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Are You Liable? Understanding Shareholder, Officer and Director Liability

One of the key features of the corporate legal structure is that it provides liability protection for the company’s owners, officers and directors. For legal purposes, the corporation is an independent legal entity – its own “person” – and it exists separately from the real-life people who keep the wheels turning and the money flowing. When the company gets sued, it is the company’s assets that are at risk rather than each individual owner, officer and director having his or her personal finances on the line.

However, this liability protection is not absolute. In fact, there are many circumstances in which individual shareholders, officers and directors can face personal liability in relation to their corporate duties.

Fiduciary Responsibilities of Shareholders, Officers and Directors

Shareholders, officers and directors in for-profit and non-profit entities all owe certain fiduciary obligations to the corporation. In broad terms, these obligations require that decisions be made in the corporation’s best interests, and not with competing interests or ulterior motives in mind. When a shareholder, officer or director breaches his or her fiduciary responsibilities, such action may be deemed a personal act – as opposed to an action on behalf of the company – and this can create exposure to personal liability.

Examples of actions that can constitute breaches of corporate fiduciary responsibilities include:

  • Engaging in conflict-of-interest transactions
  • Improper use or disclosure of inside information
  • Misappropriation of corporate assets
  • Misuse of corporate authority
  • Neglect of corporate duties

The specifics of these examples can vary widely. For example, while the directors of a condominium or homeowners’ association could face legal action based upon an alleged failure to fairly and equally apply the governing rules of the association, officers in large publicly-traded corporations will often face shareholder lawsuits alleging regulatory shortcomings and other violations that negatively impact the performance of the company’s stock. In small privately-held companies, shareholders can face liability in disputes that involve issues ranging from financial mismanagement to operation of competing businesses.

Indemnification and Insurance

While direct personal liability in these cases is a possibility, shareholders, officers and directors will often have two layers of protection available. The first is what is known as, “indemnification.” It is commonplace for corporations to cover (i) the costs of defending against, and (ii) any settlements or judgements resulting from, lawsuits against shareholders, officers and directors in their individual capacities. The second layer of protection is insurance. Director and officer (“D&O”) policies can cover these individuals directly or reimburse the company for satisfying its indemnification obligations, while general liability coverage and certain other types of insurance may provide protection as well.

Of course, there are exceptions. For example, indemnification obligations and insurance policies will typically exclude claims based upon fraud or personal profiting. Shareholder, officer and director liability claims can quickly become extraordinarily complex, and individuals facing potential liability will benefit greatly from experienced legal representation.

Speak with a Business Litigation Attorney in Fort Lauderdale, FL

With offices in Fort Lauderdale, the attorneys at Michael L. Feinstein, P.A. represent individuals and corporate entities in litigation throughout South Florida. If you are facing a dispute and would like to discuss your options, call (954) 767-9662 or contact us online to schedule a confidential consultation today.

Understanding “Pay-If-Paid” and “Pay-When-Paid” Construction Contracts

When are contractors required to pay their subcontractors? While this sounds like a simple question, determining the answer in any particular case can present unexpected challenges, and the timing of contractors’ payment obligations is a frequent issue in construction contract litigation.

“Pay-If-Paid” vs. “Pay-When-Paid”

In many cases, the issue arises out of the parties’ disagreement over whether their agreement’s payment clause is a “pay-if-paid” or a “pay-when-paid” provision. With a “pay-if-paid” provision, the general contractor is not under an obligation to pay unless and until it receives payment from the property owner (assuming the provision is properly drafted and legally enforceable). If the contractor does not get paid, then neither does the subcontractor—the entire payment risk rests with the subcontractor. This is typically reflected in contract language stating that payment from the property owner is a “condition precedent” to payment of the subcontractor, and an acknowledgement that the subcontractor is not relying on the contractor’s credit for payment.

By contrast, when a construction contract includes a “pay-when-paid” clause, the risk of non-payment ultimately shifts to the contractor. These clauses typically state that the subcontractor must be paid within a specific timeframe after payment from the property owner, or within an alternate timeframe if no such payment is received. This type of provision is clearly much more favorable to the subcontractor, although pay-when-paid clauses (or questions about whether a contract establishes pay-if-paid or pay-when-paid liability) also have a greater tendency to lead to litigation.

Related Issues in Contractor-Subcontractor Litigation

When analyzing contractors’ payment obligations and subcontractors’ payment rights, the parties will typically have a number of other issues to contend with as well. For example, in a typical contractor-subcontractor payment dispute, some of the key questions will include:

  • Does the payment clause contain a hybrid of pay-if-paid and pay-when-paid language? If so, what does this mean for the parties’ dispute?
  • If the parties’ contract has a pay-when-paid clause, when is the subcontractor entitled to seek payment from an unpaid general contractor?
  • Has the subcontractor satisfactorily performed under the contract? Or, is the contractor within its rights to withhold payment regardless of whether the agreement contains a pay-if-paid or pay-when-paid provision?
  • Is the property owner within its rights to withhold payment from the contractor? If so, what does this mean for the subcontractor?
  • If the property owner is improperly withholding payment, what remedies does the subcontractor have available? Can it take legal action against the property owner directly? Does it have the contractual authority to compel legal action by the contractor?

Contact the Fort Lauderdale Construction Lawyers at Michael L. Feinstein, P.A.

As you can see, the issues in contractor-subcontractor payment disputes can quickly generate complex disputes with high stakes for all parties involved. At Michael L. Feinstein, P.A., we have extensive experience resolving construction contract disputes through negotiations, alternative dispute resolution (ADR) proceedings, and state and federal litigation. If you are facing a potential dispute and would like to speak with an attorney at our offices in Fort Lauderdale, please call (954) 767-9662 or contact us online today.

What Contractors and Property Owners Need to Know about Surety Bonds

For construction projects of all sizes, surety bonds are important instruments that help protect property owners and lenders against the risk of non-performance by their contractors. General contractors can also use surety bonds to help avoid delays and defaults when their subcontractors fail to perform. Despite playing a central role in the bid and build processes for real estate developments throughout South Florida, many aspects of surety bonds are commonly misunderstood. Here is an overview of some of the key facts contractors and property owners need to know:

1. There are three primary types of surety bonds.

“Surety bond” is an umbrella term that encompasses several different types of bonds. In the context of construction, there are three primary types of surety bonds:

  • Bid Bonds – As their name suggests, bid bonds help protect property owners during the competitive bidding process. If the contractor who is awarded the project either fails to negotiate the contract or provide the required payment and performance bonds, the bid bond provides financial protection against the owner’s ensuing losses.
  • Performance Bonds – A performance bond provides assurance that the primary contractor will complete the project on time, according to specification and on budget. If a contractor fails to perform, the property owner can call upon the surety to either provide financial assistance to the contractor or replace the contractor without financial impact to the owner.
  • Payment Bonds – Payment bonds provide assurance that general contractors will pay their subcontractors, suppliers and employees. Property owners and lenders will frequently require payment bonds in order to prevent delays, work stoppages, liens and other issues from arising during construction.

2. A surety bond is not a substitute for insurance coverage.

Surety bonds mitigate the risk of contractual non-performance during construction projects. Insurance coverage mitigates the risk of loss from uncontrollable and unforeseen events. Surety bonds and insurance serve different purposes, and one is not a substitute for the other. Likewise, the different types of surety bonds provide protection under different scenarios, and none provide blanket protection for all construction contract-related disputes.

3. Surety bonds may or may not be mandatory.

While it is generally within the parties’ discretion whether to require surety bonds for private construction projects (public-sector projects are a different animal), lending, bidding and construction contracts will frequently require surety bonds. Parties to construction-related agreements should be sure to carefully review the terms and ensure that any bond requirements can be met.

4. Surety bonds do not guarantee litigation-free construction projects.

Finally, while bid, performance and payment bonds are intended to reduce the likelihood of costly disputes, it is not unusual for parties to major construction projects to find themselves in litigation concerning surety bonds. Questions concerning default of performance obligations, timing of payment obligations, sureties’ indemnification obligations and a wide range of other issues can all lead to multi-party construction litigation.

Michael L. Feinstein, P.A. | Fort Lauderdale Trial Litigation Attorney

If you are facing a dispute involving a surety bond and would like to discuss your options with an experienced construction litigation attorney, contact the Fort Lauderdale law offices of Michael L. Feinstein, P.A. To schedule a confidential initial consultation, please call (954) 767-9662 or get in touch online today.

Indemnification, Representations and Warranties: “Boilerplate” Terms that Play a Central Role in Business Litigation

What are the most important terms in a commercial contract? Different people have different perspectives, but most attorneys will tell you that it is actually the way that the terms in the contract work together that is most critical to protecting parties’ interests in the event of a dispute.

This is especially true with regard to the legal terms – the “boilerplate” that usually appears after the substantive provisions of the contract. When it comes to mitigating risk and apportioning liability, the indemnification, representation and warranty provisions of a contract will usually take on a central role in informing the parties’ strategies for commercial litigation.

Indemnification, Representations and Warranties

Let’s start with an overview of the basic terminology. While these terms tend to get thrown around (and are often used interchangeably), indemnification, representations and warranties are all distinct legal concepts that have their own unique and important implications:

  • Indemnification – An indemnification obligation is a duty for one contracting party to take on the other contracting party’s third-party liability. Take, for example, a subcontractor’s agreement to cover a general contractor for claims by the property owner arising out of the subcontractor’s negligence. This is a classic example of an indemnification obligation.
  • Representations – A representation is (or is supposed to be) a statement of fact. Contractual representations are intended to allow the parties to rely on their respective understandings of the present circumstances when entering into the agreement. For example, “ABC, Inc. has all necessary licenses to perform its obligations under this agreement,” is an example of a common type of representation that frequently appears in construction agreements and other commercial contracts.
  • Warranties – While representations reflect present circumstances, warranties are promises about the future. “ABC, Inc. will comply with all applicable laws and regulations in performing its obligations under this agreement.” Unlike the representation example above, this example of a common warranty provision focuses on the parties’ expectations following contract execution.

Ambiguity in Contract “Boilerplate” Can Lead to Litigation

Indemnification, representation and warranty provisions must all be carefully drafted taking into consideration how they could affect one another. For example, consider a contract that includes these two provisions:

  • “ABC, Inc. will comply with all applicable laws and regulations in performing its obligations under this agreement.”
  • “XYZ Corp. will indemnify ABC, Inc. for all third-party claims arising out of this agreement.”

What if ABC, Inc. gets sued because it violates the law? Would XYZ Corp. still be required to indemnify? What does it mean for a claim to “arise out of” the parties’ contract? These are all very real – and very common – questions that can easily lead to costly disputes. When commercial parties run into issues that implicate the terms of their written agreements, understanding what these agreements say (and don’t say) in is the first step toward making an informed decision about pursuing litigation.

Speak with a Business Litigation Attorney in Fort Lauderdale, FL

With offices in Fort Lauderdale, Michael L. Feinstein, P.A. represents commercial parties in complex business litigation throughout South Florida. If you are facing a commercial contract dispute and would like to discuss your situation with an attorney, call (954) 767-9662 or contact us online to schedule an initial consultation.

Do You Have a Claim for Trademark Infringement?

If your business is like most, it relies heavily on brand recognition to attract new customers and develop the consumer loyalty required to sustain long-term and profitable growth. In short, your name matters, and if a competitor begins using your name (or something very similar to it) to cut into your business, you are right to be considering legal action to protect your investment in your brand’s development.

This is the world of trademark infringement. In legal terms, a trademark is “any word, name, symbol, or design . . . used in commerce to identify and distinguish the goods of one manufacturer or seller from those of another and to indicate the source of the goods.” Apple, Samsung, Google, Twitter, Coca-Cola – these are all trademarks that are protected under federal law.

Understanding Your Company’s Trademark Rights

Of course, famous brands like these are not the only ones that are protected. Any individual or company can adopt and register a trademark, and even local shops and small businesses can have a legitimate interest in securing exclusive trademark rights. In fact, as a small business, securing (and enforcing) trademark rights can be critical, since infringement by a direct competitor with deep pockets or a savvy marketing plan could easily lead your customer base astray.

Importantly, if you use a brand name or logo in the marketplace (and you are not infringing someone else’s rights), you have protectable trademark rights even if you have not registered your company’s trademark with the U.S. Patent and Trademark Office (USPTO). While USPTO registration affords several key benefits, it is not a requirement to file a claim for trademark infringement.

Trademark Infringement: A “Likelihood of Confusion”

In trademark infringement litigation, the question is whether one company (the “junior” trademark user) has created a likelihood of confusion in the marketplace by using a trademark that is “confusingly similar” to a “senior” owner’s trademark. The courts examine a number of different factors in assessing whether there is a likelihood of confusion, including:

  • The strength of the senior user’s trademark
  • The proximity (similarity or relatedness) of the senior and junior users’ products or services
  • The likelihood that either user will expand into the other’s product or service lines
  • The senior and junior users’ respective marketing channels
  • The similarity of the trademarks in question
  • The types of products or services sold under the trademarks and the degree of sophistication among relevant consumers
  • The junior user’s intent in selecting its mark (i.e. did it intend to profit from the senior user’s brand recognition)
  • Any evidence of actual confusion

Infringement can quickly cause significant harm to a trademark owner’s market position and goodwill, and the law accounts for this by providing for preliminary injunctive relief in appropriate circumstances. If you believe that a competing business may be infringing your company’s trademark, taking action quickly can be critical to protecting your rights and limiting the negative consequences for your business.

Speak with a Business Litigation Attorney at Michael L. Feinstein, P.A.

With offices in Fort Lauderdale, Michael L. Feinstein, P.A. represents businesses throughout South Florida in trademark infringement litigation. To discuss your case with one of our attorneys, call (954) 767-9662 or request a consultation online today.

Should You Take Legal Action to Enforce a Non-Compete?

Florida’s non-compete statute is more employer-friendly than the comparable laws in most other states. In fact, the law is so employer-friendly that companies outside of the state will frequently choose Florida law to govern their employment agreements. In declining to enforce one of these “choice of law” provisions, an out-of-state court recently wrote that Florida’s non-compete law was “offensive” to the state’s policy of limiting non-compete enforcement in order to protect individuals’ employability.

So, you are a Florida employer, and you have an employment contract in place that includes a non-compete clause. Should you use it?

Enforceability Requirements for Florida Non-Competes

While Florida’s non-compete law favors enforceability, there are still limits as to the restrictions employers can impose on their employees. The law states:

“[E]nforcement of contracts that restrict or prohibit competition . . . [and] are reasonable in time, area, and line of business, is not prohibited. . . . The person seeking enforcement of a restrictive covenant [must also] prove the existence of one or more legitimate business interests justifying the restrictive covenant.”

As a result, there are four preliminary questions that need to be answered when assessing the enforceability of a non-competition clause under Florida law:

  • Is the duration of the non-compete reasonable?
  • Is the geographic scope of the non-compete reasonable?
  • Is the non-compete limited to the relevant line(s) of business?
  • Does the employer have a “legitimate business interest” for imposing competitive restrictions on the employee?

If the answer to each of these questions is “Yes,” and if the covenant is reasonably necessary to protect the employer’s legitimate business interest, then the covenant should be enforced. In fact, under Florida law, once an employer establishes a prima facie case for the necessity of the competitive restriction (i.e. the employer pleads all of the necessary elements for enforceability), then the burden shifts to the employee to prove that the covenant is too long in duration, overbroad or otherwise unenforceable.

While the Florida courts have established certain general principles regarding the assessment of non-compete clauses (i.e. clauses with a duration over two years will generally be subject to greater scrutiny), each circumstance is unique, and each employer has the opportunity to present its case for enforceability in court. If carefully drafted with an eye toward satisfying the law’s requirements, a non-compete will generally be enforceable under Florida law.

Practical Considerations for Non-Compete Enforcement

Of course, setting aside the strictly-legal considerations, there are certain practical considerations involved in taking a non-compete to court. Do you want to devote the necessary time and resources to litigate? Will it harm your company’s public image or ability to attract talent if it public record that you have sued a former employee? Oftentimes, alternatives will be available, and understanding why an employee violated a non-compete (was it intentional or inadvertent) and reminding the employee of his or her contractual obligations can pave the way for a non-litigious, non-public resolution.

Contact the Fort Lauderdale Law Offices of Michael L. Feinstein, P.A.

Michael L. Feinstein, P.A. is a trial litigation law firm that represents businesses in non-compete and other contract disputes. If you would like to discuss taking action to enforce a non-compete with an attorney at our offices in Fort Lauderdale, please call (954) 767-9662 or contact us online today.

Issues That Can Cause Shareholder Disputes to End Up in Litigation

As companies grow, shares change hands and shareholders’ interests begin to diverge, it is not unusual for co-owners to end up squaring off against one another in contentious disputes. While it is often in all parties’ best interests to resolve these disputes informally, in some cases shareholders will be left with little choice but to protect their interests through litigation.

From small businesses with two owners to larger companies with multiple shareholders, the following are all common examples of disputes that can lead to individual shareholders and groups of shareholders facing off against one another in court:

Common Issues in Shareholder Litigation

1. Breach of Fiduciary Duty

All shareholders in a corporation owe a duty to act in the company’s best interests. This “fiduciary duty” is at the heart of the corporate model (where the corporation exists as a stand-alone entity independent of its shareholders), and is also at the heart of many shareholder disputes.

2. Conflict of Interest Transactions

One specific example of a breach of fiduciary duty is engaging in a conflict-of-interest transaction. The law prohibits shareholders from putting their interests ahead of the company’s in corporate dealings, and transactions that benefit shareholders to the detriment of the company will often underpin contentious shareholder disputes.

3. Breach of a Shareholder Agreement

Shareholder agreements define co-owners’ rights and obligations, and along with bylaws and Articles of Incorporation constitute one of the primary governing documents of any properly-formed corporation. Exceeding a shareholder’s authority and failing to make required contributions are just two of the many shareholder agreement breaches that can lead to litigation.

4. Majority-Minority Disputes

When certain shareholders control a corporation’s decisions, shareholders in the minority may feel as though their voice is not being heard – and that they are being harmed as a result. Corporate decisions that benefit majority shareholders to the detriment of minority shareholders are commonly resolved through litigation as well.

5. Dividend Disputes

Shareholder agreements often include complex provisions regarding the amount, timing and discretionary nature of dividend distributions. Shareholders who believe that a corporation’s funds should be reinvested for growth may need to initiate litigation to protect the company (a derivative lawsuit), while shareholders who believe that their dividends have been wrongfully withheld may need to take action to protect themselves.

What Does Your Shareholder Agreement Say About Dispute Resolution?

Before initiating shareholder lawsuit, it is critical to review the terms of your shareholder agreement. Shareholder agreements commonly include dispute resolution provisions that require certain types of disagreements to be submitted to mediation or arbitration. The enforceability of these provisions is often subject to question as well, and shareholders must make informed decisions about how and where to protect their rights in order to limit the costs (both financial and practical) involved.

Contact Fort Lauderdale Business Litigation Attorney Michael Feinstein

Michael Feinstein and the other attorneys at Michael L. Feinstein, P.A. bring decades of experience to protecting shareholders’ and corporations’ interests in shareholder disputes and derivative litigation. To discuss your situation in confidence, call (954) 767-9662 or request an initial consultation online today.

Do I Really Have to Give Them Everything?

In civil litigation, the parties have the ability to request (and, if necessary, compel) one another to disclose information through the process known as “discovery.” Through the discovery tool known as a Request for Production of Documents, litigants can seek disclosure of electronic and hardcopy records which, in many cases, can be extraordinarily voluminous in nature.

Requests for production are among many litigators’ top discovery tools precisely for this reason – they want to collect as much information to build their case as possible, and they also want to make it as difficult (and expensive) as possible for the other party to comply with their requests. In some cases, the burdens and potential risks of document production can be so great that they can spur parties to negotiate a leveraged settlement.

But, before litigants throw in the towel at the discovery phase, it is important to assess their counterparties’ document requests in light of the applicable rules of civil procedure.

Limits on Document Requests in Civil Litigation

While the discovery process is intended to give the parties the information they need to litigate effectively, it does not give them carte blanche to request everything under the sun. In fact, acknowledging that litigators were increasingly using voluminous electronic discovery (or “e-discovery”) as a weapon rather than purely a tool to collect information, last year the Supreme Court approved revised rules designed to help prevent aggressive use of overly-burdensome of e-discovery.

But, there have long been other limits on the permissible scope of document requests in civil litigation as well. Some of the key limitations that parties can use to reduce the scope of their discovery obligations and protect sensitive information include:

  • Proportionality – Document requests must be proportional to the scope of the litigation. To oversimplify, if the dispute is worth $10,000, the parties generally could not request a document production that costs $100,000.
  • Relevance – Parties can only request documents that are relevant to the litigation. Depending on the nature of the case, the universe of relevant documents may be extremely broad, but there are still going to be limits in every case.
  • Privilege – Privileged records (i.e. records of communications between attorneys and their clients) do not need to be disclosed during the discovery process.

Challenging Overly-Broad Discovery Requests

Of course, it is not for either party to unilaterally decide what is proportional or relevant. While the discovery rules encourage litigants (and their attorneys) to work together to establish a mutually-agreeable scope of discovery, discovery disputes are often resolved through motions practice in court. As a result, having an attorney who is familiar with the applicable discovery rules (state or federal) and who has experience successfully arguing against overly-broad discovery requests is key to protecting your interests during litigation.

Michael L. Feinstein, P.A. | Fort Lauderdale Trial Litigation Attorneys

Michael L. Feinstein, P.A. is a Fort Lauderdale civil litigation law firm that represents businesses and individuals in complex litigation statewide. If you are facing a dispute or have concerns about protecting your interests during the discovery process, call (954) 767-9662 or contact us online to schedule a consultation today.

Using Depositions to Set the Stage for Trial

When you are mired in an opposing party’s document requests and fighting to limit your company’s disclosures as much as possible, it is important not to overlook the opportunities your company has to collect information during the discovery process. In fact, when used effectively, discovery can be used not only as a tool for gathering evidence, but also for advancing your litigation strategy as you progress toward settlement negotiations or trial.

Strategic Uses of Depositions in Business Litigation

1. Exposing Your Counterparty’s Weaknesses

While there is always a question of just how much you should show your hand to your opposition, under the right circumstances, a deposition of a counterparty’s president, records custodian or other key witness can be an opportunity to expose weaknesses in your opposition’s case. Even if the opposition already knows its weaknesses, showing that you know them too through strategic deposition questioning can provide strong leverage when it comes time to negotiate a settlement.

2. Ammunition for Witness Impeachment

If your case is headed for trial, you will want every possible opportunity to discredit the opposing party’s key witnesses. When it comes down to weighing the evidence, the less weight the judge or jury affords to your counterparty’s witnesses’ testimony, the better your chances of securing a favorable verdict. Soliciting deposition answers that you can later use to challenge testimony on the stand is one of the most effective ways to impeach a witness’s credibility in court.

Effective Questions in Civil Depositions

With these considerations in mind, there are a number of specific types of questions that will frequently prove effective in doing more than simply soliciting answers that, at best, repeat what you will find in your opposition’s interrogatory answers and document production. While each case is unique, deposition questions that can help advance your litigation strategy include:

  • “What did you do to prepare for this deposition?” Witnesses tend to prepare the most for the question they think will be the most difficult or the most important. As a result, the answer to this question will often expose more than the witness realizes.
  • “Have you ever been deposed or testified in court?” Finding out what else the witness has said in the past can provide even more ammunition for challenging inconsistent testimony at trial.
  • “Has anyone else been present in any of your discussions with legal counsel?” If a third-party was present for any of these discussions, the witness’s attorney-client privilege may be compromised—entitling you to seek additional information through the discovery process.

Of course, this is just a tiny sampling. Nailing down on substantive issues, gathering information about key employees’ roles within the organization, focusing on known weaknesses in your opposing party’s case and other targeted lines of questioning can all help advance your litigation strategy as well. To get the most out of your company’s depositions, you will need to put in the time to think about your true goals in examining each individual witness now and at trial.

Michael L. Feinstein, P.A. | Business Litigation Attorneys in Fort Lauderdale, FL

Michael L. Feinstein, P.A. is a Fort Lauderdale, FL civil litigation firm that represents business clients in state and federal court. If your company is facing a dispute and you would like to speak with an attorney, call (954) 767-9662 or get in touch with us online today.

What Does It Take to Start a Class Action Lawsuit in Florida?

If you have been harmed or treated unfairly at the hands of a major corporation, there are potentially a number of different options available for asserting your legal rights. If you believe that others have experienced similar harm or mistreatment, one of these options may be to initiate a class action lawsuit.

A class action is a unique type of lawsuit in which numerous similarly-situated individuals (referred to as “plaintiffs”) take collective action against a corporation instead of pursuing their claims individually. Class actions allow aggrieved individuals to seek legal remedies when it would be impractical for them each to assert individual claims on their own.

For example, while it would be cost-prohibitive for someone to file a lawsuit to recover hundreds or even a few thousand dollars in unlawful bank or credit card fees, a class of individuals who have collectively suffered millions of dollars in losses can come together and file a class action that allows them to obtain refunds while holding their financial institution accountable for its misdeeds.

Examples of Possible Class Action Claims

In order to initiate a class action, the members of the class must have all suffered similar types of harm from a unifying cause. As a result, class action claims commonly involve issues such as:

  • Antitrust Violations – Under the laws of Florida and the United States, companies are prohibited from engaging in a wide range of anticompetitive practices that are deemed harmful to consumers.
  • Consumer Fraud – From misleading advertising to outright scams, consumer fraud is a rampant issue that often affects thousands or millions of similarly-situated individuals.
  • Defective Products – Under the law of products liability, designers, manufacturers and retailers can be held liable when defects in their products lead to injuries or financial loss.
  • Director and Officer Misconduct – Corporate officers and directors owe certain duties to the shareholders they serve. Shareholders in public companies who have suffered financial losses due to directors’ or officers’ misconduct may be able to form a class to recover their investments.

Class Actions: The Requirement for “Certification”

Due to the complexities and the time, effort and resources involved in class action litigation, both Florida and federal law require classes to be “certified” before they can pursue their claims in court. In broad terms, there are four requirements for a class to obtain certification:

  • Numerosity – The members of the class must be “so numerous that joinder of all members is impracticable.”
  • Commonality – There must be “questions of law or fact common to the class.”
  • Typicality – The representative plaintiffs must have claims that are “typical of the claims . . . of the class.”
  • Adequacy – Pursuit of the class action must “fairly and adequately protect the interests of the class.”

Of course, as a practical matter, there is much more involved in initiating and pursuing a class action claim. If you believe you may have grounds to open a class action, you should speak with an experienced attorney as soon as possible.

Contact Fort Lauderdale Trial Litigation Attorney Michael Feinstein

Michael Feinstein is a Fort Lauderdale trial litigation attorney with 30 years’ experience representing clients in state and federal court. If you would like more information about pursuing a class action claim in Florida, contact Michael L. Feinstein, P.A. online or call (954) 767-9662 to schedule an initial consultation today.