This platform is designed to provide brief, periodic news from the legal world that will hopefully be relevant to your work or personal life.
For this new-year addition: a brief synopsis on a few issues in the law that I hope might be clarified in 2025. Legal “news” is a misnomer for this post; this is really a legal “status” update. The issues addressed here are not new, but I suspect there could be news about them in 2025. They affect a lot of people, and they are kind of begging for attention. Each of these issues has its share of controversy and, in my view, good arguments on both sides. This is not really an editorial page, so my aim here is just to inform and not to persuade either way.
1. The Federal Trade Commission’s ban on non-competition agreements.
On April 23, 2024, the Federal Trade Commission (“FTC”) issued a final rule banning most non-competition agreements between most businesses and workers across the country. It was a big move. Here is the FTC’s announcement with its rationale. And here is the FTC’s actual rule. The rule was set to take effect on September 4, 2024, and many in the business world began preparing to operate on a new landscape.
But on August 20, 2024, before the rule took effect, a federal court in Texas issued a ruling that effectively blocked the FTC’s nation-wide enforcement of the rule. Here is that court’s ruling. The FTC appealed, and that case is currently in the 5th Circuit Court of Appeals. There is buzz that it could end up in the U.S. Supreme Court.
Other lawsuits were filed to challenge the FTC’s rule, but it seems all eyes are on the case out of Texas, since the ruling in that case had a nation-wide effect.
But also… We have a new president. And a new presidential administration could mean a change in the FTC’s position.
Many business owners and workers would like to know: what will be the fate of the FTC’s ban on non-competition agreements? Maybe 2025 will bring us an answer.
2. Mandatory arbitration agreements. Here there’s been no ban, but some say there should be.
Arbitration, you may know, is an “alternative dispute resolution” forum – “alternative” because it is an alternative to traditional litigation in court, where we usually think of legal claims being handled. Court is a public forum; arbitration is a private forum. Arbitration is like court in that legal claims are heard and resolved. It is unlike court in that decisions are not made publicly by judges or juries, but privately by arbitrators. In court, cases are governed by state or federal rules of procedure and evidence. In arbitration, cases are governed by the rules of the particular arbitration forum used – for example, the American Arbitration Association, JAMS, etc. There are other differences between litigation in court and arbitration. This is just a basic overview.
The controversy is not about arbitration itself, but about mandatory arbitration – that is, contracts containing provisions that forfeit someone’s right to go to court and, instead, require that any dispute be handled in arbitration. It is controversial, in part, because people are often unaware of that provision in a contract. (Legally, that often does not matter, at least in Florida. Florida courts have consistently held that one who signs a contract is presumed to know what was in it.) It is also controversial, in part, because people are often powerless to change a mandatory arbitration provision. It is typically not something to be negotiated, but something appearing in a “take or leave it” kind of contract. In other words, if you want the product or service, these are the terms.
And these mandatory arbitration provisions have become very common. If you are using an electronic device and an internet connection to read this, you have likely agreed to at least a couple of arbitration provisions, maybe without realizing it. One reason mandatory arbitration provisions have become so common is that courts are favoring them, all the way up to the U.S. Supreme Court. To provide context, here are just a couple of examples of Florida courts upholding mandatory arbitration provisions in 2024.
In Flying Panda Florida, LLC v. Rutherford, 380 So. 3d 529 (Fla. 5th DCA 2024), the plaintiff sued after allegedly suffering a serious injury at a trampoline park owned by the defendant. To enter the park, the plaintiff had to sign a waiver on an electronic device. [You have likely been asked to sign a waiver or other document on an electronic device. Did you scroll all the way through and read the whole thing?] That waiver contained a mandatory arbitration provision. When the plaintiff sued for her alleged injury, the defendant asked to have the case removed from court and forced to arbitration instead. The plaintiff objected to arbitration, claiming the waiver she signed, including the mandatory arbitration provision, was unenforceable. The court disagreed and upheld the mandatory arbitration provision, citing precedent from the U.S. Supreme Court. The court ruled that the case, including the questions about the enforceability of the waiver, had to be decided in arbitration, not in court.
In Palacios v. Lawson, 381 So. 3d 623 (Fla. 4th DCA 2024), the plaintiff registered online for orthodontic treatment, and the online enrollment material included a mandatory arbitration provision. When the plaintiff sued for medical malpractice and the defendant sought to enforce the mandatory arbitration provision, the plaintiff claimed it was illegal and unenforceable under a specific Florida law. But the court upheld the mandatory arbitration provision, citing “the well-settled principle that contractual waivers are enforceable under Florida law for any type of rights.” The court quoted precedent from the Florida Supreme Court: “A party may waive [by contract] any right to which he is legally entitled, whether secured by contract, conferred by statute, or guaranteed by the Constitution.”
Waiving rights – like the right to be heard in court – by signing a contract. This is important stuff.
Will 2025 bring any change to this area of the law? Personally, I doubt it, given the current political landscape and the trend of courts favoring arbitration. All of this is to say: heads up!
3. Closer to home: the protection of assets owned jointly by spouses in Florida.
You Florida residents, especially you married couples, might have heard of a “tenancy by the entirety” (“TBE”). This is a type of property ownership in Florida that is available to a married couple. Importantly, a TBE provides protection against a creditor of just one of the spouses.
This explanation is over-simplified to save space here, and you would, of course, need personalized legal advice for any real-life situation. But basically, if Spouse 1 and Spouse 2 own property together as TBE, a creditor of just one of those spouses individually – say, Spouse 1 – cannot take that property to satisfy the debt of just that one spouse. Both Spouses 1 and 2 are thus protected from a consequence of Spouse 1’s personal debt. Here is a brief description from the court in the case discussed below: “The essential characteristic of the estate [TBE] is that each spouse is seized of the whole or the entirety – not just a share… Because each spouse owns the whole rather than just a share, the creditor of one spouse cannot reach the entireties property to satisfy the debt of that spouse.” (I added the emphasis there.)
This protection of joint property from one individual’s creditors has long made the TBE an important feature of Florida law for married couples.
The TBE and the protection it provides apply to both real property (i.e., land and improvements to land, like a home) and personal property (i.e., non-land assets like bank accounts, etc.). However, there is an open question about whether the TBE works the same way for both types of property. Specifically, can a TBE be created by the married couple in the same way – by taking the same steps – with personal property the same as for real property?
Here is how it works for real property [again, this is over-simplified to save space here, and you would need personalized legal advice for any real-life situation]: Spouse 1 buys a home while still single, before getting married. Spouse 1 later gets married to Spouse 2. The married couple decide they want to own the home (previously owned by Spouse 1) together as a married couple, as TBE. Accomplishing that is simple. All that is needed to create the TBE is for Spouse 1 to convey the home (execute and record a new deed to transfer title) from Spouse 1 alone over to both Spouse 1 and Spouse 2 together as a married couple, as TBE. In the eyes of the law, that creates a TBE in the home, and the TBE protection applies.
But how about for a bank account, which is personal property? Is it just as easy? In a similar situation, can Spouse 1 just change the “title” to the bank account – just add Spouse 2 to the account and designate it as TBE? In 2024, one of Florida’s appellate courts said no.
The case was Loumpos v. Bank One, 392 So.3d 841(Fla. 2d DCA 2024). There, Spouse 1 owned a bank account by himself. He later added Spouse 2 to the account, and the spouses indicated on the bank’s forms that the account was to be held as a TBE. Simple enough. When one of Spouse 2’s creditors later came along and sought to garnish (freeze and take money from) the jointly held account, Spouse 2 objected that the account was protected as TBE. But the court disagreed and allowed the garnishment of the account. Why? Because even though Spouse 2 had been added to the account along with a TBE designation, Spouse 2 did not become an owner of the account at the same time as Spouse 1. (See the court’s full opinion, linked above, for its rationale based on the history of Florida law.)
In other words, the court effectively ruled that a TBE cannot be created for a bank account – for personal property – as simply as it can be created for real property.
The practical effect of the ruling seems odd. Spouse 1 and Spouse 2 can create a TBE in the real property that was previously owned by Spouse 1 alone very easily, just by changing the title. But in order to create a TBE in a smaller asset, a bank account that was previously owned by Spouse 1 alone, it seems they need to take the extra steps of closing the old account (and changing all of the links to the old account for payment of bills, etc.) and then opening a new account to be jointly held in TBE.
The Loumpos court’s ruling created a conflict among Florida’s courts. Another appeal was filed in the case, and the Florida Supreme Court has accepted the case for review. Will the Florida Supreme Court effectively simplify the law so that a TBE can be created simply and in the same manner for both real and personal property? Hopefully we will get an answer in 2025.
