Third District Court of Appeal State of Florida
Opinion filed March 9, 2022. Not final until disposition of timely filed motion for rehearing.
________________
Nos. 3D21-2344 & 3D21-2437 Lower Tribunal No. 20-8460 ________________
Corey Shader, et al., Petitioners,
vs.
ABS Healthcare Services, LLC, et al., Respondents.
Writs of Certiorari to the Circuit Court for Miami-Dade County, William Thomas, Judge.
Carlton Fields, P.A., and Benjamine Reid, Alan Grunspan, and Clifton R. Gruhn, for petitioner Corey Shader; Cozen O’Connor, and James A. Gale, Samuel A. Lewis, David M. Stahl, and Jonathan E. Gale, for the Kratos petitioners.
Boies Schiller Flexner LLP, and Carlos M. Sires and Sigrid S. McCawley (Fort Lauderdale), for respondents.
Before LOGUE, LINDSEY, and LOBREE, JJ.
LOGUE, J. Petitioner Corey Shader, a non-party below, and the Defendants below
have filed separate petitions for a writ of certiorari seeking to quash the same
discovery order issued by the trial court. We have consolidated the petitions.
One of the Defendants, Richard Ryscik, and the non-party Corey Shader
were deposed and portions of their testimony regarding financial and
business matters were designated as confidential pursuant to a procedure
established in a protective order entered by the trial court. Subsequently, the
Respondents, the plaintiffs below, filed a motion to de-designate Ryscik’s
and Shader’s testimony pursuant to a procedure established in the same
protective order. The trial court granted the motion, de-designating the
testimony and authorizing its public use. The Petitioners seek to quash that
order.
The twist in this case is that the protective order and the designation of
the material as confidential occurred before the case was submitted to
arbitration but the motion to de-designate and the court order de-designating
occurred after the case was submitted to arbitration.
The question presented is whether the authority to interpret and apply
the trial court’s interlocutory pre-trial protective order entered prior to the
case being submitted to arbitration lies with the trial court or the arbitrators
during the pendency of an arbitration. We hold that, during the pendency of
2 the arbitration, the arbitrators have exclusive authority to determine these
matters. To decide otherwise would mean that disputes arising in the course
of the arbitration out of interlocutory pre-trial court orders (including basic
discovery disputes) would need to be referred back to the judicial process in
contravention of the purpose of arbitration which is to provide a dispute
resolution process outside of the court system. Accordingly, we issue the
writ.
BACKGROUND
This matter stems from a lawsuit in which ABS Healthcare Services,
LLC and Health Option One, LLC (collectively, “Plaintiffs”) sued Kratos
Investments LLC, Health Team One LLC, Complete Vital Care LLC, Health
Essential Care LLC, and Richard Ryscik (collectively “Defendants”) over an
alleged scheme to steal Plaintiffs’ business. The Defendants moved to
compel arbitration. The trial court denied the motion. Then, as part of the
management of the case, the trial court entered a protective order governing
discovery.
The protective order allowed both parties and non-parties to designate
documents or testimony as confidential so long as the information was
“entitled to confidential treatment under the applicable legal principles.”
3 Materials so designated were required to be treated as confidential until the
designating party agrees otherwise in writing “or a court otherwise directs.”
The protective order provided that a party opposing the designation of
the materials as confidential “may file a motion challenging a confidentiality
designation at any time if there is good cause for doing so, including a
challenge to the designation of a deposition transcript or any portion thereof.”
Even after a motion was filed, however, the designated information was to
be protected “until the court rules on the challenge.”
Pursuant to the terms of the protective order, Petitioner Corey Shader,
a non-party below was deposed and portions of his deposition testimony
were designated as confidential.
Shortly afterwards, however, this Court reversed the trial court’s denial
of arbitration and ordered the matter submitted to arbitration pursuant to a
written agreement to arbitrate “in accordance with Commercial Arbitration
Rules of the American Arbitration Association pursuant to the laws of the
State of Florida governing arbitration.” Kratos Invs. LLC v. ABS Healthcare
Servs., LLC, 319 So. 3d 97, 99-100, 102 (Fla. 3d DCA 2021). The trial court
duly entered a stay of the court proceedings and sent the matter to
arbitration.
4 Several months later, while the arbitration was still pending, the
Plaintiffs filed a motion in the trial court to de-designate portions of Corey
Shader’s testimony. After initially expressing concerns over its authority to
lift the stay entered when the case was pending in arbitration, the trial court
entered an order expressly lifting the stay and de-designating Shader’s
testimony.
ANALYSIS
“To grant certiorari relief, there must be: ‘(1) a material injury in the
proceedings that cannot be corrected on appeal (sometimes referred to as
irreparable harm); and (2) a departure from the essential requirements of the
law.’” Fla. Power & Light Co. v. Cook, 277 So. 3d 263, 264 (Fla. 3d DCA
2019) (quoting Nader v. Fla. Dep't of Highway Safety & Motor Vehicles, 87
So. 3d 712, 721 (Fla. 2012)).
Certiorari jurisdiction is present here because “an order requiring the
disclosure of confidential ‘cat-out-of-the-bag’ information is precisely the type
of order that can cause irreparable harm.” Rousso v. Hannon, 146 So. 3d
66, 71 (Fla. 3d DCA 2014) (citing Allstate Ins. Co. v. Langston, 655 So. 2d
91, 94 (Fla. 1995)) (granting certiorari to quash order requiring disclosure of
third party’s financial information). In this regard, “[d]iscovery orders that
require the disclosure of claimed confidential information are reviewed with
5 greater caution than those that are simply burdensome or costly due to
overbreadth.” Id.
The question of whether the trial court’s order at issue represents a
departure from the essential requirements of law is a closer question. This
concept means something greater than “the mere existence of legal error.”
Haines City Cmty. Dev. v. Heggs, 658 So. 2d 523, 528 (Fla. 1995). As
repeatedly explained by our Supreme Court:
Since it is impossible to list all possible legal errors serious enough to constitute a departure from the essential requirements of law, the district courts must be allowed a large degree of discretion so that they may judge each case individually. The district courts should exercise this discretion only when there has been a violation of a clearly established principle of law resulting in a miscarriage of justice.
Nader, 87 So. 3d at 722 (quoting Combs v. State, 436 So.2d 93, 95–96
(Fla.1983)). “This standard, while narrow, also contains a degree of flexibility
and discretion.” Id. at 723 (quoting Heggs, 658 So. 2d at 530). Moreover, our
Supreme Court has recognized that “‘clearly established law’ can derive from
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Third District Court of Appeal State of Florida
Opinion filed March 9, 2022. Not final until disposition of timely filed motion for rehearing.
________________
Nos. 3D21-2344 & 3D21-2437 Lower Tribunal No. 20-8460 ________________
Corey Shader, et al., Petitioners,
vs.
ABS Healthcare Services, LLC, et al., Respondents.
Writs of Certiorari to the Circuit Court for Miami-Dade County, William Thomas, Judge.
Carlton Fields, P.A., and Benjamine Reid, Alan Grunspan, and Clifton R. Gruhn, for petitioner Corey Shader; Cozen O’Connor, and James A. Gale, Samuel A. Lewis, David M. Stahl, and Jonathan E. Gale, for the Kratos petitioners.
Boies Schiller Flexner LLP, and Carlos M. Sires and Sigrid S. McCawley (Fort Lauderdale), for respondents.
Before LOGUE, LINDSEY, and LOBREE, JJ.
LOGUE, J. Petitioner Corey Shader, a non-party below, and the Defendants below
have filed separate petitions for a writ of certiorari seeking to quash the same
discovery order issued by the trial court. We have consolidated the petitions.
One of the Defendants, Richard Ryscik, and the non-party Corey Shader
were deposed and portions of their testimony regarding financial and
business matters were designated as confidential pursuant to a procedure
established in a protective order entered by the trial court. Subsequently, the
Respondents, the plaintiffs below, filed a motion to de-designate Ryscik’s
and Shader’s testimony pursuant to a procedure established in the same
protective order. The trial court granted the motion, de-designating the
testimony and authorizing its public use. The Petitioners seek to quash that
order.
The twist in this case is that the protective order and the designation of
the material as confidential occurred before the case was submitted to
arbitration but the motion to de-designate and the court order de-designating
occurred after the case was submitted to arbitration.
The question presented is whether the authority to interpret and apply
the trial court’s interlocutory pre-trial protective order entered prior to the
case being submitted to arbitration lies with the trial court or the arbitrators
during the pendency of an arbitration. We hold that, during the pendency of
2 the arbitration, the arbitrators have exclusive authority to determine these
matters. To decide otherwise would mean that disputes arising in the course
of the arbitration out of interlocutory pre-trial court orders (including basic
discovery disputes) would need to be referred back to the judicial process in
contravention of the purpose of arbitration which is to provide a dispute
resolution process outside of the court system. Accordingly, we issue the
writ.
BACKGROUND
This matter stems from a lawsuit in which ABS Healthcare Services,
LLC and Health Option One, LLC (collectively, “Plaintiffs”) sued Kratos
Investments LLC, Health Team One LLC, Complete Vital Care LLC, Health
Essential Care LLC, and Richard Ryscik (collectively “Defendants”) over an
alleged scheme to steal Plaintiffs’ business. The Defendants moved to
compel arbitration. The trial court denied the motion. Then, as part of the
management of the case, the trial court entered a protective order governing
discovery.
The protective order allowed both parties and non-parties to designate
documents or testimony as confidential so long as the information was
“entitled to confidential treatment under the applicable legal principles.”
3 Materials so designated were required to be treated as confidential until the
designating party agrees otherwise in writing “or a court otherwise directs.”
The protective order provided that a party opposing the designation of
the materials as confidential “may file a motion challenging a confidentiality
designation at any time if there is good cause for doing so, including a
challenge to the designation of a deposition transcript or any portion thereof.”
Even after a motion was filed, however, the designated information was to
be protected “until the court rules on the challenge.”
Pursuant to the terms of the protective order, Petitioner Corey Shader,
a non-party below was deposed and portions of his deposition testimony
were designated as confidential.
Shortly afterwards, however, this Court reversed the trial court’s denial
of arbitration and ordered the matter submitted to arbitration pursuant to a
written agreement to arbitrate “in accordance with Commercial Arbitration
Rules of the American Arbitration Association pursuant to the laws of the
State of Florida governing arbitration.” Kratos Invs. LLC v. ABS Healthcare
Servs., LLC, 319 So. 3d 97, 99-100, 102 (Fla. 3d DCA 2021). The trial court
duly entered a stay of the court proceedings and sent the matter to
arbitration.
4 Several months later, while the arbitration was still pending, the
Plaintiffs filed a motion in the trial court to de-designate portions of Corey
Shader’s testimony. After initially expressing concerns over its authority to
lift the stay entered when the case was pending in arbitration, the trial court
entered an order expressly lifting the stay and de-designating Shader’s
testimony.
ANALYSIS
“To grant certiorari relief, there must be: ‘(1) a material injury in the
proceedings that cannot be corrected on appeal (sometimes referred to as
irreparable harm); and (2) a departure from the essential requirements of the
law.’” Fla. Power & Light Co. v. Cook, 277 So. 3d 263, 264 (Fla. 3d DCA
2019) (quoting Nader v. Fla. Dep't of Highway Safety & Motor Vehicles, 87
So. 3d 712, 721 (Fla. 2012)).
Certiorari jurisdiction is present here because “an order requiring the
disclosure of confidential ‘cat-out-of-the-bag’ information is precisely the type
of order that can cause irreparable harm.” Rousso v. Hannon, 146 So. 3d
66, 71 (Fla. 3d DCA 2014) (citing Allstate Ins. Co. v. Langston, 655 So. 2d
91, 94 (Fla. 1995)) (granting certiorari to quash order requiring disclosure of
third party’s financial information). In this regard, “[d]iscovery orders that
require the disclosure of claimed confidential information are reviewed with
5 greater caution than those that are simply burdensome or costly due to
overbreadth.” Id.
The question of whether the trial court’s order at issue represents a
departure from the essential requirements of law is a closer question. This
concept means something greater than “the mere existence of legal error.”
Haines City Cmty. Dev. v. Heggs, 658 So. 2d 523, 528 (Fla. 1995). As
repeatedly explained by our Supreme Court:
Since it is impossible to list all possible legal errors serious enough to constitute a departure from the essential requirements of law, the district courts must be allowed a large degree of discretion so that they may judge each case individually. The district courts should exercise this discretion only when there has been a violation of a clearly established principle of law resulting in a miscarriage of justice.
Nader, 87 So. 3d at 722 (quoting Combs v. State, 436 So.2d 93, 95–96
(Fla.1983)). “This standard, while narrow, also contains a degree of flexibility
and discretion.” Id. at 723 (quoting Heggs, 658 So. 2d at 530). Moreover, our
Supreme Court has recognized that “‘clearly established law’ can derive from
a variety of legal sources, including recent controlling case law, rules of
court, statutes, and constitutional law.” Allstate Ins. Co. v. Kaklamanos, 843
So. 2d 885, 890 (Fla. 2003). “Accordingly, a district court may grant a writ
of certiorari after determining that the decision is in conflict with the relevant
6 statute, so long as the legal error is also ‘sufficiently egregious or
fundamental to fall within the limited scope’ of certiorari jurisdiction.” Nader,
87 So. 3d at 723.
The relevant statute here is Florida’s Arbitration Code. §§ 682.03–
682.15, Fla. Stat (2021). The statute squarely places discovery matters
relating to an arbitration within the authority of the arbitrators. Among other
things, the Florida Arbitration Code generally gives the arbitrator the
authority to “permit such discovery as the arbitrator decides is appropriate in
the circumstances,” § 682.08(3), Fla. Stat., and enforce these rulings by
“issu[ing] subpoenas for the attendance of a witness and for the production
of records and other evidence at a discovery proceeding, and tak[ing] action
against a noncomplying party to the extent a court could if the controversy
were the subject of a civil action in this state.” § 682.08(4), Fla. Stat.
More to the point at issue here, the Code also specifically provides that
the arbitrator’s authority extends to protective orders. It empowers the
arbitrator to “issue a protective order to prevent the disclosure of privileged
information, confidential information, trade secrets, and other information
protected from disclosure to the extent a court could if the controversy were
the subject of a civil action in this state.” § 682.08(5), Fla. Stat.
7 Of course, “an order of referral [to arbitration] is an interlocutory order,
and as a statutory matter, the trial court retains jurisdiction during the
pendency of the stay and until final judgment.” Ocala Breeders’ Sales Co. v.
Brunetti, 567 So. 2d 490, 492 (Fla. 3d DCA 1990). Nevertheless, the Code
also mandates the stay of the judicial proceeding after referral to arbitration:
“[i]f the court orders arbitration, the court on just terms shall stay any judicial
proceeding that involves a claim subject to the arbitration.” § 682.03(7), Fla.
Stat. (emphasis added). See also Chemstar Corp. v. Stark, 634 So. 2d 794,
795 (Fla. 3d DCA 1994) (“Any proceedings involving an issue subject to
arbitration under the Florida Arbitration Code must be stayed when the order
for arbitration is made.”).
“[T]he effect of a stay of proceedings is to prevent the taking of any
further steps in the action during the period of the stay . . . .” Ocala Breeders’,
567 So. 2d at 492. In short, “[o]nce a matter has been voluntarily submitted
to arbitration, a trial court lacks authority to become involved in the
arbitration.” Sea Vault Partners, LLC v. Bermello, Ajamil & Partners, Inc, 274
So. 3d 473, 477 (Fla. 3d DCA 2019).
Under this law and related law, we have held that a court departed from
the essential requirements of law by asserting jurisdiction over discovery
after a matter has been referred to arbitration. Macro Cap. Corp. v. The
8 Soffer Grp. ex rel. Soffer, 822 So. 2d 525, 526 (Fla. 3d DCA 2002);
Greenstein v. Baxas Howell Mobley, Inc., 583 So. 2d 402, 403 (Fla. 3d DCA
1991) (issuing writs of certiorari to quash orders governing discovery after a
matter has been referred to arbitration).
Respondents contend that the plain language of the order at issue
requires designated material to be kept confidential “until a court otherwise
directs.” They go so far as to maintain that testimony and documents
produced and designated as confidential under the protective order cannot
be disclosed to the arbitrator for any purpose, even for the purpose of
seeking a de-designation of the documents or materials. Respondents
accurately report the plain language of the protective order. This plain
language, however, must yield to the law described above which mandates
a stay in the trial court once arbitration is ordered, prohibits the trial court
from becoming involved in the arbitration, and authorizes the arbitrator to
take charge of discovery—including the issuance of protective orders—
during the pendency of the arbitration.
Accordingly, we issue the writ and quash the trial court order under
review as such matters are left to the arbitrators during the pendency of the
Petition granted. Writ issued.