Eversheds Sutherland 11th Circuit Business Blog
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Settlement Class Defined to Include Uninjured Members Cannot Be Approved

An appeal concerning the meaning of coupon settlements under the Class Action Fairness Act instead produced an important opinion, Drazen v. Pinto, 2022 LEXIS 20766 (11th Cir. July 27, 2022), addressing the certification of classes that are defined to include members who have not been injured. Some background may be helpful in understanding the ruling. In TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021), the Supreme Court held that class members who do not have standing are not entitled to participate in any damage recovery by the class. The Court vacated a jury’s award of damages under the...
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Rule 11 Motion May Be Filed After Final Judgment, Provided 21-Day Safe Harbor Period Has Run

The Eleventh Circuit recently confirmed that a litigant may file a Rule 11 motion even after final judgment has been entered—notwithstanding arguably contrary language in some of the court’s prior decisions—as long as the 21-day safe harbor period required by the rule has run. Huggins v. Lueder, Larkin & Hunter, LLC, 39 F.4th 1342 (11th Cir. July 12, 2022). The law firm Lueder, Larkin & Hunter represented a homeowners’ association in lawsuits seeking to collect delinquent dues, and later found itself on the receiving end of a complaint filed by homeowners alleging that the firm had...
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ERISA Beneficiary May Recover as “Appropriate Equitable Relief” Benefits Lost Due to Fiduciary’s Breach

The Eleventh Circuit has joined every other Court of Appeals to consider the issue by holding that an ERISA beneficiary may recover under ERISA’s Section 1132(a)(3), which permits an action for “appropriate equitable relief,” benefits lost as a result of a breach of fiduciary duty. Gimeno v. NCHMD, Inc., 38 F.4th 910 (11th Cir. June 28, 2022). Justin Polga was a doctor employed by NCHMD, Inc. When Dr. Polga was hired, he elected to add $350,000 in supplemental life insurance to his benefits, and NCHMD’s human resources staff helped him complete the insurance enrollment paperwork. Polga...
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En Banc Court Stands by Ban on Class-Action Incentive Payments for Plaintiffs

Nearly two years after a divided three-three judge panel held that federal law prohibits “incentive payments” to named class representatives (see our previous blog post here), the Eleventh Circuit denied a petition to rehear that case en banc. Johnson v. NPAS Solutions, LLC, 2022 U.S. App. LEXIS 21455 (11th Cir. Aug. 3, 2022). The denial effectively upholds that prohibition across federal courts in Alabama, Florida, and Georgia. Judge Jill Pryor (joined by Judges Wilson, Jordan, and Rosenbaum) dissented from the denial of rehearing en banc. Judge Pryor noted that the Second Circuit had...
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Receiver for Entity Involved in Fraud Lacked Standing to Bring Aiding and Abetting Claims against Bank

A divided Eleventh Circuit panel held in Perlman v. PNC Bank, N.A., 38 F.4th 899 (11th Cir. June 27, 2022), that a court-appointed receiver lacked standing to bring claims against the bank which, he alleged, aided and abetted the fraudulent scheme committed by the companies for which he was appointed receiver. The receiver’s action was thus properly dismissed for lack of subject matter jurisdiction. The underlying litigation became complicated when the Supreme Court decided, in AMG Capital Management, LLC v. FTC, 141 S. Ct. 1341 (2021), that the Federal Trade Commission Act did not authorize...
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Post-Petition Payment of Section 503(b)(9) Claims Does Not Reduce a Creditor’s New Value Preference Defense

The Eleventh Circuit has held that amounts paid post-petition for an administrative expense claim under Section 503(b)(9) of the Bankruptcy Code do not reduce the “new value” otherwise available to the creditor as a defense to a preference claim. Auriga Polymers Inc. v. PMCM2, LLC, 2022 U.S. App. LEXIS 19761 (11th Cir. July 18, 2022). Carpet manufacturer Beaulieu Group, LLC filed for bankruptcy in 2017. The resulting liquidating trust brought a complaint against one of Beaulieu’s erstwhile suppliers, Auriga Polymers, seeking to avoid under Section § 547(b) of the Bankruptcy Code and recover...
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No Tiebreaker Necessary: Breaking with the Federal Circuit, Court Holds That Litigation Can Result in No “Prevailing Party” for Cost and Fee Shifting

In Royal Palm Properties, LLC v. Pink Palm Properties, LLC, 2022 U.S. App. LEXIS 18682 (11th Cir. July 7, 2022), the Eleventh Circuit held that there may be no prevailing party for the purposes of post-verdict cost and fee shifting. A unanimous appellate panel affirmed a district court’s denial of a litigant’s motion for costs and fees, finding that the jury’s split verdict resulted in a legal tie and thus no prevailing party. Royal Palm Properties, LLC (“Royal Palm”) initiated the underlying lawsuit, alleging that Pink Palm Properties, LLC (“Pink Palm”) infringed upon its registered federal...
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Panel Invites Full Court to Revisit Grounds on Which International Arbitration Awards Can Be Vacated

In Corporacion AIC, SA v. Hidroelectrica Santa Rita S.A., 34 F.4th 1290 (11th Cir. 2022), a panel of the Eleventh Circuit urged the full court to reconsider its holding in Inversiones y Procesadora Tropical INPROTSA, S.A. v. Del Monte International GmbH, 921 F.3d 1291 (11th Cir. 2019), and to add to the grounds on which an international arbitration award rendered in the United States, or under U.S. law, can be vacated. The dispute between Corporacion AIC, SA (“AICSA”) and Hidroelectrica Santa Rita SA (“HSR”) arose under an agreement for the creation of a new power plant in Guatemala....
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Court Denies Coverage in Another Covid-19 Case, This Time Under Georgia Law

Recognizing that every federal and state appellate court has held that the presence of Covid-19 does not cause direct physical harm to a business’s property, the Eleventh Circuit has held again—this time under Georgia law—that Covid-related expenses and losses are not covered by a business insurance policy. In Henry’s Louisiana Grill, Inc. v. Allied Insurance Co. of America, 2022 U.S. App. LEXIS 15381 (11th Cir. June 3, 2022), Judge Grant, joined by Judges Luck and Anderson, concluded that because any route to coverage for the insured restaurant required “direct physical loss” of or “damage”...
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Fair Debt Collection Laws May Apply to Mortgage Statements

Answering a question of first impression for the court, the Eleventh Circuit held in Daniels v. Select Portfolio Servicing, Inc., 2022 U.S. App. LEXIS 14013 (11th Cir. May 24, 2022), that a mortgage statement submitted to a borrower may, under certain circumstances, constitute a communication in connection with a debt that is subject to the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq., and Florida’s Consumer Collection Practices Act. The court vacated an order dismissing the borrower’s complaint, concluding that compliance with the Truth-in-Lending Act and its implementing...
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All-Risk Insurance Coverage Doesn’t Cover All Risks from COVID-19

The Eleventh Circuit has answered an important and timely question about insurance coverage for business losses due to COVID-19. Under Florida law, an “all-risk” insurance policy covering direct physical loss or damage does not insure against losses and expenses incurred by businesses as a result of COVID-19. In SA Palm Beach, LLC v. Certain Underwriters at Lloyd’s London, 2022 U.S. App. LEXIS 12210 (11th Cir. May 5, 2022), the court considered the particular policy language at issue in four cases consolidated on appeal providing coverage for “direct physical loss of or damage to” property...
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Passing the Test: ADA “Tester” Plaintiff Has Standing to Sue Based on Lack of Information on Hotel’s Website

An ADA plaintiff sufficiently pleaded a concrete intangible injury, and thus had standing to sue, when she alleged that she was unable to access information on a hotel’s website about accommodations for persons with disabilities, even though she visited the hotel only as a “tester” plaintiff and had no intent to return. Laufer v. Arpan LLC, 2022 U.S. App. LEXIS 8270 (11th Cir. Mar. 29, 2022), involved a plaintiff with a disability under the Americans with Disabilities Act who acted as a “tester” plaintiff, monitoring places of public accommodation and their websites for compliance with the...
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Federal Arbitration Act, Not Georgia Arbitration Code, Applied to Review of Arbitration Award

In Gulfstream Aerospace Corp. v. OCELTIP Aviation 1 PTY Ltd, 2022 U.S. App. LEXIS 10382 (11th Cir. Apr. 18, 2022), the Eleventh Circuit rejected an argument that the parties’ contract provided for the Georgia Arbitration Code (“GAC”), rather than the Federal Arbitration Act (“FAA”), to apply to proceedings to confirm or vacate an arbitration award. The underlying dispute arose from an agreement for the sale of a business jet. Gulfstream (a Georgia company) said that Oceltip (an Australian company) failed to pay for the aircraft as required by the parties’ agreement; Oceltip said that...
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Plaintiff’s Coal Gasification Claims Go Up in Smoke, $13 Million Verdict on Defendant’s Counterclaim Remains

In MidAmerica C2L Inc. v. Siemens Energy Inc., 25 F.4th 1312 (11th Cir. Feb. 15, 2022), the Eleventh Circuit rejected an appeal from a $13.2 million verdict for the defendant in a lawsuit over coal gasification equipment. In an opinion written by Judge Barbara Lagoa and joined by Judges Newsom and Branch, the court affirmed, holding that the district court did not err by (a) excluding certain expert testimony; (b) entering summary judgment against each of the plaintiff’s claims; (c) denying the plaintiff’s repeated attempts to amend its complaint; and (d) denying the plaintiff’s motion for...
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