Tag: Florida

Is The End Of FINRA Drawing Nigh?

The Financial Industry Regulatory Authority, aka FINRA, is a non-profit Delaware corporation.  It was formed in 2007 by the combination of the National Association of Securities Dealers, Inc. and the regulatory arm of the New York Stock Exchange, Inc.  FINRA is a self-regulatory organization that primarily regulates securities broker-dealers.

Professor Benjamin P. Edwards recently reported that a complaint has been filed in Florida challenging the constitutionality of FINRA.  The lawsuit filed by two broker-dealers alleges:

However, FINRA’s current structure and operations, particularly in light of the transformation of the organization over the course of the last two decades, contravene the separation of powers, violate the Appointments Clause of the United States Constitution (the “Constitution”) and constitute an impermissible delegation of powers. Because it purports to be a private entity, FINRA is unaccountable to the President of the United States (the “President,” or “POTUS”), lacks transparency, and operates in contravention of the authority under which it was formed.  It utilizes its  own in-house tribunals in a manner contrary to Article III and the Seventh Amendment of the Constitution and deprives entities and individuals of property
without due process of law.

The plaintiffs are seeking, among other things, declaratory and injunctive relief.

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© 2010-2022 Allen Matkins Leck Gamble Mallory & Natsis LLP

District Court Rules Most Plaintiffs in Case Do Not Have Standing to Block Florida Stop W.O.K.E. Act

There are two key cases pending before the U.S. District Court for the Northern District of Florida on Florida’s “Stop W.O.K.E. Act”: the Falls, et al. v. DeSantis, et al., matter (No. 4:22-cv-00166) and the Honeyfund.com, et al. v. DeSantis, et al., matter (No. 4:22-cv-00227). The Northern District of Florida has issued its first order on the Act, which went into effect on July 1, 2022.

In an Order Denying Preliminary Injunction, in Part, in the Falls matter, the court concluded that the K-12 teachers, the soon-to-be kindergartner, and the diversity and inclusion consultant who sued Governor Ron DeSantis and other officials to block the Stop W.O.K.E. Act did not have standing to pursue preliminary injunctive relief. The court reserved ruling pending additional briefing on the question of whether the college professor, who also sued, has standing.

Stop W.O.K.E. Act

The Stop W.O.K.E. Act expands an employer’s civil liability for discriminatory employment practices under the Florida Civil Rights Act if the employer endorses certain concepts in a “nonobjective manner” during training or other required activity that is a condition of employment.

Court Order

In the Falls case, a diverse group of plaintiffs claiming they were regulated by the Stop W.O.K.E. Act filed a lawsuit challenging the Act on the grounds that it violates their First and Fourteenth Amendment Rights to free expression, academic freedom, and to access information.

The court, however, did not reach the question of constitutionality. It also did not determine whether the case can move forward, an issue that will be decided when the court rules on the defendants’ pending motion to dismiss.

Instead, the court denied the plaintiffs’ request for a preliminary injunction on the threshold question of standing. It found the plaintiffs (other than the college professor) did not show they have suffered an injury-in-fact that is traceable to DeSantis or another defendant that can likely be redressed by a favorable ruling.

The court found the consultant is not an employer as defined by the Florida Civil Rights Act. Therefore, she could not assert standing on that basis. Instead, she argued she has third-party standing to assert the rights of the employers who would otherwise hire her, and she is harmed by the Act because employers will no longer hire her. The court rejected both theories, finding the consultant-employer relationship is not sufficiently “close” to create standing; employers are not hindered in raising their First Amendment rights on their own; and, based on the evidence presented, the court could not reasonably infer that the consultant has lost or will lose business because of the Act.

Importantly, the court specifically held that it was not ruling on the legality of the Act, whether it was moral, or whether it constituted good policy.

Private Employer

The court highlighted that the sister case pending in the Northern District of Florida (Honeyfund.com) involves a private employer under the Florida Civil Rights Act. In that case, the plaintiffs allege the Stop W.O.K.E. Act violates their right to free speech by restricting training topics and their due process rights by being unconstitutionally vague. Honeyfund.com, Inc. and its co-plaintiffs request that the court enjoin enforcement of the law. The case has been transferred to District Court Judge Mark Walker. The Honeyfund.com case will likely have the largest effect on Florida employers and questions surrounding the enforceability of the Act as to diversity and inclusion training.

***

Since the Stop W.O.K.E. Act took effect, employers are understandably unclear how to proceed with training. Employers should continue to train their employees, but review their training programs on diversity, inclusion, bias, equal employment opportunity, and harassment prevention through the lens of the new law. Employers should also ensure they train the trainers who are conducting these important programs. Finally, employers should understand potential risks associated with disciplining or discharging employees who refuse to participate in mandatory training programs, even if employers do not consider the programs to violate the new law.

Article By Stephanie L. Adler-Paindiris, Samia M. Kirmani, Amanda Simpson, and Lindsay Dennis Swiger of Jackson Lewis P.C.

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Jackson Lewis P.C. © 2022

Why ‘Don’t Say Gay’ Bills are Antithetical to an Equitable and Inclusive Education

According to a 2019 GLSEN national survey of LGBTQ+ students, nearly 60% of surveyed students reported they felt unsafe at school because of their sexual orientation and 43% because of their gender expression. Within the same survey, nearly all (98.8%) LGBTQ+ students reported hearing “gay” used in a negative way at school, 95% heard other homophobic remarks, and 87% heard transphobic remarks.

When I was an educator, it was essential to my practice that all my students felt safe. If I were to hear any negative remarks about a student or become aware one of my students felt unsafe due to their identity, it would be my ethical, and moral, obligation to do something to create a safer and more inclusive learning environment; a core part of my role as an educator was to teach empathy and compassion in my students. This could be as simple as having a classroom discussion about the choices of language and how using words such as “gay” with a negative connotation can be hurtful to their classmates. This could also mean sharing my own identity as a queer man so my LGBTQ+ students knew they had someone they could turn to for support, and to normalize queer identities for all my students and their families. Either of these actions would require I discuss the importance of accepting all sexual orientations and gender identities.

In other words, I would have to say “gay.” But in six states — as of now — I would not have been able to do this.

The state of Florida attracted national attention earlier this year with the adoption of H.B. 1557, the “Parental Rights in Education” bill, more commonly known as the “Don’t Say Gay” bill. The bill, which has since been signed into law, dictates classroom instruction by “school staff” on “sexual orientation or gender identity may not occur in kindergarten through grade 3 or in a manner that is not age-appropriate or developmentally appropriate for students.” Five other states, according to the Movement Advancement Project, have similar laws enacted and several more have bills pending in their state legislatures. Some proponents of these bills argue the legislation is necessary to ensure parents have greater say when, if, and how LGBTQ+ issues are discussed with their children.

Yet these laws are designed to ensure only some parents have greater say, as the parents of LGBTQ+ children are certainly not reflected in these efforts.

At a time when youth mental health is reaching a crisis, state legislatures are advancing bills that would perpetuate, and arguably exacerbate, harmful school-based experiences for LGBTQ+ youth and worsen their well-being. A 2022 survey by the Trevor Project found 45% of LGBTQ+ youth seriously considered attempting suicide in the past year, and over half of transgender and nonbinary youth considered suicide. The 2019 GLSEN survey also found LGBTQ+ students who experienced forms of victimization based on their sexual orientation or gender identity (e.g., being bullied, hearing homophobic or transphobic remarks, etc.) had lower levels of self-esteem, higher levels of depression, and were less likely to say they belonged in school.

Some may argue “Don’t Say Gay” bills would not preclude educators from addressing instances of homophobia or transphobia in their classrooms and try to suggest that prohibitions on such actions are not the intent of the bills. However, regardless of intent, these bills often have the insidious impact to “chill” educators’ actions out of fear they may run afoul of the law and open themselves to reprimands, including being terminated.

All students deserve to have a safe, supportive, and affirming learning environment. All educators should be empowered to protect their students, and not feel afraid to step in when they notice a student being bullied because of their identity. And every parent should have the resources to be a partner in their child’s education. Unfortunately, state laws such as the “Don’t Say Gay” bills will only stand in way of these notions from becoming realities.

It is impossible to support all students when LGBTQ+ children continue to be targeted merely because of their identities.

Article By Sean A. Worley of Nelson Mullins

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Copyright ©2022 Nelson Mullins Riley & Scarborough LLP

Gin Manufacturer Bacardi Avoids Lawsuit for Its Use of “Grains of Paradise”

A federal judge in the Southern District of Florida recently dismissed an action alleging that Bacardi’s use of a botanical called “grains of paradise” in its gin was “harmful and illegal,” holding that the statute on which the lawsuit was based was preempted by federal law. Marrach v. Bacardi U.S.A, 19-cv-23856 (S.D. Fla. Jan. 28, 2020).

The complaint alleged a violation of the Florida Deceptive and Unfair Trade Practices Act. While Plaintiff himself suffered no harm from the drink, he cited a nineteenth-century provision forbidding the adulteration of alcoholic beverages with “grains of paradise” to support his claim that Bacardi’s use of the botanical was illegal. However, Bacardi argued in its motion to dismiss that the complaint was preempted because the Federal Food, Drug and Cosmetic Act (FDCA) permits the use of “grains of paradise.”

In an opinion that did not mince words, Judge Robert N. Scola granted the motion to dismiss, opening with the observation: “Numerous class actions have greatly benefited society such as Brown v. Board of Education, In re Exxon Valdez, and In re Agent Orange Product Liability Litigation. This is not one of those class actions.” He noted that the Food Additives Amendment of 1958 granted the FDA broad authority to monitor and control the introduction of food additives, signaling Congress’s intent to prevent rules unnecessarily prohibiting access to safe food additives. Judge Scola held that the Florida statute, which criminalizes adulterating liquor with grains of paradise, frustrated this purpose and was therefore preempted because it was in conflict with federal law.

Plaintiff attempted to counter this reasoning by arguing that the 21st Amendment gave states the right to regulate liquor, thereby overriding any argument that federal law governed in this matter. Judge Scola disagreed. As an initial matter, “the 21st Amendment does not in any way diminish the reach of the Supremacy Clause,” and therefore has neither the intent nor effect of undermining federal preemption of inconsistent state law. Moreover, Judge Scola noted that other courts have found similar state law prohibitions on food additives to be preempted by the FDCA.

Like previous cases we have covered on this blog, the decision underscores the FDA’s broad regulatory authority over food and beverage products which cannot be circumvented by plaintiffs simply by bringing claims under state law. In doing so, it provides important assurance to manufacturers of such products that their reliance on federal law will not be undercut by arcane state provisions.

© 2020 Proskauer Rose LLP.

For more on food & beverage authority, see the National Law Review Biotech Food & Drug section.

Florida’s Legislature to Consider Consumer Data Privacy Bill Akin to California’s CCPA

Florida lawmakers have proposed data privacy legislation that, if adopted, would impose significant new obligations on companies offering a website or online service to Florida residents, including allowing consumers to “opt out” of the sale of their personal information. While the bill (SB 1670 and HB 963) does not go as far as did the recent California Consumer Privacy Act, its adoption would mark a significant increase in Florida residents’ privacy rights. Companies that have an online presence in Florida should study the proposed legislation carefully. Our initial take on the proposed legislation appears below.

The proposed legislation requires an “operator” of a website or online service to provide consumers with (i) a “notice” regarding the personal information collected from consumers on the operator’s website or through the service and (ii) an opportunity to “opt out” of the sale of certain of a consumer’s personal information, known as “covered information” in the draft statute.

The “notice” would need to include several items. Most importantly, the operator would have to disclose “the categories of covered information that the operator collects through its website or online service about consumers who use [them] … and the categories of third parties with whom the operator may share such covered information.” The notice would also have to disclose “a description of the process, if applicable, for a consumer who uses or visits the website or online service to review and request changes to any of his or her covered information. . . .” The bill does not otherwise list when this “process” would be “applicable,” and it nowhere else appears to create for consumers any right to review and request changes.

While the draft legislation obligates operators to stop selling data of a consumer who submits a verified request to do so, it does not appear to require a description of those rights in the “notice.” That may just be an oversight in drafting. In any event, the bill is notable as it would be the first Florida law to require an online privacy notice. Further, a “sale” is defined as an exchange of covered information “for monetary consideration,” which is narrower than its CCPA counterpart, and contains exceptions for disclosures to an entity that merely processes information for the operator.

There are also significant questions about which entities would be subject to the proposed law. An “operator” is defined as a person who owns or operates a website or online service for commercial purposes, collects and maintains covered information from Florida residents, and purposefully directs activities toward the state. That “and” is assumed, as the proposed bill does not state whether those three requirements are conjunctive or disjunctive.

Excluded from the definition of “operator” is a financial institution (such as a bank or insurance company) already subject to the Gramm-Leach-Bliley Act, and an entity subject to the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Outside of the definition of “operator,” the proposed legislation appears to further restrict the companies to which it would apply, to eliminate its application to smaller companies based in Florida, described as entities “located in this state,” whose “revenue is derived primarily from a source other than the sale or lease of goods, services, or credit on websites or online services,” and “whose website or online service has fewer than 20,000 unique visitors per year.” Again, that “and” is assumed as the bill does not specify “and” or “or.”

Lastly, the Department of Legal Affairs appears to be vested with authority to enforce the law. The proposed legislation states explicitly that it does not create a private right of action, although it also says that it is in addition to any other remedies provided by law.

The proposed legislation is part of an anticipated wave of privacy legislation under consideration across the country. California’s CCPA took effect in January and imposes significant obligations on covered businesses. Last year, Nevada passed privacy legislation that bears a striking resemblance to the proposed Florida legislation. Other privacy legislation has been proposed in Massachusetts and other jurisdictions.

©2011-2020 Carlton Fields, P.A.

For more on new and developing legislation in Florida and elsewhere, see the National Law Review Election Law & Legislative News section.

Steering Wheels Become Increasingly Optional

Florida is the latest state to allow vehicles to operate on the road without a steering wheel.  In doing so, Florida became the third state after Michigan and Texas to allow vehicles on its roads without a human even having the ability to drive them.  The legislation signed into law includes:

The bill authorizes operation of a fully autonomous vehicle on Florida roads regardless of whether a human operator is physically present in the vehicle. Under the bill, a licensed human operator is not required to operate a fully autonomous vehicle. The bill authorizes an autonomous vehicle or a fully autonomous vehicle equipped with a teleoperation system to operate without a human operator physically present in the vehicle when the teleoperation system is engaged. A remote human operator must be physically present in the United States and be licensed to operate a motor vehicle by a United States jurisdiction.

Florida is sure to become a hotbed of autonomous vehicle testing with this new law.  Starsky Robotics is one of the companies expected to take advantage by putting driverless vehicles on the road in 2020.  These would not be just any vehicles, but big rig trucks.  These trucks have already hit 55 mph, without a driver or crew.  Most predict that this is just the beginning with as many as eight million autonomous vehicles expected on the road by 2025 and 30 million by 2030. Of course, the devil is in some of the details. There are six levels of autonomous vehicles, with level 5, Full Automation, being the highest.

Not everyone agrees that this is all happening so quickly.  As the New York Times noted, “A growing consensus holds that driver-free transport will begin with a trickle, not a flood.” Of course, this makes sense.  Outside of people with a vested interest (we are looking at you Mr. Musk), few seem to truly believe that millions of level 5, completely driverless vehicles will be on the road.

But this does not mean that they will not make an impact. While vehicles may not be navigating complex systems in dense areas next year, they are likely to find plenty of uses.  Gated communities with known road structures and limited traffic might be a good location for the first generation of fully autonomous vehicles. And think of the myriad of shuttles at various locations that run the same route, over and over, day after day. That seems like a good use of a fully autonomous vehicle run by something other than gasoline. How about college campuses, with autonomous vehicles running all day and all night providing safe routes and passage for vulnerable students at all hours. Suffice to say, the day when people can wake up, get into a fully autonomous vehicle, and go to sleep while it takes them to work is perhaps not something the current work force will enjoy (except apparently for the occasional Tesla rider taped sleeping behind the wheel).

But whatever generation comes after Generation Z is unlikely to know a driving experience like what exists today, if there is any driving at all. Will they even drive at all, or will they fly in their autonomous flying cars? Project Vahana aims to offer just that. In their own words: “Project Vahana intends to open up urban airways by developing the first certified electric, self-piloted vertical take-off and landing (VTOL) passenger aircraft.” Getting to work will never be easier.  Unless of course, all this transportation runs into the fact that everyone works remotely.

 

© 2019 Foley & Lardner LLP
For more on Vehicle Legislation see the National Law Review page on Utilities & Transport.

Trouble In Paradise: Florida Court Rules That Selling Bitcoin Is Money Transmission

The growing popularity of virtual currency over the last several years has raised a host of legislative and regulatory issues. A key question is whether and how a state’s money transmitter law applies to activities involving virtual currency. Many states have answered this – albeit in a non-uniform way – through legislation or regulation, including regulatory guidance documents. For instance, Georgia and Wyoming have amended their money transmitter statutes to include or exclude virtual currencies explicitly. In other states, such as Texas and Tennessee, the state’s primary financial regulator has issued formal guidance. In New York, the Department of Financial Services issued an entirely separate regulation for virtual currencies. Still, in others, neither the legislature nor the relevant regulator has provided any insight into how the state’s money transmitter law may apply.

In most states, the judicial branch has not yet weighed in on the question. But Florida is an exception. On January 30, 2019, in State v. Espinoza, Florida’s Third District Court of Appeal interpreted the state’s money transmission law broadly and held that selling bitcoin directly to another person is covered under the law. [1] The decision will have broad implications for the virtual currency industry in Florida.

BACKGROUND: MIAMI BEACH POLICE DEPARTMENT AND MICHELL ESPINOZA

In December 2013, the Miami Beach Police Department (“MBPD”) perused an Internet website that provided a directory of buyers and sellers of bitcoin. In an undercover capacity, an MBPD agent contacted one of the users, Michell Espinoza. Shortly thereafter, the agent arranged to meet and purchase bitcoin from Espinoza in exchange for cash. The MBPD agent who purchased the bitcoin implied that he would use the bitcoin to fund illicit activities. One month later, the MBPD made a second purchase from Espinoza, telling him that the bitcoin would be used to purchase stolen credit card numbers. After a third and fourth transaction, the MBPD arrested Espinoza. The State of Florida charged him with two counts of money laundering and one count of engaging in the business of a money transmitter without a license. Espinoza moved to dismiss the charges, arguing, among other things, that Florida’s money transmitter law does not apply to bitcoin. The trial court agreed and dismissed all counts against Espinoza.

THE THIRD DISTRICT COURT’S OPINION: SELLING BITCOIN CONSTITUTES MONEY TRANSMISSION

Florida appealed, and the appellate court reversed the trial court’s ruling. The court started its analysis noting that the state’s money transmitter law requires anyone engaging in a “money services business” to be licensed. [2] A “money services business” is defined as “any person . . . who acts as a payment instrument seller, . . . or money transmitter.” [3] The court held that bitcoin is regulated by Florida’s money transmitter law, and, as a result, Espinoza was both “acting as a payment instrument seller” and “engaging in the business of a money transmitter.”

Under the Florida statute, a “payment instrument seller” is an entity that sells a “payment instrument.” [4] The phrase “payment instrument” is defined to include a variety of instruments, including “payment of money, or monetary value whether or not negotiable.” [5] The phrase “monetary value,” in turn, is defined as “a medium of exchange, whether or not redeemable in currency.” [6] The court interpreted these definitions – which it described as “plain and unambiguous” – to conclude bitcoin falls under the definition of “payment instrument.” To reach that conclusion, it reasoned that bitcoin, which is redeemable for currency, is a medium of exchange, which falls under the definition of “monetary value.” Therefore, it falls under the definition of “payment instrument.” [7] To purportedly bolster its point, the court noted that several businesses in the Miami area accepted bitcoin as a form of payment. It also pointed to a final order from the Florida Office of Financial Regulation (“OFR”) in which OFR granted Coinbase a money transmitter license. The court noted that Coinbase provides a service “where a Coinbase user sends fiat currency to another Coinbase user to buy bitcoins.” “Like the Coinbase user,” the court reasoned, the MBPD detective “paid cash to Espinoza to buy bitcoins.”

The court also concluded Espinoza was acting as a money transmitter. Under the Florida statute, a money transmitter is an entity that “receives currency, monetary value, or payment instruments for the purpose of transmitting the same by any means….” [8] Espinoza argued he fell outside this definition because he did not receive payment for the bitcoin for the purpose of transmitting the same to a third party. The court disagreed. It held that the law does not require the presence of a third party because the definition of money transmitter does not mention a third party, either expressly or implicitly. [9] It also disagreed with the trial court and Espinoza’s “bilateral limitation,” which would require Espinoza to have both received and transmitted the same form of currency, monetary value, or payment instrument. According to the court, Espinoza fell within the ambit of the law because he received fiat for the purpose of transmitting bitcoin. It explained that the phrase “the same” in the definition of “money transmission” modifies the list of payment methods, and the use of “or” in that list of payment methods – “currency, monetary value, or payment instrument” – means that “any of the three qualifies interchangeably on either side of the transaction.”

As additional support for its position, the court distinguished a final order entered into by OFR: In re Petition for Declaratory Statement Moon, Inc. According to the court’s description, Moon sought to establish a bitcoin kiosk program under which a Moon customer would pay fiat to a licensed money services business in exchange for a PIN, and the customer would then enter the PIN into a Moon kiosk, which would initiate a transfer of bitcoins to the user from a Moon bitcoin address. Once the PIN was redeemed, the licensed entity would pay Moon. OFR determined Moon did not a license. The court distinguished the Moon order because “Moon merely facilitated the transfer of bitcoins through the use of a licensed money services business,” whereas “[h]ere, no licensed money services business was utilized in the exchange of U.S. dollars for bitcoins that occurred between Espinoza and” the MBPD agent.

COUNTERPOINTS TO THE COURT’S OPINION

Several state legislatures or regulators have amended or interpreted their money transmitter laws to apply to virtual currency, but those actions do not take the form of a judicial opinion. Here, the Third District Court provided its specific reasoning for reaching its conclusions. It remains to be seen whether Espinoza will seek review from the Florida Supreme Court, but there are at least a few points in the court’s opinion that warrant further review and analysis.

First, Espinoza did not receive money for the purpose of transmitting it. He received it in exchange for selling bitcoin; he received it for the purpose of possessing it. The court rejected Espinoza’s attempt to impose a third-party requirement, but the most natural reading of the phrase “transmitting” would require Espinoza to send onward whatever value he received. Merriam-Webster defines “transmit” as “to send or convey from one person or place to another.” By using the words “receive” and “transmit,” the Florida law focuses on the act of sending money to another person and excludes the act of selling money or monetary value. If simply selling property were sufficient to trigger the money transmitter law, the statute would likely sweep far more broadly than intended. Here, Espinoza was acting as a merchant selling goods. This would not constitute money transmission under any reasonable reading of the law. Indeed, some states (and FinCEN) have recognized that a party selling its own inventory of virtual currency in a two-party transaction is not a money transmitter.

Second, the court’s conclusion is further undercut by considering the Moon proceeding the court discusses. The opinion notes “the PIN provided by the licensed money services business to Moon’s customers provided a mechanism by which the exchange of U.S. dollars for bitcoins could be identifiable.” The PIN could arguably be classified as a payment instrument because it is an “other instrument” or “monetary value.” If transmission to a third party is not required, as the court holds, then Moon should have needed a license when it received the PIN and then transmitted bitcoins back to the user that was redeeming the PIN. But that wasn’t the conclusion OFR reached.

Third, the court’s interpretation of how OFR would treat Espinoza’s actions is questionable. In 2014, OFR issued a consumer alert stating that “[v]irtual currency and the organizations using them are not regulated by the OFR.” [10] In addition, in January 2018, OFR released another consumer alert regarding cryptocurrency, stating that “[cryptocurrencies] are subject to little or no regulation,” which further indicates OFR does not interpret the money transmission law to cover cryptocurrencies. [11] The court does not acknowledge these statements. Although the court focuses on an OFR order regarding Coinbase, that order granted Coinbase a license and listed a variety of activities in which Coinbase was engaged or planned to engage. The order does not specify what specific activity was licensable, but it is likely that a license was granted because of the receipt and transmission of fiat currency.

CONCLUSION

If Espinoza appeals, the case could go to the Florida Supreme Court, where the virtual currency industry will receive a more definitive answer. In the meantime, virtual currency businesses should be aware that the Florida Attorney General’s Office interprets the state’s money transmitter act to regulate bilateral sales of virtual currency for fiat currency and is willing to prosecute at least certain cases of unauthorized sales. As of now, Florida’s Third District Court agrees. How the Espinoza case concludes and whether and how the Florida legislature responds will be important to the virtual currency industry.

NOTES

[1] — So. 3d –, 2019 WL 361893 (Fla. 3d DCA 2019).

[2] FLA. STAT. § 560.125.

[3] Id. § 560.103(22).

[4] Id. § 560.103(30).

[5] Id. § 560.103(29) (emphasis added).

[6] Id. § 560.103(21).

[7] The court principally discusses whether bitcoin falls under Florida’s money transmitter law. In a few instances, it also references “virtual currency” generally, but it is not clear how broadly it was intending to apply its holding.

[8] Id. § 560.103(23).

[9] As a counterpoint, the court noted that the Financial Crime Enforcement Network’s (“FinCEN”) definition of money transmitter explicitly includes a third party requirement because it defines a money transmitter as someone that accepts value from one person and transmits value to “another location or person by any means….” 31 C.F.R. § 1010.100(ff)(5)(i)(A).

[10] Consumer Alert: Update on Virtual Currency, Office of Financial Regulation, Sept. 17, 2014.

[11] Consumer Alert: Cryptocurrency, Office of Financial Regulation, Jan. 17, 2018.

 

Copyright 2019 K&L Gates

Compliance With Florida’s “Generator” Laws

Earlier this year, Florida Governor Rick Scott signed into law HB7099and SPB7028 (collectively referred to as the “Bills”), ratifying emergency rules that require nursing homes and assisted living facilities to acquire alternative power sources– such as generators- and fuel in preparation of the upcoming hurricane season. See Rule 59A-4.1265 and Rule 58A-5.036. These rules were enacted after 14 residents died from heat-related illnesses and complications during Hurricane Irma last year when a Florida nursing home lost power to its air conditioning units for three days.

The Bills went into effect on March 28, 2018, and required qualifying facilities to come into compliance by June 1, 2018, unless granted an extension by the Governor whereby compliance is expected by January 2019. Facilities that can show delays caused by necessary construction, delivery of ordered equipment, zoning, or other regulatory approval processes are eligible for an extension if the facility can provide residents an area that meets the ambient temperature requirements for 96 hours. Extensions are granted on a case-by-case basis, although so far a majority of Florida facilities have been granted an extension. Indeed, it appears that over 77% of nursing homes received an extension in the first week of June. Additionally, facilities located in an evacuation zone pursuant to Chapter 252, F.S., must either evacuate its residents prior to the arrival of any emergency event, or have an alternative power source and no less than 96 hours of fuel stored onsite at least within 24 hours of the issuance of a state of emergency. Failure to comply with any provision may result in the revocation or suspension of a facility’s license and/or the imposition of administrative fines.

Nursing Homes and Assisted Living Facilities Must Develop Emergency Plans that Provide for Alternative Power Sources and Fuel Capable of Maintaining an Ambient Temperature of No Greater Than 81 Degrees Fahrenheit for At Least 96 Hours.

Nursing Homes and Assisted Living Facilities must prepare a detailed plan (“Plan”) that provides for the acquisition and maintenance of alternative power sources- such as generators- and fuel. The Plan will supplement a facility’s Comprehensive Emergency Management Plan and must be submitted to and approved by the requisite agency. While the Bills do not require facilities to maintain a specific type of power system or equipment; the alternative power sources utilized by a facility must be capable of maintaining an ambient temperature of no greater than 81 degrees Fahrenheit for at least 96 hours after the loss of primary electrical power. This temperature must be maintained in areas of sufficient size to shelter residents safely. Alternative power sources and fuel should be maintained in accordance with local zoning restrictions and the Florida Building Code.

Moreover, the Bills set forth additional requirements for nursing homes and assisted living facilities in evacuation zones, as well as for single campus and multistory facilities.

  • Facilities in Evacuation Zones – A facility in an evacuation zone pursuant to Chapter 252, F.S. must provide in their Plan for the maintenance of an alternative power source and fuel at all times when the facility is occupied but may utilize mobile generators to facilitate evacuation.
  • Single Campus – Single campus facilities under common ownership may share alternative power sources and fuel space if such resources are sufficient to maintain the ambient temperature required under the rules.
  •  Multistory Facilities – Multistory facilities, whose Comprehensive Emergency Management Plan comprises of moving residents to a higher floor during flood or surge events, must place their alternative power source and all additional equipment in a location protected from flooding or storm surge damage.

Fuel Storage Requirements Vary by Facility Size and Location.

The Bills require facilities to provide for storage of a certain amount of fuel based on their size and location. Assisted living facilities with 16 beds or less must store a minimum of 48 hours of fuel, while assisted living facilities with 17 beds or more a required to store a minimum of 72 hours of fuel. All nursing homes must store a minimum of 72 hours of fuel. Nursing homes and assisted living facilities located in a declared state of emergency area pursuant to Section 252.36, F.S., that may impact primary power delivery, must secure 96 hours of fuel; these facilities may utilize portable fuel storage containers for the remaining fuel necessary for 96 hours during the period of a declared state of emergency.

Emily Budicin, a 2018 Summer Associate in the firm’s Washington, DC office, contributed significantly to the preparation of this post.

 

©2018 Epstein Becker & Green, P.C. All rights reserved.

Litigation After Devastation: The Legal Storm Surge

Bridges crumbling in Texas. Houses turned to toothpicks in the USVIs. Newly-formed rivers ravaging the streets in South Florida. The devastating destruction from the recent hurricanes that have pummeled the U.S. has uprooted many peoples’ homes and lives, but we have only begun to feel the impact of the surge.

Massive relief efforts have begun, national fundraising, news coverage, responsive legislation, and building codes to name a few. A litigation surge is swelling as well. We have seen several types of cases and class actions churn from a hurricane’s aftermath. Here are some of the types of cases, coverage issues, and expert needs you may see after the storm.

Property Damage and Meteorological Causation

Insurance companies insuring the Southern United States are bracing for the waves of claims that will soon be flooding in. Just as it was following Hurricanes Katrina, Ivan, and Sandy, the hotly-debated issue of whether the damage was caused by wind or water will be the likely focus. While most homeowner insurance policies will cover water damage that was caused by a roof or window that was compromised by wind and allowed water intrusion, most do not cover water that rises from the ground level and enters the home. Experts will be relied upon to determine how water got into a structure, even when it is entirely obliterated.

Insurance companies and attorneys will be looking for experts in meteorology, often with advanced degrees and testifying experience, who can opine on the types of weather conditions that might have existed at a given time in a given place (i.e., Key West when Hurricane Irma struck). The experts could come from academia or environmental institutes and societies. They will be asked to review various data points and speak on weather conditions at a particular time and place to support causation for insurance coverage. Structural engineers will also be needed, preferably with experience in standard insurance practices, procedures, and protocols in evaluating damage caused by hurricanes. They will need to have an understanding of insurance claims handling and will be asked to review various reports and data, some from other engineers, discussing damage caused to structures by the hurricane and opine as to whether or not the reports and data are accurate.

Structural Failures and Faulty Design/Construction

While many large, concrete commercial buildings and bridges are designed to withstand 150+ mph winds and flooding,  they can still be left severely damaged after a storm blows through. Structural failure of buildings, roofs, bridges, and roadways that were expected to withstand hurricane winds will lead to litigation over damage caused by the failure. Structural engineers with expertise in the types of structures at issue, likely licensed engineers, will be needed to examine damage patterns through photos, video, or via a post-storm on-scene inspection. They will also need to use meteorological wind information to determine the cause of the failure and the quality of the design or construction.

Class Actions for Coverage Determinations

Often, the core issues in insurance-related storm damage cases are similar across a wide span of policyholders. These cases will vary depending on the coverage matter at issue, but the most sought-after experts will be familiar with insurance claims standards, protocols, and policy interpretation. Construction experts may also be needed to opine on the necessity and extent of certain repairs required after a storm. Also, standard practices and interactions between contractors and insurance companies during the re-build process will come into question. Class actions may be filed as well, simply as placeholders to toll certain claims-filing deadlines or allow broader bad faith discovery against insurance companies who refuse to pay mass claims.

Litigation Over Price-Gouging

One of the worst scenarios to follow a storm is wide-scale price-gouging and scamming by companies trying to capitalize on the desperation and vulnerability of storm victims. Before the storm, many people preparing for power outages or evacuation will see unfair spikes in essentials such as water and gas. After the storm, shady contractors and tree-removers often flood in, lie about their licensing and credentials, and charge exorbitant fees while performing shoddy, haphazard work, or no work at all. Many states, including Florida, have made it a crime for any service provider to offer or sell essential commodities for an amount that “grossly exceeds the average price” during the thirty days following a declaration of emergency. In the days before Hurricane Irma’s approach, many reported price-gouging for essentials such as water, ice, batteries, and gas when thousands of Floridians were stocking up or evacuating. Class actions alleging price-gouging will likely occur following the storm. Experts in standard industry pricing, manufacture costs, and storm clean-up and repair may be called in to opine on the “average price” of certain essential commodities and post-storm services.

In the wake of Hurricanes Harvey and Irma, we are gearing up for the incumbent waves of litigation and expert requests we anticipate will follow. What types of cases, class actions, and expert needs are you expecting?

This post was written by Annie Dike of IMS ExpertServices, All Rights Reserved. © Copyright 2002-2017
For more legal analysis go to The National Law Review

P3 Legislation in Florida – Public Private Partnerships

On September 24-25, Miami-Dade County held a P3 Institute entitled “The P3 Pipeline: A Forum for the Private Sector.” Among the topics discussed at the Institute was a measure currently before the Florida Legislature that, if enacted, will make the P3 procurement process easier for all parties involved.

Two bills, House Bill 97 and House Bill 95, have advanced to House committees and are moving through the legislative process. HB 97, known as “Public Records and Public Meetings,” is currently in the State Affairs Committee. HB 95, a companion bill known simply as “Public-Private Partnerships,” is in the Appropriations Committee. Approval by all required legislative committees is a necessary step before these bills can be introduced in the 2016 legislative session.

If it passes, HB 97 would exempt unsolicited P3 proposals by responsible public entities from public records and public meeting requirements for a specified time period. HB 95, a corollary bill, revises provisions regarding responsible public entities and unsolicited proposals for qualified projects. In doing so, HB 95 expands the list of entities authorized to conduct P3s to include state universities, special districts, school districts (rather than school boards), and institutions included in the state college system.

On a related note, the bills’ sponsor, Representative Greg Staube (R-Sarasota), has stated that several state legislators (without naming the legislators specifically) are discussing the possibility of a centralized state office that could offer Public Private Partnership procurement expertise to Florida counties. The office could be housed in an existing state agency, like the Department of Management Services or Enterprise Florida, to save money.

Article By Albert E. Dotson, Jr. & Leah Aaronson of Bilzin Sumberg Baena Price & Axelrod LLP

© 2015 Bilzin Sumberg Baena Price & Axelrod LLP