The Florida Bar Re: Advisory Opinion - Scharrer v. Fundamental Administrative Services , 176 So. 3d 1273 ( 2015 )

Supreme Court of Florida
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No. SC14-1730
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THE FLORIDA BAR RE: ADVISORY OPINION — SCHARRER v.
FUNDAMENTAL ADMINISTRATIVE SERVICES.
[October 15, 2015]
PER CURIAM.
Pursuant to rule 10-9.1 of the Rules Regulating the Florida Bar (Bar Rules),
and this Court’s decision in Goldberg v. Merrill Lynch Credit Corp., 35 So. 3d 905
(Fla. 2010), Petitioners Beth Ann Scharrer, as the Trustee for the Bankruptcy
Estate of Fundamental Long Term Care, Inc., and Trans Health Management, Inc.
(THMI) (Petitioners), petitioned The Florida Bar Standing Committee on the
Unlicensed Practice of Law (Standing Committee) for an advisory opinion as to
whether certain activities by Fundamental Administrative Services (FAS) and its
in-house counsel, who is not admitted to practice law in the State of Florida, would
constitute the unlicensed practice of law in this state. As required by Bar Rule 10-
9.1(f), the Standing Committee provided notice and held a public hearing to
address the petition, where it considered both live and written testimony. After
considering the issues, the Standing Committee filed its proposed advisory opinion
in this Court. The Court has jurisdiction to review the opinion pursuant to article
V, section 15 of the Florida Constitution, and Bar Rule 10-9.1(g).
After the proposed advisory opinion was filed, the Court issued an order
inviting Petitioners and any interested parties to file briefs in response to the
opinion; briefs were filed by several individuals and organizations. Counsel for the
Standing Committee filed a brief in response to these comments. We have fully
considered both the proposed advisory opinion and the briefs filed with the Court.
As discussed here, because we conclude that the advisory opinion does not address
the “specified conduct” at issue, as contemplated by the Goldberg decision, we
disapprove the advisory opinion without prejudice to Petitioners submitting a
revised petition for an advisory opinion, and to the Standing Committee
conducting further proceedings consistent with our opinion in this case.
The Proposed Advisory Opinion
Petitioners Scharrer and THMI, and FAS and its in-house counsel, Christine
Zack (an attorney not licensed to practice law in Florida), have been, and continue
to be, involved in lawsuits in several jurisdictions, with potentially significant sums
of money at issue. As is relevant here, Petitioners brought a suit against FAS and
Ms. Zack in the United States District Court for the Middle District of Florida.
The suit alleged that FAS and Zack provided administrative support services to
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FAS’s client, THMI, and served as a “litigation liaison” between THMI and the
Florida lawyers hired to represent THMI in several wrongful death cases brought
against the company in Florida. Petitioners further alleged that FAS’s and Zack’s
substantial involvement in the wrongful death cases constituted the tort of the
unlicensed practice of law. In July 2013, the federal court dismissed the case
without prejudice, citing Goldberg, 35 So. 3d at 907, in which this Court held that
a civil complaint alleging a cause of action for damages based on the unlicensed
practice of law must allege that this Court has ruled that the specified conduct at
issue is the unlicensed or unauthorized practice of law. The federal court
determined that Petitioners had not cited in their complaint any case where this
Court had determined that the specific conduct that FAS and Zack are alleged to
have engaged in was unlicensed practice. However, consistent with Goldberg, the
federal court invited Petitioners to seek an advisory opinion on the issue.
Petitioners’ subsequent petition for an advisory opinion is the first such request
submitted to the Standing Committee pursuant to Goldberg.
In their petition to the Standing Committee, Petitioners presented six
questions:
1. Whether [FAS] engaged in the unlicensed practice of law in
Florida by employing an attorney not licensed in Florida to provide
legal advice, strategy and services to third parties in litigation pending
in Florida in which FAS was not a party.
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2. Whether FAS engaged in the unlicensed practice of law in
Florida by employing in-house counsel, who is not licensed in Florida,
to hire, direct, manage, control, and supervise Florida lawyers
defending FAS’s third-party customer(s) in Florida litigation when
FAS was not a party to the litigation.
3. Whether FAS engaged in the unlicensed practice of law in
Florida when, as part of the services it provided to its third-party
customers, FAS’s employees provided legal advice and services in
Florida litigation, to which FAS was not a party, under the supervision
of FAS’s nonlawyer principals or unlicensed lawyer principals.
4. Whether FAS engaged in the unlicensed practice of law in
Florida when its in-house counsel, who is not licensed in Florida,
controlled, directed, and managed Florida litigation on behalf of
FAS’s third-party customers, including:
a. preparing pleadings, discovery responses, and/or other
legal documents;
b. making strategic decisions regarding defense strategy for
the third-party, and
c. construing and interpreting the legal effect of Florida law
on behalf of the third party.
5. Whether Ms. Zack engaged in the unauthorized practice of law
in Florida when, without a Florida license, she directed, managed,
controlled, and supervised Florida lawyers’ defense of FAS’s third
party customer(s) in Florida litigation when her employer, FAS, was
not a party to the litigation.
6. Whether Ms. Zack engaged in the unauthorized practice of law
in Florida when, without a Florida license, she controlled, directed,
and managed Florida litigation, in which FAS was not a party, on
behalf of her employer’s third-party customers, including:
a. preparing pleadings, discovery responses, and/or other
legal documents;
b. making strategic decisions regarding defense strategy for
her employers’ customers; and
c. construed and interpreted the legal effect of Florida law
on behalf of her employers’ customers.
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The Standing Committee consolidated these questions into a single issue:
Whether a nonlawyer company engages in the unlicensed practice of
law in Florida when the nonlawyer company or its in-house counsel,
who is not licensed to practice law in Florida, controls, directs, and
manages Florida litigation on behalf of the nonlawyer company’s
third-party customers when the control, direction, and management is
directed to a member of The Florida Bar who is representing the
customer in the litigation?
The proposed advisory opinion answers this question in the negative, finding that,
generally speaking, it does not constitute the unlicensed practice of law for a
nonlawyer company or its in-house counsel (who is not licensed in Florida) to
control, direct, and manage Florida litigation on behalf of the nonlawyer
company’s third party customers when the control, direction, and management is
directed to a member of The Florida Bar who is representing the customer in
litigation. However, the Standing Committee also concluded that, while generally
such conduct is not the unlicensed practice of law, there are circumstances where
the opposite may be true, and the activity of the nonlawyer company or its in-house
counsel could constitute unlicensed practice. The answer would be dependent on
the level of involvement of the Florida lawyer versus the level of involvement of
the nonlawyer.
Petitioners, FAS and Zack, and other individuals and organizations have
submitted briefs in opposition to the Standing Committee’s proposed advisory
opinion, raising a number of procedural and substantive concerns. However, as
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discussed below, because we conclude that the advisory opinion does not properly
address the specified conduct at issue, as contemplated in our decision in
Goldberg, we disapprove the advisory opinion without prejudice.
Goldberg v. Merrill Lynch Credit Corp.
In Goldberg, the petitioners filed class action lawsuits in the circuit court to
recover document preparation fees charged by respondent Merrill Lynch for
services performed by its clerical personnel in processing mortgage loans. 35 So.
3d at 906. Merrill Lynch moved to dismiss the complaints, arguing, among other
things, that the circuit court lacked jurisdiction to hear any claims relating to the
unlicensed practice of law. The circuit court granted the motion and dismissed the
case. The Fourth District Court of Appeal affirmed the dismissals, holding that a
determination from this Court as to whether conduct constitutes the unlicensed
practice of law was a “prerequisite” to bringing a civil suit to recover fees and
damages based on unlicensed practice. Id. at 907.
On review, this Court held that the petitioners were not precluded from
bringing a private civil suit for damages alleging a cause of action based on
unlicensed practice of law. Id. However, the Court agreed with the Fourth District
Court of Appeal that the petitioners’ complaint failed to state such a cause of
action:
To state a cause of action for damages under any legal theory that
arises from the unauthorized practice of law, we hold that the pleading
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must state that this Court has ruled that the specified conduct at issue
constitutes the unauthorized practice of law. Stated another way, a
claimant must allege as an essential element of any cause of action
premised on the unauthorized practice of law that this Court has ruled
the activities are the unauthorized practice of law.
Id. (citations omitted). The Court stated that a plaintiff’s complaint could allege
that the conduct complained of has already been ruled on by this Court to be the
unlicensed practice of law, or it could allege that the defendant was the subject of a
Florida Bar proceeding. But the Court made clear that:
a plaintiff will not be able to state a cause of action premised on the
unauthorized practice of law on a case of first impression (where this
Court has not ruled on the actions at issue). In those cases, the
pleading may be dismissed without prejudice or the action may be
stayed until a determination from this Court pursuant to the advisory
opinion procedures of rule 10-9.1 or the complaint and injunctive
relief procedures of rules 10-5, 10-6, and 10-7 of the Rules Regulating
the Florida Bar.
Id. at 908.
In the case at issue here, the federal court, citing Goldberg, concluded that
Petitioners’ complaint did not cite any case where this Court had ruled that the
specific actions alleged to have been committed by FAS and Ms. Zack were held to
be the unlicensed practice of law. Thus, consistent with Goldberg, the federal
court dismissed the case without prejudice and invited Petitioners to seek an
advisory opinion from this Court.
As a preliminary issue, FAS and Zack suggest that Petitioners’ request for an
advisory opinion is procedurally improper under Goldberg. They raise two
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specific objections: (1) that the Standing Committee lacked authority to consider
Petitioners’ request for an advisory opinion because Petitioners’ civil case in the
federal district court was not “voluntarily” dismissed; and (2) that the Standing
Committee lacked authority to consider Petitioners’ request because other cases
involving the same parties and similar legal issues remain pending in various
courts. The Standing Committee held a special hearing specifically to address
these issues, and determined that Petitioners’ request for an advisory opinion was
proper under Goldberg. We agree.
As to the first objection, the procedures we established in Goldberg are
satisfied when a civil case is “dismissed without prejudice or . . . stayed until a
determination from this Court.” Id. FAS and Zack cite language in Bar Rule 10-
9.1(c), adopted in response to Goldberg,1 which provides that the Standing
Committee “shall issue a formal advisory opinion under circumstances described
by the court in [Goldberg], when the petitioner is a party to a lawsuit and that suit
has been stayed or voluntarily dismissed without prejudice.” R. Regulating Fla.
Bar 10-9.1(c) (emphasis added). Despite this language in the rule, we agree with
the Standing Committee that our opinion in Goldberg did not require that a case be
“voluntarily” dismissed. Rather, that opinion stated that a plaintiff will not be able
1. See In re Amends. to Rules Reg. Fla. Bar 10-9.1, 82 So. 3d 66 (Fla.
2012).
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to state a cause of action premised on the unlicensed practice of law on “a case of
first impression,” and that in such cases the plaintiff’s pleading may be “dismissed
without prejudice” or “stayed.” Accordingly, the Petitioners here were authorized
to petition the Standing Committee for a proposed advisory opinion when their
case in federal court was dismissed without prejudice in July 2013. However,
because we recognize that the language in Bar Rule 10-9.1(c) is inconsistent with
Goldberg, in a separate opinion also issued today we sua sponte amend the rule to
remove the word “voluntary.”
As to the second procedural challenge to the proposed advisory opinion
under Goldberg, we agree with the Standing Committee’s determination that it
could properly consider Petitioners’ petition for an advisory opinion because there
were no pending cases in any court or tribunal in this jurisdiction alleging a cause
of action for unlicensed practice of law. The only case alleging unlicensed
practice, the suit between Petitioners and FAS and Zack in the United States
District Court for the Middle District of Florida, was dismissed without prejudice
before Petitioners submitted their request.
Applying Goldberg v. Merrill Lynch Credit Corp.
Although we conclude that Petitioners’ petition for an advisory opinion was
authorized, we nonetheless disapprove the Standing Committee’s proposed
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advisory opinion because it does not address the “specified conduct” at issue in the
underlying federal case, as required by Goldberg.
Our decision in Goldberg was based on the central principle that the Florida
Constitution requires this Court exclusively to determine whether certain conduct
or activities constitute the unlicensed or unauthorized practice of law. See
Goldberg, 35 So. 3d at 906; see also art. V, § 15, Fla. Const. Thus, in Goldberg,
we established a new process through which the parties to a civil suit alleging a
cause of action based on unlicensed practice—where the Court has not yet ruled
that “the specified conduct” alleged in the suit constitutes the unlicensed or
unauthorized practice of law—could seek a determination from this Court on that
issue, by way of a petition for an advisory opinion from the Standing Committee.
Goldberg, 35 So. 3d at 908. However, integral to this new process is the
requirement that both the party’s request for an advisory opinion, and the Standing
Committee’s resulting proposed opinion, must address the “specified conduct” that
is at issue in the civil suit. Although we recognize that the Standing Committee
does not sit as a trier of fact, and it is not the Committee’s role to decide disputed
issues of fact, our decision in Goldberg does authorize the Standing Committee to
determine whether the specific facts as alleged in a petition for an advisory
opinion, if those facts are taken as true, would constitute the unlicensed or
unauthorized practice of law.
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In this instance, we conclude that Petitioners’ request for an advisory
opinion did not allege the type of specific facts that, if assumed true, the Standing
Committee could use to evaluate whether FAS and Zack engaged in the unlicensed
practice of law. The Standing Committee then consolidated Petitioners’ six
questions into a single and more general question. As a result, we conclude that
the proposed advisory opinion does not adhere to the process the Court established
in Goldberg, in that it does not offer meaningful guidance as to whether the
specified conduct at issue would constitute the unlicensed practice of law.
Accordingly, we disapprove the advisory opinion; however, our decision is without
prejudice to Petitioners submitting a revised petition for an advisory opinion, and
to the Standing Committee conducting further proceedings consistent with our
opinion in this case.
Finally, we agree with the federal district court, as stated in its July 2013
order dismissing Petitioners’ civil case, that the Court’s opinion in Florida Bar v.
Neiman, 816 So. 2d 587 (Fla. 2002), is inapplicable to the conduct and activities at
issue here. The Standing Committee may wish to consider Chapter 17 of the Rules
Regulating the Florida Bar (Authorized House Counsel Rule), as well as Bar Rule
4-5.5 (Unlicensed Practice of Law; Multijurisdictional Practice of Law), and the
extent to which those rules may impact the specified conduct at issue.
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Accordingly, for the reasons discussed in this opinion, we disapprove the
proposed advisory opinion without prejudice.
It is so ordered.
LABARGA, C.J., and PARIENTE, LEWIS, QUINCE, POLSTON, and PERRY,
JJ., concur.
CANADY, J., dissents with an opinion.
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND
IF FILED, DETERMINED.
CANADY, J., dissenting.
In this proceeding, we are asked to give an advisory opinion concerning a
matter that is the subject of litigation. I would dismiss the case on the ground that
the Florida Constitution gives this Court no authority to issue such an advisory
opinion.
In Goldberg v. Merrill Lynch Credit Corp., 35 So. 3d 905, 909 (Fla. 2010)
(Canady, J., dissenting) (emphasis in original), I expressed the view that the
process adopted by the majority in that case unjustifiably relied on “the grant of
exclusive regulatory authority in article V, section 15, Florida Constitution” to
assert “a type of exclusive judicial authority that is sui generis.” I adhere to the
view I expressed in Goldberg. The regulatory authority granted to us in section 15
of article V does not justify transgressing the limits on our judicial power
established in section 3(b) of article V. In my view, this Court simply lacks the
constitutional authority to issue an advisory opinion of the type sought in this
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proceeding. I would recede from Goldberg and abide by the limitations on our
jurisdiction imposed by the Florida Constitution. Consistency between regulatory
decisions and judicial decisions should be maintained through the ordinary
operations of the judicial process without the unprecedented expansion of our
judicial power accomplished by Goldberg.
Original Proceeding – The Florida Bar
Jeffrey Michael Kolokoff, Chair, Standing Committee on the Unlicensed Practice
of Law, Beighley Myrick & Udell, Miami, Florida; Carsandra Denyce Buie, Past
Chair, Standing Committee on the Unlicensed Practice of Law, Tallahassee,
Florida; John F. Harkness, Jr., Executive Director, Lori S. Holcomb, Director,
Client Protection, and Jeffrey Todd Picker, The Florida Bar, Tallahassee, Florida,
on behalf of the Standing Committee on the Unlicensed Practice of Law; and
Steven Mark Berman and Duane Allan Daiker of Shumaker, Loop & Kendrick,
LLP, Tampa, Florida, on behalf of Beth Ann Scharrer and Trans Health
Management, Inc.,
for Petitioners
Martin Stephen Turner of Broad and Cassel, Tallahassee, Florida, on behalf of The
Doctors Company; Timothy Patrick Chinaris, Nashville, Tennessee; Katherine
Eastmoore Giddings and Kristen Marie Fiore of Akerman LLP, Tallahassee,
Florida, on behalf of Fundamental Administrative Services, LLC; Joseph Arnold
Corsmeier of the Law Office of Joseph A. Corsmeier PA, Clearwater, Florida, on
behalf of Fundamental Administrative Services, LLC; Gerald Barnette Cope, Jr. of
Akerman LLP, Miami, Florida, on behalf of Fundamental Administrative Services,
LLC; Christopher Benton Hopkins of McDonald Hopkins LLC, West Palm Beach,
Florida, on behalf of Fundamental Administrative Services, LLC; Peter Alan
Contreras of Brunner Quinn, Columbus, Ohio, on behalf of Christine Zack; Amar
D. Sarwal, Vice President and Chief Legal Strategist, and Evan P. Schultz, Senior
Counsel and Director of Advocacy, Association of Corporate Counsel,
Washington, District of Columbia; Michael Herman, President, and John J. Price,
Advocacy Liaison & Program Chair, Association of Corporate Counsel-North
Florida Chapter, Jacksonville, Florida; Kelli Joan Cueto, President, and Alan
Jockers, Advocacy Chair, Association of Corporate Counsel-South Florida
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Chapter, Hollywood, Florida; S. Todd Merrill, President, and Nicholas Popp,
Advocacy Liaison, Association of Corporate Counsel-West Central Florida
Chapter, Tampa, Florida; Christine Davis Graves and Joseph Hagedorn Lang, Jr. of
Carlton Fields Jorden Burt, P.A., Tallahassee, Florida, on behalf of the Florida
Chamber of Commerce; Marie Elena Abate and Nate Wesley Strickland of
Colodny, Fass, Talenfeld, Karlinsky Abate & Webb, P.A., Tallahassee, Florida, on
behalf of Property Casualty Insurers Association of America, Florida Insurance
Council, American Insurance Association, and National Association of Mutual
Insurance Companies,
Responding
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