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    • Partition in Florida: Standing Room Only In Florida, partition is a statutory remedy by which a joint owner of real estate can ask a court to divide the property. See generally Chapter 64, Florida Statutes. Partition can be physical, whereby the subject land itself is divided amongst the joint owners, or it can be via sale and division of the proceeds to the extent a physical partition will result in some type of prejudice to the owners. See §64.071. The partition remedy enables the owners of the subject land to protect their respective interests despite any disagreements as to how the property should be used or whether it should be sold. Florida law also contemplates partition of personalty by the same procedures as are applicable to realty. See §64.091.   Although the remedy is widely recognized throughout the American and English common law and has been codified within the Florida Statutes for nearly 200 years, it is often incorrectly invoked by practitioners and misconstrued by judges. The focus of this topic will be the standing requirement for partition as set forth in §64.031, which states:   “Parties.—The action may be filed by any one or more of several joint tenants, tenants in common, or coparceners, against their cotenants, coparceners, or others interested in the lands to be divided” (emphasis added).   The above provision therefore clearly and expressly limits the partition remedy to three classes of property owners – beginning with joint tenants. A joint tenancy is an interest in property created simultaneously amongst two or more owners. It contemplates each joint tenant having an equal, undivided interest in the subject property. See Siewak v. AmSouth Bank, 2006 WL 3391222 at 5, n.4 (M.D.Fla. Nov. 22, 2006) (“Here, Plaintiffs’ holding of the property as joint tenants gives each Plaintiff a common and undivided right to the entire value of the claim.”) A joint tenancy also creates a “right of survivorship” whereby the death of a joint tenant automatically (that is, without the need for probate) transfers the decedent’s interest to the remaining joint tenant(s). Under Florida law, a joint tenancy requires unity of interest, title, time and possession. See Weed v. Knox, 157 Fla. 896, 900 (1946); see also Beal Bank, SSB v. Almand and Associates, 780 So.2d 45, 53 (Fla.2001) (“…the owners’ interests in the property must be identical, the interests must have originated in the identical conveyance, and the interests must have commenced simultaneously.”)   In contrast, a tenancy in common –while also a form of joint ownership amongst two or more persons - requires only unity of possession. Id. (“Tenancies in common, joint tenancies, and tenancies by the entireties all share the characteristic of unity of possession; however, tenancies in common do not share the other characteristics or unities.”) This means that while a tenancy in common must give each tenant a simultaneous right to possession according to such tenant’s interest in the subject property, each tenant may nevertheless own different percentages and their respective interests can arise separately from unrelated conveyances at different times.   A coparcenary is nearly identical to a tenancy in common, in that it consists of joint ownership of property with each coparcener owning an undivided, transferable interest. Unlike tenancies in common, however, a coparcenary arises only by inheritance from a common ancestor.   As can be discerned from the above definitions, the three classes of ownership eligible for partition under §64.031 all share the “unity of possession” – meaning each ownership interest exists simultaneously and jointly, such that the owners share the concurrent right to possession of the subject property. It therefore seems clear that the remedy is not available to one who has no current possessory interest in the property sought to be partitioned. See, e.g., Garcia-Tunon v. Garcia-Tunon, 472 So.2d 1378, 1379 (Fla. 2d DCA 1985) (“The purpose of [§64.031] is to provide for partition only among those who have joint interests”, emphasis added). If, for example, a litigant is pursuing one or more claims in an effort to gain possession of the property in the first instance (such as a mortgage foreclosure action), partition is unavailable under Florida law. See, e.g., Rountree v. Rountree, 101 So.2d 43, 44 (Fla.1958) (partition action cannot be used to settle a disputed title to property).   Yet, on two separate occasions, in two unrelated cases I was defending before different judges, partition claims were allowed to proceed in favor of plaintiffs who did not have a current possessory interest in the property sought to be partitioned. In both cases, the operative complaint contained clear allegations showing that the plaintiffs were neither joint tenants, tenants in common nor coparceners and, therefore, entirely ineligible to claim partition as per the express terms of §64.031.   The first was before Judge Martin Bidwill in the Seventeenth Judicial Circuit Court in and for Broward County, Florida. Upon hearing my argument in favor of dismissal of the partition claim pursuant to the statute and various Florida precedent holding that the remedy could not be invoked in the absence of a current possessory interest, Judge Bidwill calmly (and rather shockingly) responded: “What’s the harm?” Dear reader, please allow me to unpack this fairly remarkable statement. In the face of binding precedent (including from the Florida Supreme Court) and a controlling statute (§64.031) which collectively and inarguably prohibited the use of the partition remedy in the manner being attempted in a case before him, Judge Bidwill simply did not care. In his view, my client wasn’t suffering any “harm” by the allowance of a patently-defective partition claim. My client, however - after incurring the attorneys’ fees to defend the claim under the threat of losing his house if the claim ultimately succeeded - surely did not share Judge Bidwill’s apathy. In a courtroom like that, there is no democracy. It is a dictatorship.   The second was before Judge Abby Cynamon in the Eleventh Judicial Circuit Court in and for Miami-Dade County, Florida. When I argued my motion to dismiss the partition claim pending against my client in that case, Judge Cynamon played it safe by defaulting to a common legal principle. She heard me argue that the plaintiff lacked standing to seek partition (because the allegations and attachments to his complaint clearly established his lack of a current possessory interest in the property sought to be partitioned), and therefore reasoned that standing is an affirmative defense. As a matter of Florida civil procedure, affirmative defenses typically cannot be asserted via motion and must instead be pleaded in an answer. See Malden v. Chase Home Finance, LLC, 312 So.3d 553, 554-55 (Fla. 1st DCA 2021) (trial court cannot look beyond the complaint’s “four corners” when considering a motion to dismiss, and affirmative defenses typically require proof of matters outside the complaint’s allegations). The lone exception to this rule, as recognized in Malden, is where (as in my case before Judge Cynamon) the defense appears on the face of the complaint – i.e., the plaintiff’s own allegations and/or attachments to the complaint establish the basis for the defense. That’s what I argued to Judge Cynamon. She denied my motion immediately thereafter.   These actual courtroom experiences illustrate a frightening reality for litigants: having the stronger position - being legally “right” - in no way assures victory. Whether due to judicial bias or ignorance, legally-defective rulings result in attorneys’ fees being incurred unnecessarily and court dockets clogged with cases that should have been quickly disposed.   To be sure, there are many competent judges sitting today that would quickly dispose of the partition claims in my cases. If any of you ever get sued by a non-owner of your property for partition, pray that your case ends up before one of them.

      Started by: FPSFPS in: Strategy Discussion

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    • January 31, 2023 at 10:40 pm

      FPSFPS

    • Why Secured Creditors Should Feel Insecure in the Southern District of Florida Case:   In re Coralee Edwards, 603 B.R. 516, Chapter 13 bankruptcy case no. 13-25698, amended opinion entered on May 22, 2019   Court: U.S. Bankruptcy Court for the Southern District of Florida, West Palm Beach Division   Judge: Erik P. Kimball   Edwards is an example of a court reaching a preferred conclusion rather than one dictated by controlling law. It is notable for the extent to which the presiding judge rationalizes his ruling by relying upon a Supreme Court case which is only superficially analogous to the case at bar, but fundamentally distinguishable upon closer examination. In the process, the Bankruptcy Court casually disregards binding Eleventh Circuit precedent that has been disfavored by debtor-friendly judges within Florida’s Southern District Bankruptcy Court for the better part of two decades.   The facts of the case are not uncommon in Chapter 13 bankruptcies: the debtor obtains confirmation of a plan which provides for curing a pre-petition arrearage and maintaining post-petition monthly payments on a claim secured by the debtor’s principal residence, for which the final payment is due under the subject note subsequent to the debtor’s final plan payment. For any number of reasons, the confirmed plan does not accurately provide for the allowed secured claim. In Edwards, the specific issue was an inaccurate post-petition monthly payment amount. The debtor sought and was granted a post-confirmation modification to her Chapter 13 plan which contemplated an aggregate of post-petition monthly mortgage payments to her lender, Wells Fargo, in an amount approximately $5,400 less than the sum required by the lender’s allowed claim (allegedly due to a “scrivener’s error” in the modified plan as to the payment amount). As a result, the debtor emerged from her Chapter 13 proceeding after completing all payments required by the confirmed and modified plan with a post-petition arrearage owed on her mortgage (there was no dispute, however, that the pre-petition arrearage had been cured).   Insisting that the orders confirming her plan and allowing its subsequent modification bound Wells Fargo to the monthly payment amounts actually paid through the bankruptcy, the debtor sought a ruling that any discrepancy with the lender’s claim was discharged and unrecoverable. Wells Fargo opposed this relief, contending that relevant provisions of the Bankruptcy Code prohibit Chapter 13 modification of claims secured by the debtor’s principal residence. It therefore argued that the finality of the orders approving the debtor’s modified confirmed plan could not affect the amount required to be paid pursuant to the terms of the subject loan documents, and such remained recoverable notwithstanding the debtor’s bankruptcy discharge.   The secured creditor’s position in Edwards was hardly controversial; the United States Court of Appeals for the Eleventh Circuit considered a case with a nearly identical set of facts approximately sixteen years previously. See In re Bateman, 331 F.3d 821 (11th Cir. 2003), which was the authority relied upon by Wells Fargo in Edwards. There, the confirmed Chapter 13 plan provided for a pre-petition arrearage on the debtor’s homestead mortgage in an amount nearly $30,000 less than the figure stated in the creditor’s allowed claim. As in Edwards, the creditor neither objected to its treatment via the confirmed plan, nor did the debtor object to the mortgage claim before the confirmation order was entered. Instead, the debtor objected to the claim post-confirmation upon being alerted to the discrepancy by the Chapter 13 trustee. Judge Cristol of the Southern District of Florida Bankruptcy Court granted the objection, determining that the mortgagee, Universal American Mortgage Company, was bound by the confirmation order and could not seek to collect the resulting shortfall after the bankruptcy.   Universal appealed. After the Bankruptcy Court’s ruling was initially affirmed by the District Court, the Eleventh Circuit reversed. The Circuit Court’s analysis focused upon the tension between the finality of the order confirming the debtor’s plan and the special treatment afforded creditors secured by claims against the debtor’s principal residence under Chapter 13, as specifically provided via §1322(b)(2). To resolve this tension, the Eleventh Circuit charted a middle path. It recognized that the confirmation order was binding pursuant to §1327(a) (“[t]he provisions of a confirmed plan bind the debtor and each creditor, whether or not the claim of such creditor is provided for by the plan, and whether or not such creditor has objected to, has accepted, or has rejected the plan.”)   It also recognized that §1322(b)(2) allows a Chapter 13 plan to modify the rights of holders of secured claims, other than claims secured only by a security interest in real property that is the debtor’s principal residence. Indeed, the Circuit Court expressly noted that its decision was made within the specific context of “the special treatment afforded mortgage lenders by §1322(b)(2)” and therefore no opinion was expressed “as to the result with regard to a general secured creditor.” Accordingly, the Eleventh Circuit’s ruling in Bateman turned upon whether the mortgage lender’s claim – secured by the debtor’s principal residence – survived the confirmation of a plan which provided a lesser amount for the pre-petition arrearage.   Citing to the U.S. Supreme Court’s opinion in Nobelman v. Am. Savs. Bank, 508 U.S. 324, 113 S.Ct. 2106, 124 L.Ed.2d 228 (1993), the Bateman Court acknowledged the legislative history underlying §1322(b)(2) which contemplated encouragement of lenders to deploy capital within the residential mortgage market. As a result, the “anti-modification” provision (as §1322(b)(2) is otherwise known) prohibits “any modification of a homestead mortgagee’s rights in the Chapter 13 plan.” The Eleventh Circuit thereafter looked to its own precedent holding that secured creditors in general (even those holding claims secured by property other than the debtor’s principal residence) need not file a proof of claim in a bankruptcy proceeding to the extent the creditor can always rely upon its lien to recover the amount owed by the debtor. See, e.g., In re Folendore, 862 F.2d 1537, 1539 (11th Cir.1989) [reversed on other grounds as discussed in In re Waits, 793 F.3d 1267 (11th Cir.2015)]. In other words, the Bateman Court recognized the venerable principle that unchallenged liens pass through bankruptcy unaffected by anything other than payment of the debt.   Rejecting the Bankruptcy Court’s conclusion that "[a]s a matter of substance the Chapter 13 plan provided an objection to the claim which placed a duty on the mortgagee to pursue the matter if the $21,600.00 was not acceptable", the Circuit Court observed that Universal’s claim was “deemed allowed” by virtue of Bateman’s failure to object to the claim before her plan was confirmed. Merely obtaining confirmation of a plan reflecting a lower pre-petition arrearage owed to the lender could not, therefore, “constitute a constructive objection” by the debtor to the mortgagee’s claim.   Nevertheless, the Eleventh Circuit acknowledged that the order confirming Bateman’s plan was final and binding since Universal had notice of its terms and failed to object prior to confirmation. Hence, the middle path: although the lender was bound by the terms of the confirmed plan to accept a lower amount for the pre-petition arrearage than was listed in its allowed claim, the Circuit Court determined that §1322(b)(2) required any shortfall to survive the completion of the plan and Universal would thereafter be permitted to seek its collection (against both the collateral as well as Bateman personally) notwithstanding the debtor’s successful completion of her bankruptcy.   Apart from Bateman’s focus upon the mortgagee’s pre-petition arrearage claim, the facts of Edwards (involving instead a discrepancy with the post-petition monthly payment amount owed to the homestead mortgagee) are otherwise indistinguishable. Both cases involved confirmed Chapter 13 plans that paid homestead secured creditors less than the amounts required by their allowed claims. So why did Judge Kimball in Edwards rule against Wells Fargo and determine that, contrary to Bateman (and despite §1322(b)(2)), the lender was bound to forfeit the shortfall between its allowed claim and the lower amount paid to it through the confirmed plan?   According to Judge Kimball, a U.S. Supreme Court opinion relied upon by Ms. Edwards – United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 130 S.Ct. 1367, 176 L.Ed.2d 158 (2010) – overruled Bateman. More specifically, Judge Kimball opined in Edwards that “the Eleventh Circuit’s determination in Bateman that the anti-modification provision of section 1322(b)(2) prevails over the binding effect of a confirmed plan under section 1327(a) is not consistent with the Supreme Court’s subsequent decision in Espinosa.” Thus, a brief examination of Espinosa is required to illustrate precisely why Judge Kimball’s conclusion in this regard is not correct.   Rather than a claim secured by the debtor’s principal residence, Espinosa pertained instead to an entirely unsecured debt for a student loan. As in Bateman (and Edwards), however, the lender in Espinosa, United Student Aid Funds, Inc., received an amount under the debtor’s confirmed Chapter 13 plan which was less than that stated in the lender’s allowed claim. The discrepancy arose from the debtor’s treatment of United’s claim in the plan, which proposed to repay only an amount representing the unpaid principal balance of the loan while seeking to discharge the remaining balance for accrued interest. This resulted in a shortfall of some $4,500 as compared to the lender’s allowed - yet unsecured - claim. And again as was the case in both Bateman and Edwards, Mr. Espinosa did not object to his lender’s claim (nor did United object to its lower treatment in the plan) before his plan was confirmed. Approximately six years after Mr. Espinosa successfully completed his Chapter 13 plan, he filed a motion with the Bankruptcy Court to preclude his student lender from proceeding with collection efforts for the outstanding accrued interest that was not paid through the bankruptcy. His lender filed a cross-motion asking the Bankruptcy Court to set aside as void the confirmation order which incorrectly provided for its claim. After the Bankruptcy Court ruled in Espinosa’s favor, that ruling was ultimately upheld by the Ninth Circuit Court of Appeals before the lender sought, and was granted, certiorari review by the Supreme Court.   Of course, the Supreme Court in Espinosa had no occasion to consider the effect of §1322(b)(2) because United’s claim (unlike those at issue in Bateman and Edwards) was not secured by the debtor’s principal residence. Instead, United relied upon different provisions - §§523(a)(8) and 1328(a)(2) - to argue that the Bankruptcy Code prohibits debtors from discharging unpaid debts for student loans in the absence of an adversary proceeding filed by the debtor, in which the debtor must prove the existence of undue hardship if the student loan debt were excepted from discharge. Thus, United maintained that the accrued interest component of its allowed unsecured claim survived Mr. Espinosa’s discharge because the required adversary proceeding was never filed. It further contended that the order confirming Mr. Espinosa’s plan with an insufficient amount paid towards its allowed claim was “void”, and therefore of no binding effect, as a result.   Notably, the Espinosa Court considered these arguments through the specific lens of Federal Rule of Civil Procedure 60(b)(4) which permits a final order (such as the confirmation order challenged by Mr. Espinosa’s student lender) to be set aside if it was “void” upon entry. The Court emphasized this point via footnote 8 of the opinion: “Because United brought this action on a motion for relief from judgment under Rule 60(b)(4), our holding is confined to that provision. We express no view on the terms upon which other provisions of the Bankruptcy Rules may entitle a debtor or creditor to postjudgment relief.” This is yet another distinction not shared by Bateman or Edwards – the secured creditors in those cases did not directly challenge the pertinent confirmation order(s) via Rule 60(b)(4), or otherwise (although the lender in Bateman did unsuccessfully seek dismissal of the bankruptcy), and instead challenged its finality only as it pertained to the incorrect amounts for the debtor’s homestead secured debts.   The Espinosa Court, therefore, undertook a very limited analysis to determine whether the challenged confirmation order in the case before it qualified as “void” so as to trigger Rule 60(b)(4) as a means of collateral attack. The Court defined such a void order as one “so affected by a fundamental infirmity that the infirmity may be raised even after the judgment becomes final.” It thereafter specified that only two categories of fundamentally infirm orders qualify as “void” sufficient for Rule 60(b)(4) purposes: a judgment afflicted by jurisdictional error; or one entered in violation of a party’s due process rights to notice and an opportunity to be heard.   The Supreme Court had little difficulty in concluding that Mr. Espinosa’s confirmation order fell within neither category, and consequently could not qualify as that type of final order subject to challenge by Rule 60(b)(4). As to the first, Mr. Espinosa’s student lender wisely conceded that the Bankruptcy Court had sufficient jurisdiction to enter the confirmation order. Although the confirmed plan contemplated discharging the debtor’s student loan interest in the absence of the statutorily-required adversary proceeding and finding of undue hardship, the Espinosa Court characterized these prerequisites as procedural rather than jurisdictional. Because mere legal error does not render a judgment “void” for Rule 60(b)(4) purposes, this procedural infirmity did not affect the finality of the confirmation order.   And as for whether Mr. Espinosa’s student lender received adequate notice and an opportunity to be heard regarding the disparate treatment of its claim within the confirmed plan, the Supreme Court unhesitatingly concluded that the lender’s due process rights were upheld. The Espinosa Court observed that due process requires only that notice which is “reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” Upon recognition that Mr. Espinosa’s lender received actual notice of the proposed plan before it was confirmed and nevertheless failed to object to (or appeal) the confirmation order, the Supreme Court found that the lender received due process even in the absence of the statutorily-required adversary proceeding. Accordingly, the Espinosa Court concluded that under these facts United failed to establish a cognizable basis to overturn the confirmation order via Rule 60(b)(4).   Ultimately, therefore, Mr. Espinosa’s student lender remained bound by the confirmation order and could no longer pursue recovery of the accrued interest component of its claim as a result of the debtor’s discharge. Distilled to its essence, the Espinosa decision is really quite limited, however. All that can be gleaned from the decision is that a confirmation order is not “void” for Rule 60(b)(4) purposes merely because its entry is marred by procedural error – so long as affected creditors receive sufficient notice. So why did Judge Kimball determine in Edwards that Espinosa overruled Bateman? Ironically, the ultimate holding in Espinosa appears to be perfectly consistent with Bateman – in both decisions, the subject confirmation order was upheld as valid and binding, despite being afflicted with procedural error, because the affected creditors received adequate notice of the plan and failed to object to, or appeal, the confirmation order.   In Espinosa, this resulted in the lender’s shortfall being discharged and unrecoverable. In Bateman, the lender’s claim survived confirmation of a plan paying a significantly lower amount, and the lender was permitted to pursue the shortfall after all plan payments were completed. Hence, Judge Kimball in Edwards appears to have extrapolated from Espinosa that there can never be any types of allowed claims which override contrary provisions in a Chapter 13 plan once that plan has been confirmed. However, a careful review of Espinosa reveals the precise opposite. Specifically, the Supreme Court expressly recognized that its holding was premised upon the inherent dischargeability of student loan debt as per the pertinent provisions of the Bankruptcy Code. See footnote 10 of the Espinosa opinion:   “Sections 1328(a) and 523(a)(8) provide that student loan debt is dischargeable in a Chapter 13 proceeding if a court makes a finding of undue hardship. In contrast, other provisions in Chapter 13 provide that certain other debts are not dischargeable under any circumstances. See, e.g., §§523(a)(1)(B), (C) (specified tax debts); §523(a)(5) (domestic support obligations); §523(a)(9) (debts “caused by” the debtor’s unlawful operation of a vehicle while intoxicated). We express no view on the conditions under which an order confirming the discharge of one of these types of debt could be set aside as void.” (latter emphasis added)   In other words, the Supreme Court was comfortable in finding that Mr. Espinosa’s confirmation order bound his student lender to an amount less than the lender’s allowed claim primarily because the Bankruptcy Code does in fact contemplate the dischargeability of student loan debt (albeit only after the procedural – rather than jurisdictional – requirement of an adversary proceeding has been successfully pursued by the debtor). The Court therefore limited its holding via footnote 10 and made clear that the same conclusion would not necessarily follow with respect to other types of debts which are categorically non-dischargeable, such as certain tax debts or domestic support obligations. Thus, no generalizations as to the primacy of confirmation orders over allowed claims can be made from Espinosa without reference to the specific type of debt sought to be discharged.   Indeed, the Espinosa Court’s focus upon the dischargeability of the student loan debt under consideration raises another distinction not shared by Bateman (or, for that matter, Edwards): a bankruptcy discharge pertains only to personal, rather than in rem, liability. See Johnson v. Home State Bank, 501 U.S. 78, 84 (1991) ("Rather, a bankruptcy discharge extinguishes only one mode of enforcing a claim — namely, an action against the debtor in personam — while leaving intact another — namely, an action against the debtor in rem.") The significance of this factor cannot be overstated: even if a Chapter 13 discharge eliminates a secured creditor’s ability to pursue a judgment against the debtor individually, it has no effect upon that creditor’s entitlement to pursue recovery of the collateral securing the debt to the extent the amount owed is not satisfied through the Chapter 13 plan. Hence the fundamental inapplicability of Espinosa’s holding to secured claims; the Supreme Court in that case was confronted only with the debtor’s discharge of his personal liability for a student loan. But since a Chapter 13 discharge does nothing to eliminate in rem liability based upon a secured claim, Judge Kimball’s reliance upon Espinosa in Edwards is severely misplaced. See, e.g., Dewsnup v. Timm, 502 U.S. 410, 419 (1992), wherein the Supreme Court recounts more than a century of its precedent in which creditors’ liens were consistently found to survive bankruptcy discharges without reduction for anything other than payment of the underlying debt. None of this precedent is even referenced within Espinosa, and it is therefore difficult to conclude that the Supreme Court had any intention to silently overrule a basic tenet of American bankruptcy jurisprudence: liens pass through bankruptcy unaffected.   Nor is it any easier to conclude that Espinosa similarly forecloses a homestead mortgagee’s right to pursue the debtor individually for any deficiency resulting after the collateral’s sale. The Espinosa Court itself approvingly cited to the Nobelman decision (relied upon by the Eleventh Circuit in Bateman, and cited above) in which the Supreme Court expressly found that a creditor secured by the debtor’s principal residence enjoys the right to pursue the debtor individually to the extent sale of the collateral is insufficient to satisfy the debt, and that such right is immune to modification per §1322(b)(2). The Espinosa Court certainly gave no indication it was overruling Nobelman to that extent, and it would therefore seem that debts protected from Chapter 13 modification via §1322(b)(2) are among those types – referenced in Espinosa at footnote 10, quoted above – that are not dischargeable under any circumstances, and for which “no view” was expressed. Absent the Supreme Court’s express acknowledgement that a homestead mortgage can be modified by a confirmed Chapter 13 plan, despite §1322(b)(2), Judge Kimball’s conclusion that Espinosa so held appears untenable.   Perhaps the most troubling aspect of the Edwards decision is that it was rendered shortly after the Eleventh Circuit itself acknowledged the foregoing points, while simultaneously affirming the continuing validity of Bateman, long after the Supreme Court decided Espinosa. See Dukes v. Suncoast Credit Union (In re Dukes), 909 F.3d 1306 (11th Cir.2018). Approximately six months prior to Judge Kimball deciding Edwards, the Eleventh Circuit in Dukes considered whether a Chapter 13 plan which merely references the debtor’s intention to directly pay her homestead mortgagee outside of the plan “provides for” that secured debt for purposes of discharging the debtor’s personal liability upon completion of the bankruptcy. The Dukes Court therefore undertook an analysis of the effect of the debtor’s Chapter 13 discharge upon debt secured by her principal residence. It initially noted that even if the debtor’s mortgage debt was “provided for” within her repayment plan, Chapter 13’s discharge provision - §1328(a)(1) – specifically excepts so-called “long-term” debts (those with maturity dates occurring beyond the date of the final plan payment) from the scope of the discharge: “So, once the plan terminates, the debtor must continue to maintain her long-term obligations even though her short-term obligations have been discharged.” In other words, long-term debts treated within a Chapter 13 plan (such as the debtor’s homestead mortgage at issue in Edwards) remain enforceable against the debtor even after the plan has been successfully completed and a discharge issued.   Nevertheless, Judge Kimball in Edwards reached an entirely different result. Via footnote 8 of the opinion, he boldly suggests (without any semblance of supporting authority) that the portion of the debtor’s mortgage debt coming due over the life of her plan is considered “short-term” debt included within the scope of the debtor’s discharge: “So-called "long-term" mortgage obligations that arose after the Debtor finished making payments under the 6MP are not affected by the discharge or this order. See section 1328(a)(1). Only the Debtor's "short-term" mortgage obligations, those obligations covered by the life of the 6MP, including the delinquency of $ 4,810.37, are discharged.” Judge Kimball therefore had no trouble concluding that the shortfall resulting from Ms. Edwards’ confirmed and modified plan paying too little towards her post-petition mortgage payments was discharged, merely because those payments came due during the pendency of the plan.   However, the operative Bankruptcy Code provision - §1322(b)(5) – clearly defines “long-term” obligations as those for which “the last payment is due after the date on which the final payment under the plan is due”. There is no bifurcation of such debt into “short-term” and “long-term” components for purposes of inclusion within the scope of the debtor’s discharge; if the debt in question matures beyond the date upon which the final plan payment is due, it is excepted from the debtor’s discharge in its entirety and without regard for that portion of the debt paid through, or coming due during the life of, the completed plan. The Eleventh Circuit gave no indication in Dukes that any portion of long-term debt is dischargeable, and Judge Kimball’s subsequent, contrary ruling appears irreconcilable as a result.   So too does that portion of Edwards which concludes that a Chapter 13 confirmation order can modify an allowed claim secured by the debtor’s principal residence, so long as the creditor thereby secured receives proper notice of the plan and fails to object prior to confirmation. Directly to the contrary, the Eleventh Circuit in Dukes unequivocally held that §1322(b)(2) insulates the homestead mortgagee’s claim from any modification proposed via the confirmed plan: “The antimodification provision prohibits a plan from modifying ‘the rights of [a] holder[ ] of ... a claim secured only by a security interest in real property that is the debtor’s principal residence.’ Clearly, a discharge of a debtor’s obligations under his residential mortgage would dramatically modify the rights of the holder of that mortgage.”   Citing to the Supreme Court’s Nobelman decision, the Dukes Court emphasized that §1322(b)(2) prohibited the debtor’s attempt to avoid personal liability for a deficiency judgment as an impermissible modification of her mortgage lender’s rights:   “A creditor’s rights ‘protected from modification by § 1322(b)(2)’ are the rights under the original loan instruments as defined by state law. Nobelman , 508 U.S. at 329–30, 113 S.Ct. 2106. Under Florida law (the law governing the Credit Union’s mortgage), the Credit Union has the right to seek a deficiency judgment against Debtor. See Fla. Stat. § 702.06 ; see also Royal Palm Corp. Ctr. Ass'n v. PNC Bank, NA , 89 So.3d 923, 929–33 (Fla. 4th DCA 2012) (discussing a mortgagee’s rights under Florida law to both foreclose on the property and obtain a deficiency judgment against the mortgagor). By terminating the Credit Union’s right to obtain an in personam judgment against the debtor, discharge undoubtedly modifies the Credit Union’s rights and runs afoul of the antimodification provision. See Universal Am. Mortg. Co. v. Bateman (In re Bateman) , 331 F.3d 821, 822 (11th Cir. 2003) (holding that a mortgagee’s secured claim for arrearage ‘survives ... to the extent it is not satisfied in full by payments under the plan, or otherwise satisfied under the terms [of] § 1325(a)(5), because to permit otherwise would deny the effect of 11 U.S.C. § 1322(b)(2)’).” (emphasis added)   Why would the Eleventh Circuit unqualifiedly cite to Bateman in Dukes if the former had been overruled by the Supreme Court in Espinosa approximately eight years prior? More importantly, why would Judge Kimball conclude in Edwards that Bateman was overruled by Espinosa approximately six months after the Eleventh Circuit reaffirmed Bateman’s continuing validity in Dukes? Having had the opportunity to personally appear before him on behalf of a creditor in a contested proceeding many years ago, I know that Judge Kimball is highly intelligent with a firm grasp of bankruptcy law. He would not have decided Edwards without researching the issues, and that research surely would have revealed the existence of Dukes. If I am correct in this regard, it leads to a seemingly inescapable conclusion: the result in Edwards was a product of Judge Kimball’s bias rather than a correct application of controlling law.   This is a problem I have experienced firsthand throughout the Southern District of Florida Bankruptcy Court since Bateman was decided nearly twenty years ago; it is, unfortunately, not limited to Judge Kimball. In fact I appeared before Judge Kimball’s predecessor on behalf of a homestead mortgagee in order to oppose a motion nearly identical to that litigated in Edwards. Just as in Edwards, I argued that Bateman precluded the debtor’s attempt to discharge any portion of his mortgage debt not provided for within his confirmed Chapter 13 plan. Just as in Edwards, the court disregarded Bateman (the judge claimed, without elaboration, that it “didn’t apply” in our case) and ruled that the shortfall between what was paid through the plan and what was actually owed to the homestead mortgagee was discharged and unrecoverable (neither against the collateral nor the debtor individually). As a young attorney, I was shocked that a court would so blatantly ignore binding precedent. In retrospect, it was an early indication that the practice of law is not always consistent with the ideals taught in law school.   With many more years of experience amassed since then, I now realize how frail and imperfect our judicial system actually is. It is entirely dependent upon the competence of presiding judges. Too often – and as is precisely illustrated by the Edwards decision – judges allow their personal bias to control the outcome. That represents a total systemic failure because it defeats the very purpose of the exercise. All litigants, regardless of whether they are impecunious individuals or wealthy corporations, are entitled to an impartial tribunal through which their disputes can be resolved pursuant to controlling law.   So long as decisions like Edwards continue to prevail, however, the law within the Southern District of Florida will instead remain out of control.

      Started by: FPSFPS in: Litigation Discussion

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    • June 19, 2022 at 8:39 am

      FPSFPS

    • Gil v Winn-Dixie (Title III website claim) – The End of an Er[ror] Case:   Gil v. Winn-Dixie Stores, Inc., No. 17-13467 issued April 7, 2021 (full text of the opinion here) Court: United States Court of Appeals for the Eleventh Circuit Circuit Judges: Elizabeth Branch, Danny Reeves (United States District Chief Judge for the Eastern District of Kentucky, sitting by designation) (majority); Jill Pryor (dissent) Lower Court: U.S. District Court for the Southern District of Florida, case no. 1:16-cv-23020-RNS (full text of the opinion here) Trial Judge: Robert N. Scola Following my recent post on general defensive strategies under Title III of the Americans With Disabilities Act (“ADA” or the “Act”), 42 U.S.C. ch. 126 §12181 et seq., the U.S. Court of Appeals for the Eleventh Circuit dealt a major blow to Title III plaintiffs hoping to capitalize upon the increasing prevalence of litigation over alleged website barriers. The Gil decision vacated the District Court’s judgment entered in favor of the Plaintiff as a result of Winn-Dixie’s website lacking compatibility with screen reader software. I have mixed feelings. Having successfully defeated several Title III website claims, I applaud the Gil majority’s clear intent to limit the scope of the Act’s reach to physical places. This will effectively reduce the amount of claims filed in bad faith and should eliminate (at least within the Eleventh Circuit) what has become a racket amongst many plaintiffs’ attorneys. However, Judge Pryor authored a compelling dissenting opinion which relies upon statutory interpretation to convincingly argue the Act’s applicability to websites connected to physical places of public accommodation. Below I will attempt to demonstrate the strengths and weaknesses of both sides of the opinion, while ultimately concluding that the majority got it right for the wrong reason. The Plaintiff, who is legally blind, successfully argued at the trial level that Winn-Dixie violated Title III – applicable to “places of public accommodation” – because Mr. Gil could not avail himself of particular features offered through the grocery chain’s website. Specifically, Gil was unable to refill prescriptions online or to link digital coupons to his rewards card because Winn-Dixie’s website was largely incompatible with screen reader software. Since a website must be developed with screen reader compatibility in mind for the software to successfully verbalize text on each page, Gil’s software could not read most of the text on Winn-Dixie’s website and he was thereby prevented from using the online prescription refill or digital coupon functionality. Notably, there was no dispute at trial that Gil had previously shopped at Winn-Dixie’s physical locations for more than a decade; he claimed to have decided against further patronizing the grocery chain once he discovered that he could not access its website. Judge Scola acknowledged that courts were split on whether the ADA’s scope is limited only to physical places. He ultimately found, however, that Winn-Dixie’s website was “heavily integrated with” and “operates as a gateway to” the grocery chain’s physical stores. He therefore declined to decide whether the website itself could be considered a “place of public accommodation” subject to Title III. Based upon then-prevailing Ninth and Eleventh Circuit Title III law (including Rendon v. Valleycrest Prods., Inc., 294 F.3d 1279 (11th Cir. 2002)), the District Court instead concluded that the Act applied to intangible barriers connected to tangible public accommodations (commonly referred to as the “nexus” theory: if an intangible barrier –such as a website incompatible with screen reader software – shares a sufficient nexus with a physical place of public accommodation, a Title III violation exists). Reasoning that the online prescription refill and digital coupon functionality of the website were merely extensions of services, privileges or advantages offered through Winn-Dixie’s stores, Judge Scola determined that the grocery chain had discriminated against Gil by failing to make its website compatible with screen reader software. The District Court thus entered an injunction requiring Winn-Dixie to update and maintain its website in a compliant fashion, which the grocery chain timely appealed. After an agonizing, nearly four-year wait (Winn-Dixie filed its appeal back in 2017), the Eleventh Circuit finally vacated the trial court’s judgment in favor of Gil in an opinion released on April 7, 2021. The majority began its merits analysis by quickly disposing of the notion that a website itself could be considered a place of public accommodation subject to Title III. Finding the pertinent statutory language “unambiguous and clear”, the Circuit Court concluded that Title III covers only those public accommodations which are “actual, physical places.” The majority then turned to the more subtle issue as to whether Winn-Dixie’s website creates intangible barriers actionable under the ADA as a result of the connection between any such barriers and those services, privileges or accommodations on offer at the grocery chain’s physical locations. It began by acknowledging the Eleventh Circuit’s prior decision in Rendon v. Valleycrest Prods., Inc., relied upon by the District Court, wherein Title III was determined to prohibit an intangible barrier (a telephone hotline for contestants which was inaccessible to disabled persons) that blocked access to a physical place of public accommodation (a televised, in-studio game show – “Who Wants to be a Millionaire?”) However, the Gil majority identified a “fundamental level” at which Winn-Dixie’s “limited use website” differed from the contestant hotline in Rendon: whereas the telephone hotline was the “sole access point” for contestants to vie for a spot on the game show, Winn-Dixie’s website did not allow online purchases and instead only offered functionality (i.e., prescription refills and digital coupons) which required customers to ultimately transact business within the physical store locations. Because disabled customers such as Gil were still able to refill prescriptions and use paper coupons inside of Winn-Dixie’s physical locations, the Gil majority concluded that the website could not be considered an intangible “barrier” to a place of public accommodation. By so concluding, the majority expressly rejected the “nexus” theory relied upon by the District Court and argued by Gil to have been adopted in Rendon. Reasoning that “no basis” for the theory existed in the text of the statute or Eleventh Circuit precedent, the majority instead determined that the ADA only required public accommodations to take those steps deemed “necessary” to ensure an experience for the disabled that was comparable to that of people without disabilities. Stated differently, the fact that the functionality of Winn-Dixie’s website enhanced and augmented a customer’s patronage of the grocery chain’s physical stores (i.e., by expediting prescription refills and digital coupon redemption) was not enough to establish a Title III violation; only those intangible barriers entirely precluding a particular service to the disabled (such as the contestant telephone hotline in Rendon – the “sole access point” to the in-studio game show) will trigger liability. Gil  represents a seismic shift in Eleventh Circuit Title III jurisprudence. Website cases now face a new hurdle: the need to demonstrate that the benefit or privilege offered through the site is unavailable by other means. Moreover, collateral benefits like increased convenience (linking digital coupons to a rewards card) or time savings (online prescription refills) don’t count; only where the underlying benefit or privilege itself (coupons or prescriptions) is completely precluded will an intangible barrier actionable under Title III be found. Whereas most contemporary commercial websites which are connected to physical places of public accommodation (such as grocery stores, restaurants or hotels) offer informational and convenience advantages without being the “sole access point” for the benefits or privileges on offer, the Gil decision itself will likely present an impenetrable barrier for would-be Title III website plaintiffs. The dissent, however, holds nothing back as it attempts to, and largely succeeds in, dismantling the majority’s reasoning. It begins with an examination of the relevant statutory provision,42 U.S.C. §12182(b)(2)(a)(iii), which defines “discrimination” as including: “a failure to take such steps as may be necessary to ensure that no individual with a disability is excluded, denied services, segregated or otherwise treated differently than other individuals because of the absence of auxiliary aids and services, unless the entity can demonstrate that taking such steps would fundamentally alter the nature of the good, service, facility, privilege, advantage, or accommodation being offered or would result in an undue burden” (emphasis added) With due regard for Title III’s applicability only to physical places, Judge Pryor concludes that the services offered through Winn-Dixie’s website fundamentally enhance the in-store shopping experience so as to comfortably fall within the statute’s mandate. She rejects, as contrary to the above-cited statutory provision, the majority’s conclusion that Gil’s ability to avail himself of in-store prescription refills and paper coupon redemption amounts to an experience comparable to that of a sighted person using the grocery chain’s website in advance of a visit to one of its stores. Reasoning that Title III’s broad prohibition on discrimination preventing “the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation” applied to the “privileges” and “advantages” offered via the prescription refill and digital coupon functionality of Winn-Dixie’s website, the dissent determines that the District Court correctly found the grocery chain to be in violation of the statute. Judge Pryor also persuasively challenges the majority’s reliance upon Rendon and Robles v. Domino's Pizza, LLC, 913 F.3d 898 (9th Cir.), cert. denied, ––– U.S. ––––, 140 S. Ct. 122, 205 L.Ed.2d 41 (2019) (reversing dismissal of Title III complaint premised upon inaccessible website and mobile app allowing pizza to be ordered for delivery or pick-up) to conclude that a violation based upon an intangible barrier occurs only where a “sole access point” or point of sale is blocked or prevented. The dissent correctly emphasizes that neither case established a bright line rule requiring the total preclusion of a point of access or sale to state a Title III claim, and the majority is therefore mistaken to so narrowly construe the statute and precedent. Judge Pryor is of course correct in this regard, as evidenced by the Eleventh Circuit’s own unpublished decision in Haynes v. Dunkin’ Donuts LLC, 741 Fed.Appx. 752 (11th Cir. 2018) (full text of the opinion here). Haynes, like Gil, involved a Title III website claim premised upon a lack of compatibility with screen reader software. Mr. Haynes alleged an inability to access certain features available on Dunkin’ Donuts’ website including a store locator and the ability to purchase gift cards, as well as general information about the services and accommodations on offer at the food chain’s physical stores. The District Court dismissed the claim for failure to allege a “nexus” between those stores and the website’s features. The Circuit Court unanimously reversed the dismissal, reasoning that “the website is a service that facilitates the use of Dunkin’ Donuts’ shops, which are places of public accommodation.” Pursuant to Eleventh Circuit Rule 36-2, unpublished decisions like Haynes are not considered binding precedent but may be cited as persuasive authority. Haynes was therefore an important (even if non-binding) indication of the Eleventh Circuit’s stance towards intangible barriers under Title III: the decision seemingly validated the “nexus” theory by concluding that an inability to access online privileges or services tied to physical accommodations was sufficient to state a valid claim. It’s true that one of the alleged barriers in Haynes was an inability to purchase gift cards through the website – which could be considered a “point of sale” similar to the website and mobile app at issue in Robles (and recognized by the Gil majority to be one of only two restrictive grounds sufficient for finding an intangible Title III barrier). But the Haynes Court also acknowledged the store locator feature as well as “information about ... the goods, services, facilities, privileges, advantages or accommodations of” Dunkin’ Donuts’ shops as equally-sufficient grounds – neither of which pertain to a point of sale or sole access as were found to be dispositive in Gil. Thus, anyone expecting the Eleventh Circuit to affirm in Gil based upon its earlier decision in Haynes was likely shocked by the Circuit Court’s about-face. In terms of whether a website connected to a place of public accommodation can be an intangible barrier triggering Title III liability, the Gil dissent has the better analysis. The relevant statutory language is amply broad enough to encompass time-saving, convenience and informational advantages or services offered through a physical accommodation’s website as a basis for discrimination to the extent such features are inaccessible. The Gil majority’s narrow focus upon points of sole access or sale as the only grounds for finding an intangible barrier is not readily supported by Rendon or Robles. So why is Gil’s holding nevertheless correct despite the majority’s flawed rationale? The answer results from the dissent’s reliance (like that of the District Court who ruled in Gil’s favor) upon the incompatibility of Winn-Dixie’s website with screen reader software as a basis for finding the existence of an intangible barrier. The relevant statutory provision - 42 U.S.C. §12182(b)(2)(a)(iii) (quoted above) – provides that discrimination actionable under Title III occurs only where there is an absence of “auxiliary aids and services”. Mr. Gil alleged no such violation; he claimed only that Winn-Dixie failed to make its website compatible with screen reader software and that he was unable to access the services, privileges and advantages offered through the website as a result of such incompatibility. Screen reader software, however, is just one among any number of “auxiliary aids and services” for which places of public accommodation have discretion under the Act to choose to implement depending upon the particular circumstances. See, e.g., 28 C.F.R. §36.303(b): “Examples. The term ‘auxiliary aids and services’ includes- (2) Qualified readers; taped texts; audio recordings; Brailled materials and displays; screen reader software; magnification software; optical readers; secondary auditory programs (SAP); large print materials; accessible electronic and information technology; or other effective methods of making visually delivered materials available to individuals who are blind or have low vision …” (emphasis added) As per the above regulation, screen reader software is merely one example of an auxiliary aid and service. Places of public accommodation, such as Winn-Dixie, are otherwise permitted to rely upon “other effective methods” of delivering visual materials to the visually impaired. Indeed, subsequent portions of the cited regulation emphasize this. See 28 C.F.R. §36.303(c)(1)(ii): “(1) A public accommodation shall furnish appropriate auxiliary aids and services where necessary to ensure effective communication with individuals with disabilities. …(ii) The type of auxiliary aid or service necessary to ensure effective communication will vary in accordance with the method of communication used by the individual; the nature, length, and complexity of the communication involved; and the context in which the communication is taking place. A public accommodation should consult with individuals with disabilities whenever possible to determine what type of auxiliary aid is needed to ensure effective communication, but the ultimate decision as to what measures to take rests with the public accommodation, provided that the method chosen results in effective communication. In order to be effective, auxiliary aids and services must be provided in accessible formats, in a timely manner, and in such a way as to protect the privacy and independence of the individual with a disability.” (emphasis added) Accordingly, Winn-Dixie would have been well within its rights under the ADA to offer, for example, a staffed telephone hotline to assist the visually impaired with any services available via the website which may be inaccessible due to screen reader incompatibility. The statutory trigger for liability turns not upon whether any one particular auxiliary aid or service is offered; it is instead dependent upon whether any auxiliary aids and services are offered. This is because only an absence of auxiliary aids and services violates §12182(b)(2)(a)(iii). So the Gil decision correctly reversed the District Court’s judgment in favor of the Plaintiff for the incorrect reason. As the dissent astutely demonstrates, Title III’s provisions may fairly be read to encompass intangible barriers relating to convenience or time-savings privileges offered by an accommodation’s website. But Mr. Gil was certainly not entitled to a judgment merely because Winn-Dixie’s website did not work with his screen reader software. Ultimately, the Gil decision - despite its questionable analytical underpinnings - will protect public accommodations within the Eleventh Circuit from vexatious Title III website claims.

      Started by: FPSFPS in: Litigation Discussion

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    • May 1, 2022 at 4:36 pm

      FPSFPS

    • ADA Title III defense – a primer for public accommodations Title III of the Americans with Disabilities Act (“ADA”, 42 U.S.C. §12181 et seq.) indisputably serves a laudable purpose. It prohibits discrimination on the basis of disability by places of public accommodation – which includes any public establishment such as restaurants, hotels, retail shops, etc. See §12182. Congress intended the Act to be enforced by, among other means, private right of action. See §12188(a). Private plaintiffs who personally encounter accessibility barriers are therefore permitted to sue the public accommodation for injunctive relief requiring it to remove the barrier. See §12188(a); see also 42 U.S.C. §2000a-3. The ADA also permits an award of prevailing party attorneys’ fees. See 42 U.S.C. §12205. Notably, damages are not available to Title III plaintiffs. Amidst the legitimate Title III claims, however, are those which are filed for fraudulent, ulterior motives. There is an unfortunate subset of illegitimate claims that are pursued solely for attorneys’ fees, which are often shared between the attorney and the plaintiff in contravention of bar rules. See, e.g., https://www.adatitleiii.com/2019/08/florida-judge-sanctions-serial-ada-plaintiff-alexander-johnson-and-attorney-scott-dinin/. These claims are typically concocted by unscrupulous lawyers who target establishments or websites with cases filed by serial plaintiffs in name only, having never actually visited the subject of the lawsuit. Nevertheless, proving an ongoing fraudulent enterprise between ADA plaintiffs and their counsel will rarely be possible. Many defendants opt to quickly settle these cases for a sum less than it would cost to expose the litigation as abusive. To be clear, settlement should absolutely be pursued whenever it is the cheapest option. There are, however, some cases in which a successful motion to dismiss may cost less than the plaintiff’s settlement demand. In those cases, defense counsel should strive to defeat such claims on the merits. The serial nature of many Title III claims, frequently based upon boilerplate allegations copied and pasted from template pleadings shared amongst plaintiffs’ attorneys, creates various defensive options. These superficial, assembly-line claims commonly suffer from a misreading of the controlling statutes. The diligent defendant may have an opportunity to quickly end the litigation and, in some cases, obtain a fee award against the plaintiff to the extent a defective claim is not voluntarily dismissed. Please note that the following discussion will primarily rely upon prevailing Title III law from within the U.S. Eleventh Circuit, and therefore may not be applicable in other jurisdictions. I. Physical architectural barriers Let’s start with those cases in which the plaintiffs are alleging architectural barriers, such as insufficient clearance under tables, a lack of wheelchair-accessible ramps, etc. Let’s further assume that the alleged barriers do in fact exist, in which case the plaintiff will likely obtain the injunctive relief sought along with a prevailing party fee award if the case goes to trial. This means the defendant will be liable for the expense of complying with the injunction, plus the fees and costs incurred by the plaintiff (in addition to, of course, all of its own fees and costs incurred throughout the litigation). This is a worst-case scenario for the public accommodation, but it is by no means inevitable. A better strategy is to simply fix the barrier voluntarily, without waiting for an adverse judgment mandating the remediation. It is in the accommodation’s best interest to quickly eliminate it lest it find itself the target of further ADA litigation. Just like there is no requirement for the plaintiff to give pre-suit notice, there is absolutely no impediment under the Act to a defendant voluntarily fixing the barrier after litigation has been filed. However, some plaintiffs will attempt to circumvent a self-help defense by shifting the target of the litigation as it proceeds. For example, the complaint may identify particular barriers in a qualified manner (such as “including, but not limited to” and the like) so as to permit the plaintiff to raise new barriers if those named in the complaint are fixed voluntarily. The reasons why this type of “moving target” offense is legally defective, and therefore unsustainable, are beyond the scope of this topic. Suffice it to say that the diligent defendant will strive to limit the plaintiff to pursuing only those barriers expressly identified in the complaint. It inarguably benefits the defendant to voluntarily remediate, because there remains nothing for the court to enjoin once the barrier(s) sued upon have been removed. In other words, the case becomes moot. See Kennedy v. Nick Corcokius Enterprises, Inc., 2015 WL 7253049 at 2-3 (S.D.Fla. Nov. 17, 2015); Access 4 All, Inc. v. Bamco VI, Inc., 2012 WL 33163 at 6 (S.D.Fla. Jan. 6, 2012) (acknowledging that “federal courts have found ADA claims moot” based upon the defendant’s voluntary implementation of structural modifications); National Alliance for Accessibility, Inc. v. Walgreen Co., 2011 WL 5975809 at 3 (M.D.Fla. Nov. 28, 2011) (acknowledging that federal courts have dismissed ADA claims as moot when the alleged architectural violations have been remedied after the complaint was filed “[i]n a number of cases”); Kallen v. J.R. Eight, Inc., 775 F.Supp.2d 1374, 1379 (S.D.Fla.2011) (where parties agreed that nine of the architectural violations alleged in the complaint were voluntarily remediated by the defendant, “the Court finds that those nine claims are rendered moot and subject to dismissal for lack of jurisdiction.”) Once the case is rendered moot, the plaintiff loses statutory entitlement to attorneys’ fees and costs. Id. at 1381 (“A Plaintiff who initiates a lawsuit that causes the Defendant to voluntarily remedy ADA violations is not a prevailing party for purposes of attorneys' fees, and is not entitled to collect costs and fees.”) The diligent defendant avoids having to pay the plaintiff any fees or costs, while minimizing its own, by voluntarily fixing the barrier and seeking a dismissal as early as possible. II. Intangible barriers Title III plaintiffs have increasingly targeted intangible accessibility barriers in recent years. As distinguished from physical architectural features which impede the use of a facility, intangible barriers are those which prevent a disabled person from exercising an informational advantage offered by the public accommodation. They can consist of websites that are incompatible with screen reader software, retail gift cards without braille lettering, or even gas pump video content which lacks closed captioning. These cases rest upon an inaccurate presumption: Title III permits the plaintiff to dictate that a particular “auxiliary aid and service” must be offered by the public accommodation. For example, cases targeting websites will exclusively focus upon allegations that the site lacks compatibility with screen reader software (text to speech software used by the visually impaired to read aloud text displayed on the screen) and is therefore not compliant with the ADA. However, the relevant Title III provisions along with federal regulations implementing them clearly provide that the public accommodation may choose for itself any appropriate means to effectively communicate with the disabled. For example, 42 U.S.C. §12182(b)(2)(A)(iii) provides that “discrimination” under Title III includes: “a failure to take such steps as may be necessary to ensure that no individual with a disability is excluded, denied services, segregated or otherwise treated differently than other individuals because of the absence of auxiliary aids and services, unless the entity can demonstrate that taking such steps would fundamentally alter the nature of the good, service, facility, privilege, advantage, or accommodation being offered or would result in an undue burden …” (emphasis added) Unless the place of public accommodation can establish that it would result in a fundamental alteration or an undue burden, it is expressly required to offer “auxiliary aids and services” that will ensure equal access by disabled persons. Importantly, §12182(b)(2)(A)(iii) specifies that a public accommodation discriminates only to the extent it fails to offer any auxiliary aids and services whatsoever, i.e., “because of the absence of auxiliary aids and services”. No particular auxiliary aids and services are mandated, nor does the statute impose liability merely because a public accommodation neglects to ensure that its website is compatible with screen reader software. Various examples of “auxiliary aids and services” are listed at 28 C.F.R. §36.303(b): “Examples. The term ‘auxiliary aids and services’ includes- (2) Qualified readers; taped texts; audio recordings; Brailled materials and displays; screen reader software; magnification software; optical readers; secondary auditory programs (SAP); large print materials; accessible electronic and information technology; or other effective methods of making visually delivered materials available to individuals who are blind or have low vision …” (emphasis added) Notably, screen reader software is merely one example of an auxiliary aid and service; places of public accommodation are otherwise permitted to rely upon “other effective methods” of delivering visual materials to the visually impaired. Subsequent portions of the cited regulation emphasize this. See 28 C.F.R. §36.303(c)(1)(ii): “(1) A public accommodation shall furnish appropriate auxiliary aids and services where necessary to ensure effective communication with individuals with disabilities. … (ii) The type of auxiliary aid or service necessary to ensure effective communication will vary in accordance with the method of communication used by the individual; the nature, length, and complexity of the communication involved; and the context in which the communication is taking place. A public accommodation should consult with individuals with disabilities whenever possible to determine what type of auxiliary aid is needed to ensure effective communication, but the ultimate decision as to what measures to take rests with the public accommodation, provided that the method chosen results in effective communication. In order to be effective, auxiliary aids and services must be provided in accessible formats, in a timely manner, and in such a way as to protect the privacy and independence of the individual with a disability.” (emphasis added) The federal regulations implementing Title III therefore emphasize that the place of public accommodation ultimately has sole and absolute discretion to determine which “auxiliary aids and services” it must offer in order to ensure effective communication with disabled persons. See, e.g., Price v. City of Ocala, Florida, 375 F.Supp.3d 1264, 1271 (M.D.Fla. 2019) (“[A]n agency with an inaccessible Web site may also meet its legal obligations by providing an alternative accessible way for citizens to use the programs or services, such as a staffed telephone information line”, citing 28 C.F.R. §Pt. 35, App.A, emphasis added); Silva v. Baptist Health South Florida, Inc., 856 F.3d 824, 835-36 (11th Cir.2017) (“If effective communication under the circumstances is achievable with something less than an on-site interpreter, then the hospital is well within its ADA and RA obligations to rely on other alternatives. Indeed, the implementing regulations clarify that ‘the ultimate decision as to what measures to take rests with’ the hospital …”, emphasis added); Petrano v. Nationwide Mut. Fire Ins. Co., 2013 WL 1325045 at 8 (N.D.Fla. Jan. 24, 2013): “Under the plain language of the regulations, then, no single form of auxiliary aid and no single type of communication is mandated. Rather, the code directs that public accommodations provide appropriate aids that will ensure effective communication. Notably, the code specifically provides that the ‘ultimate decision as to what measures to take rests with the public accommodation.’ … See Burkhart v. Washington Metropolitan Area Transit Auth., 112 F.3d 1207, 1213 (D.C.Cir.1997) (noting that ‘[n]othing in the ADA itself or its implementing regulations dictates that a disabled person must be provided with the type of auxiliary aid or service he requests.’)” (emphasis added) After reviewing the foregoing authority, it becomes clear that the increasingly prevalent Title III website cases are completely misguided. Plaintiffs have no legal basis to dictate that a public accommodation’s website must be compatible with screen reader software. If, for example, the establishment provides a phone number that can be used by the visually impaired to speak with an employee who will read any portions of the establishment’s website to the extent such portions are not compatible with screen reader software, the accommodation is in full compliance with the ADA. All that is required is effective communication; how that is achieved remains up to the accommodation. I will appreciate any feedback regarding the foregoing analysis, particularly from those of you who practice in this area on the plaintiffs’ side. Please feel free to point out anything I may have overlooked. Thanks for reading!    

      Started by: FPSFPS in: Strategy Discussion

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    • March 21, 2021 at 8:04 am

      FPSFPS

    • U.S. vs. Google antitrust: what’s Google’s [P]lay? Case:   United States, et al. v. Google, LLC, 1:20-cv-03010 filed on 10/20/20 Court: U.S. District Court for the District of Columbia Judge: Amit Mehta   As many of you may be aware, the United States along with several individual states recently sued Google under section 2 of the Sherman Act (15 U.S.C. §2) based upon alleged monopolization for general search, search advertising and general search text advertising. Please note that this thread refers only to the first of three antitrust lawsuits filed against Google since October, 2020. Copies of the complaint and Google’s answer are attached for those interested. A rather striking disparity between the pleadings becomes immediately apparent; whereas the complaint is hyper-detailed and appears to be the result of significant research into Google’s business practices, the answer seems perfunctory, and perhaps purposely so. But Google’s affirmative defenses leave much to the imagination and certainly lack the factual precision of the Plaintiffs’ allegations.   The purpose of this thread is to examine potential strategies that Google may have to effectively defend against this litigation. Let me begin by acknowledging that I am not an antitrust lawyer, and I would therefore welcome insight from anyone with practical experience in this area (or, for that matter, anyone else with an interest in the case regardless of practical experience). I will also point out that although I am a fan of Google’s products and services, I tend to agree with the Plaintiffs’ contention that the company is indeed a monopoly which harms consumers. Sure, Google’s search engine (along with its open-source Android mobile operating system and Chrome web browser) is offered to the public free of charge – which is likely one of various reasons why Google is synonymous with search. But that accessibility and ubiquity enables Google to dominate online advertising. As the Plaintiffs aptly point out in the complaint (see p.11, the “consumer purchase funnel”), search advertising is incredibly valuable to merchants because the ads are displayed at the moment a potential consumer is expressing interest in a subject by entering related search terms. A Google search is often the final step taken by a consumer before a particular product or service is purchased. Thus, Google’s inarguable search dominance enables it to dictate the cost of advertising on its platform above a level which might prevail in a more competitive environment. Consumers ultimately foot the bill for Google’s monopolistic search advertising prices as advertisers pass the higher costs along.   One element of the Plaintiffs’ burden here will be to prove Google’s possession of monopoly power. See U.S. v. Microsoft Corp., 253 F.3d 34, 50 (D.C.Cir.2001) (“The offense of monopolization [under section 2 of the Sherman Act] has two elements: ‘(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.’” (citing United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698, 16 L.Ed.2d 778 (1966)). If the Court agrees that search advertising (and general search text advertising) are relevant markets, Plaintiffs will satisfy their burden to prove that Google has monopoly power in those markets by establishing the existence of barriers to entry which insulate Google from competition. Id. at 51 (“monopoly power may be inferred from a firm's possession of a dominant share of a relevant market that is protected by entry barriers” (citing Rebel Oil Co. v. Atl. Richfield Co., 51 F.3d 1421, 1434 (9th Cir.1995)).   The complaint makes clear that Google’s suite of exclusionary agreements with device manufacturers and browser developers – while also forming the basis of Google’s alleged unlawful maintenance of its monopoly power (i.e., the 2nd element required to establish a §2 violation) – simultaneously act as significant barriers to entry. See complaint ¶¶95, 110 (discussing the importance of scale and how Google’s anticompetitive conduct denies scale to any would-be rivals). In other words, the MADAs, RSAs and other agreements described in the complaint enable Google to exclude competitors from occupying default status on mobile devices, browsers and even IoT devices. That default status – which Google pays billions for annually – ensures that potential rivals never achieve the critical mass needed to attract advertisers.   So why is this bad for Google? Are they not innocuously paying the supermarket for prime shelf space much like a cereal brand would do (see https://blog.google/outreach-initiatives/public-policy/response-doj)? If the allegations of the complaint are accurate, the “supermarket shelf space” analogy falls a little flat. Specifically, the Plaintiffs are alleging: a) the majority of internet searches are performed via mobile platforms (complaint¶42); b) Google enjoys preset default status “for an overwhelming share” of U.S. mobile device search access points (complaint ¶45); and c) Google’s suite of exclusionary agreements in many cases expressly preclude mobile device manufacturers from installing rival search apps or replacing Google as the default search option (complaint ¶56). Moreover, Google over the last 15 years or so has made a calculated play to dominate search on mobile devices via the acquisition, development and licensing of the Android mobile operating system (complaint ¶¶58-77). Along with Android, Google licenses its suite of industry-leading apps (YouTube, Google Play store, etc.) and enters into lucrative revenue sharing agreements – all of which is dependent upon Android device manufacturers agreeing to make Google the default search option (complaint ¶¶76, 78).   Rather than a cereal brand paying the supermarket for prime shelf placement, what Google is actually doing is more akin to the cereal brand cementing its market dominance by manufacturing the shelving itself, and then licensing the shelving to the supermarket on the condition that only the dominant cereal brand can be displayed (but if the consumer wants to rearrange the shelving to display other brands, they are welcome to do so). More to the point, Google’s practices in this regard appear to have long since been condemned under the Sherman Act. See, e.g., Microsoft Corp., 253 F.3d at 61 (“As noted above, the OEM channel is one of the two primary channels for distribution of browsers. By preventing OEMs from removing visible means of user access to IE, the license restriction prevents many OEMs from pre-installing a rival browser and, therefore, protects Microsoft's monopoly from the competition that middleware might otherwise present. Therefore, we conclude that the license restriction at issue is anticompetitive”); and 62 (“This kind of promotion is not a zero-sum game; but for the restrictions in their licenses to use Windows, OEMs could promote multiple IAPs and browsers. By preventing the OEMs from doing so, this type of license restriction, like the first two restrictions, is anticompetitive: Microsoft reduced rival browsers’ usage share not by improving its own product but, rather, by preventing OEMs from taking actions that could increase rivals’ share of usage.”) In other words, Microsoft violated the Sherman Act by imposing Windows license restrictions which impeded device manufacturers from installing rival browsers – much like Google is accused of doing with respect to its Android licensing and default search status. Because Google’s exclusionary agreements are designed to forestall potential rivals from developing the necessary scale to become competitive (and to the extent the agreements are effective in doing so), these practices will likely be deemed anticompetitive.   Does Google have any viable defenses here? If the facts as alleged in the complaint are accurate, I’m not seeing many options. But a careful review of the Microsoft decision reveals at least one potential avenue. Specifically, Microsoft rather creatively argued both at trial and on appeal that the District Court’s analysis of the relevant market was flawed because it failed to account for emerging threats to Microsoft’s dominance of the desktop PC operating system market. See id. at 52 (Microsoft criticizes the District Court’s market definition as “far too narrow” because it ignores, among other potential threats, “operating systems for non-PC devices”); see also id. at 57 (“The District Court expressly considered and rejected Microsoft’s claims that innovations such as handheld devices … would soon expand the relevant market beyond Intel-compatible PC operating systems.”)   The Circuit Court summarily dismissed these points due to Microsoft’s failure to cite supporting record evidence or to argue that the District Court’s factual findings to the contrary were clearly erroneous. See id. at 52 (“[Microsoft] fails to challenge the District Court’s factual findings, or to argue that these findings do not support the court’s conclusions.”) Ironically, however, history may have proven Microsoft correct. Just about six years after the Microsoft decision was issued, Apple released the iPhone in 2007. I would argue that this event marked the end of Microsoft’s operating system dominance by virtue of the iPhone’s functionality encompassing much, if not all, of what was previously available only via desktop computer. And of course, the release of the iPhone ushered in the smartphone era in general whereby such devices packed in so much functionality that they were rightly considered handheld computers. Consumers no longer had a need to rely primarily upon Windows to browse the web, send and receive email or do their online banking. And I would go so far as to say it would be difficult to argue that Microsoft’s current success has much to do with Windows anymore; although Windows may still dominate the desktop market, the desktop market has been eclipsed by handheld devices. Microsoft has continued to succeed due to its nimbleness. As a result, it’s unclear whether, in retrospect, the government’s antitrust litigation against the company achieved anything more than what naturally occurred due to the advent of smartphones.   I would therefore argue that if Google can adduce some compelling record evidence of emerging technology which will threaten its search dominance, it may succeed where Microsoft failed. It needs to establish that, just as smartphones dethroned desktop computers (and Windows) as the dominant means of internet access, some new technology will imminently shift the paradigm away from Google’s search monopoly and thereby eliminate much of its current market power.   Not an easy argument to make, but then again Google’s defensive options appear limited. But this is just my take - I invite anyone and everyone to point out any errors in my reasoning or anything I may have overlooked. Thanks for reading!

      Started by: FPSFPS in: Litigation Discussion

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    • February 28, 2021 at 10:40 pm

      FPSFPS

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