Docket: Case Nos. 09-CV-21527, 09-CV-21538, 09-CV-21539
Court: District Court, S.D. Florida; May 27, 2010; Federal District Court
The Court denied class certification and dismissed three related cases for lack of subject matter jurisdiction. The plaintiffs, in each case, accused court-reporting firms of violating Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA) and unjust enrichment, claiming that the firms charged the same rate for computer-generated indices as for transcript pages. Although the cases have not been formally consolidated, they share overlapping legal issues, prompting the Court to address the motions collectively.
The Court emphasized that class certification must not involve evaluating the merits of the claims. However, it found an analysis of the plaintiffs' claims necessary. The plaintiffs argued there should be a distinct, lower price for index pages compared to transcript pages; however, the Court found no legal authority supporting this claim. In fact, existing guidelines permit court reporters to charge the same rate for both types of pages. The Court criticized the plaintiffs' reasoning, suggesting it could disrupt common commercial practices, using the analogy of fast-food pricing to illustrate that charging the same price for different components does not equate to unfairness. Ultimately, the Court concluded that the plaintiffs' interpretation of FDUTPA would unjustly label many normal business practices as deceptive, reflecting that the absence of detailed pricing information is neither illegal nor unethical.
Several issues prevent the certification of the proposed classes in this case. Key difficulties include the negotiation of special rates by some prospective class members, varied transaction histories (with some being repeat customers and others not), and differences in invoice review among members, all of which undermine the predominance requirement for class certification. Additionally, determining who ultimately paid for the transcript is complicated by factors such as contingency fee arrangements, leading to significant administrative challenges. Establishing class-wide damages is also problematic due to the subjective valuation of the index by each class member, making it labor-intensive to ascertain the identity of class members and the value they attach to the indices.
The complaints allege that the defendants’ billing practices regarding multi-page computer-generated word indexes for transcripts violated the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) and resulted in unjust enrichment. Plaintiffs argue that while transcription requires the skill of a licensed court reporter, the index is generated by software and does not involve such labor. They contend that defendants should charge differently for index pages versus transcribed pages, as indices are not part of the official transcript. The plaintiffs assert that the defendants’ practice of charging the same per-page rate for both types of pages, without disclosure, is unfair and deceptive.
Motions for class certification seek to include all individuals and entities in Florida who paid for a word index at the transcription rate during the class period, excluding class counsel.
Motions have been filed to certify a class based on the defendants' practice of uniformly charging for transcript and index pages without disclosure. The plaintiffs argue for certification under Federal Rules of Civil Procedure Rules 23(a) and 23(b)(3), asserting that the elements of numerosity, commonality, typicality, and adequacy of representation are met. The proposed class includes thousands of individuals, satisfying numerosity. Commonality is established through shared claims under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) and unjust enrichment, stemming from the same billing practices. Typicality is claimed as the plaintiffs' experiences are similar to those of the class members. The plaintiffs assert they will adequately represent the class, and the defendants do not dispute the qualifications of the plaintiffs’ attorneys as class counsel.
For Rule 23(b)(3) certification, the plaintiffs argue that common legal or factual questions predominate over any individual issues and that class action is the superior method for resolution. They contend the claims are generalized due to the defendants' consistent billing practices, negating individual factual questions since FDUTPA does not require proof of reliance. Damages can be determined through common evidence, and differences in damage amounts do not impede certification. The plaintiffs also argue that managing the class action is feasible, with class members easily identifiable through the defendants' records.
The case involves Dr. Charles A. Adelson and Jacqueline Lauzerique, who sued U.S. Legal Support after discovering potential overcharges for index pages related to their previous personal injury and wrongful death lawsuits. Adelson's prior legal matters included a lawsuit against Time Warner and Sports Illustrated, during which he did not engage with U.S. Legal Support directly but later incurred costs in a legal malpractice case related to that matter.
Adelson's attorney secured a special rate for index pages from U.S. Legal Support and deemed the court-reporter expenses incurred as "reasonable and necessary." In contrast, Lauzerique's attorney operated under a contingency fee agreement, responsible for all expenses, reimbursed from settlement proceeds. However, Lauzerique paid a retainer for case investigation, with uncertainty over its allocation to court-reporter expenses. U.S. Legal Support contends the proposed class definition is overbroad, vague, and unascertainable, as it includes individuals who knowingly paid for index pages and does not account for multiple payors of the services. They argue that the adequacy element of Rule 23(a) is unmet due to conflicts of interest among class members, particularly between attorneys and clients who value index charges differently, and potential breaches of ethical obligations by attorneys passing costs to clients. Furthermore, U.S. Legal Support asserts that plaintiffs cannot satisfy Rule 23(b)(3) predominance due to individualized factual and legal issues, particularly regarding the applicability of FDUTPA to non-Florida members, the potential for varying perceptions of fairness regarding charges, and differing customer awareness of the billing practices. They also challenge the plaintiffs’ methodology for proving damages and argue against the superiority of a class action due to manageability issues stemming from these individualized concerns.
Glenn J. Webber, P.A. filed a lawsuit against Esquire Deposition Services, LLC, stemming from the law firm's practices regarding deposition transcripts. Attorney Glenn Webber, who has taken over 1,000 depositions primarily in insurance defense, has always received word indices with his ordered transcripts but claims to not use them, preferring to create his own. He has never raised concerns about the indices or their costs to Esquire, and his firm's mail-room system ensures he does not see the invoices, which are sent to his wife. The firm pays all invoices without inquiry unless they are significant, such as expert witness fees. Despite ongoing orders from Esquire post-lawsuit, Webber states that these orders were a mistake.
Esquire contends that the proposed class of plaintiffs is inadequately defined and unascertainable, as it cannot easily determine who paid for the transcripts. Transcripts are typically ordered by attorneys, with costs passed to clients or absorbed by attorneys in contingency cases. Class membership is fluid; it can shift from attorney to client based on reimbursements or court-awarded costs. Esquire argues that identifying class members would require extensive individual record reviews, creating a significant administrative burden. Additionally, Esquire claims the proposed class fails to meet the commonality, typicality, and predominance requirements of Rule 23, particularly regarding the applicability of the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) to non-Florida residents, and highlights the presence of individual issues, such as customers’ prior knowledge of billing practices and negotiated rates.
Esquire contends that under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), the Court must evaluate if a deceptive practice is likely to mislead a reasonably acting consumer, necessitating an individualized assessment of how each class member purchased the transcript. Esquire also raises concerns about potential conflicts among class members due to attorneys' ethical obligations to ensure reasonable costs for clients, suggesting that passing on unfair or deceptive costs may constitute a breach of these obligations.
Additionally, Esquire argues against class certification on the grounds that damage assessments cannot be uniformly determined since individual valuations of the indices vary.
Public Concepts LLC, a political consulting firm that has faced defamation lawsuits, claims to have purchased only one transcript from Veritext, unlike the multiple purchases by the Webber firm. Public Concepts relied on its attorney to order transcripts, and while the attorney values the indices, he acknowledges differing valuations among other attorneys.
Veritext opposes class certification, pointing to difficulties in identifying who paid for the indices and asserting that individual issues predominate over common questions. They argue that establishing causation under FDUTPA on a class-wide basis is unfeasible, as some customers may have been aware of the charges for indices, and some specifically negotiated for them. Furthermore, Veritext highlights that damages cannot be assessed uniformly due to varying customer valuations.
Veritext also argues against certification due to manageability issues, particularly in determining payment and valuation of indices. They assert that the commonality, typicality, and adequacy requirements of Rule 23(a) are not met, echoing arguments made by Esquire and U.S. Legal Support. Lastly, Veritext claims Public Concepts is an inadequate class representative due to its admission of violations of Florida’s election laws, questioning its integrity for the fiduciary role required.
To achieve class certification under Rule 23, plaintiffs must meet the criteria of numerosity, commonality, typicality, and adequacy of representation as outlined in Rule 23(a), along with at least one requirement under Rule 23(b).
Plaintiffs are pursuing class certification under Rule 23(b)(3), requiring them to show that common questions of law or fact dominate over individual ones and that a class action is the superior method for resolving the issues at hand. While the trial court should not delve into the merits of the plaintiffs' claims at this stage, it can assess the merits to the extent necessary to evaluate compliance with Rule 23. There is often overlap between Rule 23 requirements and the merits of the case, and courts should not rigidly avoid examining the merits when necessary for a reasoned determination of class action eligibility.
The determination of class certification involves a complex interplay of factual and legal issues, particularly in Rule 23(b)(3) cases, which further complicates the analysis. District courts have significant discretion in certifying classes, with manageability being a key consideration, as they are typically more familiar with the practical issues of litigation than appellate courts.
In this analysis, the court denies class certification due to substantial manageability concerns, particularly noting that the claims under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) and unjust enrichment require consideration of varying factual matters among potential class members. Consequently, the court dismisses the lawsuits for lack of subject matter jurisdiction, as its jurisdiction relied on minimal diversity under the Class Action Fairness Act of 2005. The plaintiffs' argument that manageability issues are minimal is deemed insufficient, as the realities of court-reporting service ordering, typically handled by attorneys, complicate the notification process for class members.
Defendants' records only list the attorneys who requested court-reporting services, omitting who ultimately paid those costs—typically the class members. Payment responsibility varies based on fee agreements; some attorneys work on a contingency basis, absorbing costs unless their client wins, while others have clients reimburse costs periodically. This variability complicates identifying the true payer without requiring all defendants' clients to produce their accounting records. Additionally, costs could shift to losing parties or be covered by insurers. Determining the ultimate payer poses further challenges, such as attorneys possibly offering discounts to clients, leading to joint payment scenarios. Class membership is also fluid, as attorneys remain class members until reimbursed. Individualized factors affect claims under FDUTPA and unjust enrichment, including negotiated rates between clients and court-reporting firms. For instance, Boies, Schiller, Flexner LLP has a specific agreement with a court-reporting firm that exempts them from certain costs, which may not be obvious without detailed record examination. Florida law upholds parties' rights to contract, reinforcing that individuals should not be protected from unfavorable agreements unless deemed unconscionable by the courts.
Individualized inquiries in the Webber case reveal pertinent details that may disqualify Webber from class membership. Webber's lack of awareness regarding vendor charges, his ongoing orders for transcripts from Esquire despite the lawsuit, and his wife's expertise as a court reporter contribute to potential defenses for Esquire, such as estoppel or ratification, which may not apply to all class members. The discovery process has illuminated these unique circumstances, indicating that while Webber's firm is a lead plaintiff, it also falls within the class of potential members against U.S. Legal Support. This complexity underscores the impracticality of conducting extensive discovery for all potential class members, suggesting that such a process would impose significant burdens on the Court and the defendants without justifying the associated costs and time. Consequently, the Court determines that individualized factual and legal issues predominate, leading to unwarranted manageability problems, resulting in a decision against certifying the proposed classes.
Regarding the FDUTPA claim, it prohibits unfair competition and deceptive practices in trade, requiring plaintiffs to prove a deceptive act, causation, and actual damages. Courts are instructed to give weight to the Federal Trade Commission's interpretations of related statutes. Additionally, plaintiffs can seek redress under statute 501.211 for losses incurred due to violations, which encompass breaches of the act, FTC rules, or any laws against unfair practices.
FDUTPA mirrors Section 45(a)(1) of the FTC Act, which prohibits unfair methods of competition and deceptive practices in commerce. The FTC is empowered to regulate acts deemed unfair, but under 15 U.S.C. 45(n), an act can only be declared unlawful if it causes substantial consumer injury that is not avoidable by consumers and is not outweighed by benefits. This framework complicates the certification of a class alleging unfair practices regarding uniform per-page charges for transcripts and indices.
Plaintiffs fail to demonstrate that the alleged injury was not reasonably avoidable on a class-wide basis. Experienced users of court-reporting services could have avoided index charges by leveraging their knowledge to request different pricing. The proposed class includes both novice and sophisticated users, creating variability in their ability to avoid charges. For instance, a novice user may lack awareness of potential charges, while an experienced attorney likely understands the pricing structure.
Individual inquiries are necessary to assess whether index charges were reasonably known and avoidable, as invoices clearly stated the per-page rate. Additionally, some class members negotiated special rates, further complicating the claims against uniform pricing. The assessment of "countervailing benefits" also weighs against class certification, as the value of indices varies significantly depending on the length of the transcript and individual user needs. Lengthy transcripts may provide substantial value from indices, while shorter ones may not, complicating any class-wide claim of unfairness. The subjective nature of the value assigned to indices by attorneys further emphasizes the inadequacy of a uniform class definition.
Some lawyers, such as Webber, undervalue word indices in transcripts, while others, like Weil, Gotshal, and Manges LLP, consider them essential, as evidenced by their requirement for a word index in bid specifications for court reporters. Expert William Chandler initially stated that indices hold no value, but later acknowledged their subjective value, varying among users. His deposition revealed that market value for a word index is uncertain and contingent upon individual circumstances, complicating class-wide damage calculations. The disparity in perceived value among attorneys indicates that the proposed classes contain individuals who received differing benefits from word indices, necessitating individualized assessments for determining damages. Furthermore, the definition of unfair practices includes entities that experienced no substantial injury, leading to potential inclusion of uninjured class members. Given these complexities, the court may reject the certification of the proposed classes.
Plaintiffs must demonstrate that defendants' practices violate established public policy and are characterized as "immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers" to succeed in their claims. However, the plaintiffs failed to prove these factors on a class-wide basis. There is no established public policy defining fair pricing for word indices. The federal judiciary has guidelines that permit court reporters to charge the same per-page rate for both transcript and index pages. Evidence shows that the District's website does not differentiate between fees for index and non-index pages, and an invoice from a court reporter in a related case charged uniformly for transcript pages, including index pages, without distinction. Additionally, the New York Attorney General's request for proposals for court-reporting services grouped transcript and index charges into a single price category, indicating a lack of public policy against the defendants' practices. The court found no authority or rationale to label the defendants' billing practices as “immoral, unethical, oppressive, or unscrupulous.” Furthermore, some users consider the pricing for transcript and index pages to be reasonable, suggesting that any perception of immorality or unethics may vary based on individual user experiences. This variability precludes the application of such standards on a class-wide basis.
The Court determined that the plaintiffs failed to demonstrate that the uniform per-page charge for transcript and index pages constitutes an unfair practice under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA). The inquiry into whether this practice is deceptive follows federal standards, which define a deceptive act as one likely to mislead consumers. Florida courts have not uniformly established whether proof of reliance is necessary for FDUTPA claims; however, at least one court has ruled it is not required, a position the Eleventh Circuit has echoed in an unpublished opinion. For the purposes of this case, the Court assumes reliance is not necessary, focusing instead on whether the practice is likely to deceive a reasonable consumer in similar circumstances.
The standard involves both objective and subjective elements: the objective aspect assesses reasonableness without considering individual plaintiffs' mindsets, while the subjective aspect requires examining the specific context of the alleged deceptive practice. The Court highlighted that the determination of deception must consider the circumstances surrounding the claim. Examples from case law illustrate how subjective components can be established on a class-wide basis, such as in the "Batman" case where consumers were misled by a misleading term regarding port charges, and the Latman case where a merchant charged an inflated sales tax.
An intentional overcharge of sales tax that is retained by a company is deemed an unfair and deceptive trade practice, necessitating consumer repayment, regardless of consumers' willingness to pay or awareness of the overcharge. This claim is actionable under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA). However, determining the reasonableness of consumer conduct involves various individualized inquiries that could complicate class certification, as individual issues may overshadow common ones. Some class members were aware of and valued the charges for services like word indices, negotiating specific terms with court-reporting firms. Notably, firms like Weil Gotshal and Skadden, Arps negotiated agreements that indicated a perceived value in word indices, paying the same per-page rate for both indices and transcripts. Others continued purchasing these services either knowingly or due to error. The court recognizes that the experience level of attorneys varies, affecting their understanding of court-reporting practices. Consequently, because individual circumstances significantly influence the reasonableness of actions, class certification is deemed inappropriate.
Regarding unjust enrichment claims in Florida, essential elements include the benefit conferred on the defendant by the plaintiff, the defendant’s acknowledgment of that benefit, and the inequity of retaining the benefit without compensating the plaintiff, as established in Rollins Inc. v. Rutland.
A court must evaluate the specific circumstances of each case before granting relief for equitable claims to determine if inequity would occur without a remedy. As established in Vega, claims of unjust enrichment typically cannot be certified for class treatment due to the individualized nature of the inquiry, where each class member must present evidence on the rationale for their purchases. Additionally, unjust enrichment claims may not apply if the consumer did not rely on the alleged deceptive practices.
The court also addressed its subject matter jurisdiction over individual plaintiffs' claims, asserting that it has a duty to evaluate jurisdiction at any time. Federal courts are limited to cases with congressional jurisdiction, and if no jurisdiction is found, the case must be dismissed. The plaintiffs cited 28 U.S.C. § 1332(d) for federal jurisdiction, applicable in class actions exceeding $5 million with minimal diversity. However, the court's refusal to certify the class and the absence of federal claims meant that only 28 U.S.C. § 1332(a) could apply, which requires complete diversity and a $75,000 threshold. Since the requirements for § 1332(a) were not met and § 1332(d) was no longer applicable, the court concluded it lacked subject matter jurisdiction, resulting in the dismissal of these cases without prejudice. Consequently, all pending motions, aside from one for attorneys' fees, were deemed moot, and the clerk was instructed to close the cases.
Cover pages, appearance pages, certification pages, recorded testimony pages, and similar documents are defined as non-index pages in this order. Index pages typically appear at the end of a transcript, listing terms and their locations within the document, such as "insurance 1:3 5:11." "U.S. Legal Support" refers to both U.S. Legal Support, Inc. and Klein, Bury, Reif, Applebaum Associates, Inc. The Florida Supreme Court describes an unfair trade practice as actions that violate established public policy or are immoral, unethical, or harmful to consumers. Webber's office has a system where invoices from court-reporting firms are managed by Mrs. Webber, a former court reporter familiar with the inclusion of word indices, setting Webber apart from other class members, leading the Court to determine he is not an adequate class representative. Affidavits from various attorneys indicate they value word indices, with some asserting that it is appropriate to charge the same per-page rate for indices as for testimony. Notable consumers of court-reporting services, like the New York Attorney General's Office and law firm Skadden, Arps, also value and request word indices. Chandler's report concluded that no class member gains from non-transcribed pages, and it is requested that Veritext re-file a sealed document for public access, urging all parties to review and re-file any sealed exhibits lacking proprietary information. The Court acknowledges its reliance on the unpublished Cold Stone case for class certification, noting it aligns with Eleventh Circuit law regarding the reliance requirement under FDUTPA.
Reliance on representations may be a relevant factor in the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) analysis, as indicated by the Eleventh Circuit's ruling in Cold Stone. The court noted that while franchisees made representations about business prospects, the franchise agreement explicitly stated that franchisees lacked authority to make profit margin claims, highlighted variability in results, warned of potential poor performance, and advised independent investigations into costs. Consequently, the court upheld the district court's summary judgment for Cold Stone, stating that a reasonable consumer would likely not be deceived by the franchisees' statements given the circumstances. Although the court determined that reliance is not a necessary element of a FDUTPA claim, it acknowledged that in certain cases, proof of reliance could be required.
In the context of the present case, the court noted distinctions from the Fitzpatrick case, where class certification was heavily influenced by the Cold Stone decision. Unlike Fitzpatrick class members, who allegedly purchased yogurt without knowing it lacked advertised benefits, consumers in the current case received the indices they purchased and had the option to request deletions or price adjustments if they valued them less. Moreover, one plaintiff, Webber, continued to order transcripts post-lawsuit, creating a unique factual issue that may undermine his suitability as a class representative. This aspect, along with other reasons previously discussed, supports the court's conclusion regarding his unsuitability.
