendant later learned that no effort was made to retrieve any ESI from plaintiffs’ computers. Plaintiffs’ response objected to every request for electronic discovery as unreasonably duplicative as well as expensive and burdensome “taking into account the needs of the case, the amount in controversy, the Plaintiff’s resources as non-profit condominium associations and the lack of value of the electronic discovery in resolving the issues.” The trial court found that the plaintiffs’ response to defendant’s request for production was untimely. Courts will take into account the fact that a party in business litigation took no action to locate the requested ESI until faced with a motion to compel. The trial court held that plaintiffs did not demonstrate good cause for their late response, so their objections were deemed waived. The trial court found that even if plaintiffs’ objections were timely, their objections that the ESI was duplicative and unduly burdensome in light of the needs of the case was unsupported by the evidence presented. Plaintiffs testified that not all of its ESI would necessarily be found in hard copy format. Plaintiffs had no policy in place for generating hard copies of e-mails between employees, or any e-mail policy whatsoever. Because there was evidence of an unusually large amount of document shredding, some of which may have been unauthorized by plaintiffs’ CFO, there was at least the possibility that hard copy evidence germane to the lawsuit may have been destroyed. The evidence, therefore, would not otherwise be available to the Defendant absent access to ESI stored in Plaintiffs’ computer systems.