Associate’s Corner: Florida’s Appellate Courts Split on the Scope of FDUTPA—Will More Foreign Consumers Gain Protection from Fraudulent and Deceptive Trade Practices?

By May 13, 2013

By: Jorge Delgado
The Florida Deceptive and Unfair Trade Practices Act, popularly known as FDUTPA, was designed to protect consumers from fraudulent and deceptive trade practices.  In a typical scenario, a Florida consumer would sue a company that transacts business in Florida over activities that occurred entirely in Florida.
However, a split has emerged within the Florida’s District Courts of Appeal as to whether  FDUTPA only protects Florida consumers, as opposed to foreign consumers.  Concomitant with this issue are other questions, such whether FDUTPA applies to Florida companies that commit deceptive trade practices in other states, or to foreign parties that enter into a contract or other one-time transaction in Florida.

As foreign investors begin to transact large volumes of business in Florida, the scope of FDUTPA will come into play.  And with the DCA’s split on the scope of the statute, where business is transacted, the identity of the parties and where the lawsuit is filed may play a greater role in the plaintiff’s ability to seek relief.
Currently, the Third DCA allows foreign plaintiffs to file a FDUTPA claim against a Florida defendant for unfair or deceptive trade practices.  In the case of Millennium Communications & Fulfillment, Inc. v. Office of the Attorney General, 761 So. 2d 1256 (Fla. 3d DCA 2000), Florida’s Attorney General sought statutory relief under FDUTPA against a Florida company that used unfair and deceptive trade practices to promote a credit card program to consumers.  Millennium argued that because it did not market its products to Florida residents and because no Florida residents were affected by its activities, FDUTPA did not apply.  The Third DCA disagreed:

As we read FDUTPA, it seeks to prohibit unfair, deceptive and/or unconscionable practices which have transpired within the territorial boundaries of this state without limitation.  Therefore, where the allegations in this case reflect that the offending conduct occurred entirely within this state, we can discern no legislative intent for the Department to be precluded from taking corrective measures under FDUTPA even where those persons affected by the conduct reside out of state.

Id. at 1262.
In its reasoning, the Third DCA refused to follow the Fourth DCA’s decision in Coastal Physician Services of Broward County, Inc. v. Ortiz, 764 So. 2d 7, 8 (Fla. 4th DCA 1999), which, in a case involving debt collection practices, held that FDUPTA is “for the protection of in-state consumers from either in-state or out-of-state debt collectors.”
The Third DCA also noted that the Fourth DCA in Renaissance Cruises, Inc. v. Glassman, 738 So.2d 436 (Fla. 4th DCA 1999), wherein the same court found that FDUTPA applied to in-state and out-of-state residents in a class action, appeared to have receded, sub silentio, from Ortiz.  Nonetheless, one year after Glassman, the Second DCA in Océ Printing Systems USA, Inc. v. Mailers Data Services, Inc., 760 So. 2d 1037, 1042 (Fla. 2d DCA 2000) agreed with the holding in Ortiz, and held that “only in-state consumers can pursue a valid claim under the Unfair Trade Act.”
Florida’s federal courts have taken Millennium a step further, allowing FDUTPA claims to proceed where neither party is a Florida resident, and not all transactions occurred in Florida.  In the case of Barnext Offshore, Ltd. v. Ferretti Group USA, Inc., No. 10-23869-CIV, 2012 WL 1570057, at *6 (S.D. Fla. May 12, 2012), the Southern District of Florida allowed a FDUPTA claim to proceed by the purchaser of a yacht, a foreign corporation, against defendants that included a domestic corporation and foreign entities, because the yacht was sold in Florida, even though certain documents relevant to the sale of the yacht were signed in the Bahamas and that the yacht was physically transferred in the Bahamas.
Accordingly, Barnext suggests an even broader reading of FDUTPA that has yet to be applied in state courts.  Notably, the Middle District of Florida in 2P Commercial Agency S.R.O. v. Familant, No. 2:11-CV-652-FTM-29, 2012 WL 6615889 (M.D. Fla. Dec. 19, 2012), has agreed with the holdings in Barnext and Millennium, concerning the purchase of mobile phones by a foreign corporation for the global market, although in that case the conduct appears to have occurred entirely in Florida.
With foreign investors transacting significant business in Florida today, it is likely that more FDUTPA claims will be brought in the future by foreign plaintiffs based upon business transactions that occur in the state.  It remains to be seen how far the courts will extend FDUTPA, but, absent intervention by the Florida Supreme Court, the case law suggests a broader reader of the statute in future litigation.