Atwater v. Kortum

Citations: 95 So. 3d 85; 37 Fla. L. Weekly Supp. 439; 2012 Fla. LEXIS 1317; 2012 WL 2579677Docket: No. SC11-133

Court: Supreme Court of Florida; July 5, 2012; Florida; State Supreme Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

The case involves a challenge to section 626.854(6) of the Florida Statutes, which regulates public insurance adjusters' solicitation practices. The First District Court of Appeal invalidated this statute, ruling it unconstitutional for unduly restricting the commercial speech of public adjusters without being narrowly tailored to serve the state’s interests in ethical conduct and homeowner protection. The regulation originated from a Task Force established by the Florida Legislature in 2007 following hurricane claims, which recommended prohibiting public adjusters from soliciting claims until 72 hours after a relevant event. The Legislature later enacted a similar law, reducing the waiting period to 48 hours and prohibiting any initiated contact by public adjusters during that time.

Frederick W. Kortum, Jr., a public adjuster, filed a complaint asserting that the statute violated his constitutional rights, arguing it barred all public adjuster communications within the specified period. The Department of Financial Services countered that the statute allowed written communication. The trial court found the statute ambiguous and accepted the Department’s interpretation, ruling it constitutional by classifying it as a regulation of conduct rather than speech. The court applied the precedent from United States v. O’Brien, emphasizing that government regulations must serve a substantial interest without suppressing free expression more than necessary.

In Kortum, 54 So.3d at 1015, the First District reversed a trial court ruling, interpreting section 626.854(6) as prohibiting all forms of communication initiated by public adjusters, including electronic, written, or oral contact. The court determined that this section regulates commercial speech, necessitating the application of the Central Hudson test rather than the O’Brien standard. Under Central Hudson, the court evaluated whether the speech was protected by the First Amendment, whether the governmental interest was substantial, whether the regulation directly advanced that interest, and whether the regulation was not more extensive than necessary. The First District found that while the statute met the first three prongs, it failed on the fourth, as the Department did not sufficiently justify the 48-hour communication prohibition based on potential ethical concerns. Consequently, the First District ruled that the statute unconstitutionally burdened public adjusters' commercial speech and did not consider additional claims regarding equal protection or industry reward rights under the Florida Constitution. The Department, led by Chief Financial Officer Jeffery Atwater, appealed, arguing that the statute does not restrict written communication and should be viewed as regulating conduct rather than speech, thus falling under the rational relationship test. However, the analysis affirmed that section 626.854(6) indeed limits public adjusters' communications post-claim event and appropriately applied the Central Hudson test, rejecting the Department's interpretation and failing to find any alternative justification for upholding the statute's constitutionality.

Section 626.854 of the Florida Statutes regulates public adjusters, defining them as individuals (excluding licensed attorneys) who, for compensation, assist in preparing and filing insurance claims or negotiating settlements. The statute aims to protect the public from unauthorized legal practices. It applies specifically to residential property insurance policies and condominium association policies.

Kortum argues that subsection (6) imposes a forty-eight-hour ban on public adjusters' commercial speech to potential clients, while the Department contends it only restricts the method of contact—specifically prohibiting in-person or telephonic solicitation, but allowing written communications. The First District Court, however, interpreted the statute as banning all forms of public adjuster-initiated contact, including written, electronic, or oral, ultimately declaring it unconstitutional.

The court reviews such constitutional declarations de novo and adheres to the statute's plain language unless it is ambiguous. Clear statutory language does not require further interpretation. The court found the Department's interpretation flawed, as it disregarded the prohibition on initiating contact as stipulated by the legislature.

Section 626.854(6) prohibits public adjusters from initiating any contact—directly or indirectly—with potential claimants during a specified forty-eight-hour period. The term "initiate contact," as defined, encompasses all forms of communication, both written and oral. The Legislature specifically included this phrase, leading to the conclusion that any form of communication by public adjusters during this time frame is banned. The Department's interpretation suggesting that written materials could be disseminated during this period is deemed unreasonable and inconsistent with the statute.

The argument that such solicitation by public adjusters is not protected commercial speech is rejected. Citing the Supreme Court case Edenfield v. Fane, it is established that solicitation in a business context is protected under the First Amendment. The Department has not provided justification for treating public adjuster solicitation differently than that of certified public accountants, which the Supreme Court recognized as commercial expression entitled to First Amendment protections. The discussion also references O’Brien, which clarifies that not all conduct is protected as speech; only conduct that is necessarily expressive qualifies for such protection. Thus, the statute's ban on initiating contact is a regulation of commercial speech.

A public adjuster's act of contacting potential clients is inherently expressive, aimed at informing them about available services and obtaining consent for a contract. In this context, the communication is focused on a commercial transaction related to public adjusting. Section 626.854(6) of Florida Statutes regulates this type of commercial speech rather than conduct alone. The First District correctly applied the Central Hudson test to assess the statute's constitutionality. The Department did not demonstrate any error in the First District's conclusion that the statute's restrictions are overly broad in relation to the State's interests. Consequently, the statute explicitly prohibits public adjuster contact with potential claimants for 48 hours following a claim-producing event. The First District's decision is affirmed, and the previously imposed stay is lifted. All justices concur with the ruling.