Case Title: Atwater v. Kortum

Citation: 

Docket Number: SC11-133

State: florida

Court: Florida Supreme Court

Date: 2012-07-05T00:00:00Z

Document:
Supreme Court of Florida 
 
 
____________ 
 
No. SC11-133 
____________ 
 
 
JEFFREY H. ATWATER, 
Appellant, 
 
vs. 
 
FREDERICK W. KORTUM, 
Appellee. 
 
[July 5, 2012] 
 
CANADY, J. 
 
This case concerns a statutory regulation affecting public insurance 
adjusters, who are authorized to assist insureds and thirty-party claimants in the 
filing and settlement of insurance claims.  We have on appeal Kortum v. Sink, 54 
So. 3d 1012 (Fla. 1st DCA 2010), in which the First District Court of Appeal 
declared invalid section 626.854(6), Florida Statutes (2008), a provision regulating 
solicitation by public adjusters.  We have jurisdiction.  See art. V, § 3(b)(1), Fla. 
Const.  We affirm the First District‘s decision that the statute unconstitutionally 
restricts the commercial speech of public adjusters because it is not narrowly 
 
 
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tailored to serve the State‘s interests in ensuring ethical conduct by public adjusters 
and protecting homeowners. 
I.  BACKGROUND 
During a 2007 special session, the Florida Legislature created the Task 
Force on Citizens Property Insurance Claims Handling and Resolution (Task 
Force) to make recommendations regarding the 2004–2005 hurricane claims of 
Citizens Property Insurance Corporation.  Among other recommendations, the 
Task Force proposed that the Legislature enact the following provision governing 
public adjusters: 
A public adjuster shall not directly or indirectly through any other 
person or entity engage in face-to-face or telephonic solicitation or 
enter into a contract with any insured or claimant under an insurance 
policy until at least 72 hours after the occurrence of an event that may 
be the subject of a claim under the insurance policy unless contact is 
initiated by the insured or claimant. 
Kortum, 54 So. 3d at 1014. 
During its 2008 regular session, the Legislature enacted a law similar to the 
Task Force‘s proposal.  The Legislature added to the proposal a provision stating 
that a public adjuster may not ―initiate contact‖ with a claimant and reduced the 
period of the restriction from seventy-two to forty-eight hours.  Section 
626.854(6), Florida Statutes (2008), thus provides: 
A public adjuster may not directly or indirectly through any 
other person or entity initiate contact or engage in face-to-face or 
telephonic solicitation or enter into a contract with any insured or 
 
 
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claimant under an insurance policy until at least 48 hours after the 
occurrence of an event that may be the subject of a claim under the 
insurance policy unless contact is initiated by the insured or claimant. 
The Legislature passed amendments to other portions of section 626.854 in 2009 
and 2011, but there have been no revisions to section 626.854(6) since its 
enactment. 
In October 2009, Frederick W. Kortum, Jr., a public adjuster, filed a 
complaint for declaratory and injunctive relief ―alleging that section 626.854(6) 
violates his constitutional rights to free speech, equal protection of the laws, and to 
be rewarded for his industry.‖  Kortum, 54 So. 3d at 1014.  Kortum asserted that 
the statute prohibits all public adjuster-initiated communication during the forty-
eight-hour period.  In response, the Department of Financial Services (Department) 
contended that section 626.854(6) does not prohibit a public adjuster from using 
written methods of communication to contact a potential claimant.  Kortum, 54 So. 
3d at 1015. 
The trial court determined that section 626.854(6) is ambiguous, accepted 
the Department‘s interpretation that the statute prohibited only in-person or 
telephonic communication, and ruled that the statute is constitutional.  The trial 
court concluded that because section 626.854(6) primarily regulates conduct—not 
speech—the case was governed by United States v. O‘Brien, 391 U.S. 367 (1968), 
in which the United States Supreme Court stated: 
 
 
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[G]overnment regulation is sufficiently justified if it is within the 
constitutional power of the Government; if it furthers an important or 
substantial governmental interest; if the governmental interest is 
unrelated to the suppression of free expression; and if the incidental 
restriction on alleged First Amendment freedoms is no greater than is 
essential to the furtherance of that interest. 
Kortum, 54 So. 3d at 1015 (quoting O‘Brien, 391 U.S. at 377).  In O‘Brien, the 
Court upheld a federal statute prohibiting the knowing destruction or mutilation of 
selective service certificates. 
 
In the decision now on review, the First District reversed the trial court‘s 
decision.  After determining that the plain language of section 626.854(6) 
―prohibits all public adjuster-initiated contact, whether electronic, written or oral,‖ 
the First District concluded that section 626.854(6) regulates commercial speech—
not merely conduct.  Kortum, 54 So. 3d at 1018.  As a result, the First District 
applied the test from Central Hudson Gas & Electric Corp. v. Public Service 
Commission of New York, 447 U.S. 557 (1980), rather than the more deferential 
O‘Brien standard. 
In Central Hudson, the Supreme Court set out a four-prong test to be used to 
evaluate the constitutionality of a statute regulating commercial speech: 
At the outset, we must determine whether the expression is protected 
by the First Amendment.  For commercial speech to come within that 
provision, it at least must [1] concern lawful activity and not be 
misleading.  Next, we ask [2] whether the asserted governmental 
interest is substantial.  If both inquiries yield positive answers, we 
must determine [3] whether the regulation directly advances the 
 
 
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governmental interest asserted, and [4] whether it is not more 
extensive than is necessary to serve that interest. 
447 U.S. at 566.  The First District concluded that section 626.854(6) satisfies the 
first three prongs of this test but held that the statute does not satisfy the fourth 
prong of Central Hudson.  The First District concluded that the Department failed 
to demonstrate ―that prohibiting property owners from receiving any information 
from public adjusters for a period of 48 hours is justified by the possibility that 
some public adjuster may unduly pressure traumatized victims or otherwise engage 
in unethical behavior.‖  Kortum, 54 So. 3d at 1020.  Because the First District 
concluded that section 626.854(6) unconstitutionally burdens the commercial 
speech of public adjusters, it did not address Kortum‘s assertions that the statute 
violates his right to equal protection of the law or his right ―to be rewarded for his 
industry‖ guaranteed by article I, section two of the Florida Constitution.  Id. at 
1014. 
Jeffery Atwater, in his capacity as Chief Financial Officer and head of the 
Department, appealed the First District‘s decision.  The Department contends on 
appeal that section 626.854(6) does not restrict written communication and that 
because the statute regulates conduct and not the content of speech, the 
requirements of Central Hudson are not applicable.  Based on this narrow reading 
of the statute, the Department thus argues that the statute is in ―the rational 
 
 
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relationship test category for the regulation of conduct‖ and that the statute should 
be sustained under this test.  Appellant‘s Initial Brief at 4. 
II.  ANALYSIS 
In the analysis that follows, we first conclude that section 626.854(6) 
prohibits public adjusters from initiating any form of communication with a 
potential claimant during the hours immediately following a claim-producing event 
and that the statute regulates protected commercial speech.  We then conclude that 
the First District was correct in applying the test outlined by the Supreme Court in 
Central Hudson to evaluate the constitutionality of section 626.854(6).  The 
Department‘s argument is predicated entirely on its position regarding the proper 
interpretation of the statute—a position that we reject.  No alternative basis is 
asserted by the Department for sustaining the constitutionality of the statute and 
reversing the First District‘s decision. 
Section 626.854, Florida Statutes (2008), defines and regulates public 
adjusters in Florida.  It states in part: 
The Legislature finds that it is necessary for the protection of 
the public to regulate public insurance adjusters and to prevent the 
unauthorized practice of law. 
(1) A ―public adjuster‖ is any person, except a duly licensed 
attorney at law as hereinafter in s. 626.860 provided, who, for money, 
commission, or any other thing of value, prepares, completes, or files 
an insurance claim form for an insured or third-party claimant or who, 
for money, commission, or any other thing of value, acts or aids in 
any manner on behalf of an insured or third-party claimant in 
negotiating for or effecting the settlement of a claim or claims for loss 
 
 
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or damage covered by an insurance contract or who advertises for 
employment as an adjuster of such claims, and also includes any 
person who, for money, commission, or any other thing of value, 
solicits, investigates, or adjusts such claims on behalf of any such 
public adjuster. 
 
. . . . 
(6) A public adjuster may not directly or indirectly through any 
other person or entity initiate contact or engage in face-to-face or 
telephonic solicitation or enter into a contract with any insured or 
claimant under an insurance policy until at least 48 hours after the 
occurrence of an event that may be the subject of a claim under the 
insurance policy unless contact is initiated by the insured or claimant. 
 
. . . . 
The provisions of subsections (5)-(12) apply only to residential 
property insurance policies and condominium association policies as 
defined in s. 718.111(11). 
 
 
Kortum asserts that section 626.854(6) acts as a forty-eight-hour ban on all 
commercial speech from public adjusters to potential clients.  The Department in 
turn asserts that section 626.854(6) does not actually regulate commercial speech.  
According to the Department, the statute only restricts how a public adjuster may 
contact the potential client during a forty-eight-hour period, not what a public 
adjuster may say to a potential client during that time.  Specifically, the 
Department contends that the statute prohibits only in-person or telephonic 
solicitation and that because written communications are not initiated through ―any 
other person or entity,‖ the statute does not prohibit public adjusters from 
distributing written documents, such as informational mailings, to potential 
claimants during the forty-eight-hour period.  Neither party contends that the 
 
 
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statute limits a public adjuster‘s ability to engage in general advertising not 
targeted at a specific homeowner known to have experienced a recent loss. 
 
The First District concluded that the plain language of section 626.854(6) 
―prohibits all public adjuster-initiated contact, whether electronic, written or oral‖ 
and declared the statute unconstitutional.  Kortum, 54 So. 3d at 1018.  This Court 
―review[s] de novo a district court decision declaring a statute unconstitutional.‖  
Fla. Dep‘t of Children & Families v. F.L., 880 So. 2d 602, 607 (Fla. 2004). 
 
―[W]hen the language of the statute is clear and unambiguous and conveys a 
clear and definite meaning, there is no occasion for resorting to the rules of 
statutory interpretation and construction; the statute must be given its plain and 
obvious meaning.‖  Holly v. Auld, 450 So. 2d 217, 219 (Fla. 1984) (quoting A.R. 
Douglass, Inc. v. McRainey, 102 Fla. 1141, 1144, 137 So. 157, 159 (1931)).  
―[W]ords or phrases in a statute must be construed in accordance with their 
common and ordinary meaning.‖  Donato v. Am. Tel. & Tel. Co., 767 So. 2d 1146, 
1154 (Fla. 2000).  ―It is only if the statutory language is ambiguous that ‗the Court 
must resort to traditional rules of statutory construction to determine legislative 
intent.‘‖  Blanton v. City of Pinellas Park, 887 So. 2d 1224, 1230 (Fla. 2004) 
(quoting Palm Beach Cnty. Canvassing Bd. v. Harris, 772 So. 2d 1273, 1282 (Fla. 
2000)).  Likewise, the ―[a]dministrative construction of a statute, the legislative 
history of its enactment, and other extraneous matters are properly considered only 
 
 
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in the construction of a statute of doubtful meaning.‖  Donato, 767 So. 2d at 1153 
(quoting Fla. State Racing Comm‘n v. McLaughlin, 102 So. 2d 574, 576-77 (Fla. 
1958)).  In the instant case, we agree with the First District that the plain language 
of section 626.854(6) ―prohibits all public adjuster-initiated contact, whether 
electronic, written or oral‖ and that the Department‘s interpretation of the statute is 
untenable because it requires ―the court to eliminate the ‗initiate contact‘ 
prohibition inserted by the legislature.‖  Kortum, 54 So. 3d at 1018. 
Section 626.854(6) states that a public adjuster ―may not directly or 
indirectly through any other person or entity initiate contact‖ with a potential 
claimant during the specified time frame.  As noted above, the Legislature added 
the phrase ―initiate contact‖ to the Task Force‘s proposal when adopting section 
626.854(6).  This Court is bound to ―interpret statutes as they are written and give 
effect to each word in the statute.‖  Fla. Dep‘t of Revenue v. Fla. Mun. Power 
Agency, 789 So. 2d 320, 324 (Fla. 2001).  Consequently, the Legislature‘s 
insertion of the broad phase ―initiate contact‖ causes us to conclude that section 
626.854(6) bans all public adjuster-initiated communication with a potential 
claimant during the forty-eight-hour period. 
Contact means to ―get in communication with,‖ to ―make connection with,‖ 
or ―to talk or confer with.‖  Webster‘s Third New International Dictionary 490 
(1993) (second definition).  The definition of ―contact‖ is not restricted to any 
 
 
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particular type of communication, but rather encompasses both written and oral 
transmissions.  The statute‘s prohibition against initiating contact thus means that a 
public adjuster may not make any sort of communication to an identified claimant 
during the forty-eight-hour period.  It is unreasonable to read the restriction on 
―initiat[ing] contact‖ ―directly or indirectly through any other person or entity‖ to 
permit—as the Department urges—a public adjuster to initiate the dissemination of 
written materials to a claimant during the forty-eight-hour period. 
The Department‘s claim that the public adjuster-initiated contact and 
solicitation regulated by section 626.854(6) are conduct—not protected 
commercial speech—is unpersuasive.  This argument is predicated on the strained 
reading of the statute advanced by the Department.  With the rejection of that 
strained statutory reading, the argument collapses. 
The Supreme Court has expressly held that solicitation in a business context 
is protected commercial speech.  In Edenfield v. Fane, 507 U.S. 761, 764 (1993), 
the Supreme Court reviewed a Florida regulation providing that a certified public 
accountant (CPA) ―shall not by any direct, in-person, uninvited solicitation solicit 
an engagement to perform public accounting services . . . where the engagement 
would be for a person or entity not already a client of [the CPA], unless such 
person or entity has invited such a communication.‖  (alteration in original) 
(quoting Fla. Admin. Code R. 21A-24.002(2)(c) (1992)).  The Supreme Court 
 
 
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stated that ―it is clear that this type of personal solicitation is commercial 
expression to which the protections of the First Amendment apply.‖  Id. at 765.  
The Supreme Court then reiterated that ―even a communication that does no more 
than propose a commercial transaction is entitled to the coverage of the First 
Amendment.‖  Id. at 767.  The Department offers no reason why solicitation by a 
public adjuster would not be protected speech when solicitation by a CPA is 
―clear[ly] . . . commercial expression to which the protections of the First 
Amendment appl[ies].‖  Id. at 765. 
O‘Brien likewise supports the conclusion that section 626.854(6) regulates 
commercial speech.  In O‘Brien, 391 U.S. at 375-76, the Supreme Court 
distinguished nonexpressive conduct from protected speech in the context of 
reviewing a federal law prohibiting the knowing destruction of a selective service 
certificate.  The Supreme Court rejected ―the view that an apparently limitless 
variety of conduct can be labeled ‗speech‘ whenever the person engaging in the 
conduct intends thereby to express an idea.‖  Id. at 376.  Instead, the Supreme 
Court limited the protections that accompany pure speech to conduct that is 
―necessarily expressive‖ and concluded that the statute regarding selective service 
certificates only incidentally affected speech.  Id. at 385.  Unlike the destruction of 
a draft card, a public adjuster‘s act of contacting or soliciting a potential customer 
is necessarily expressive.  The purpose and intent of the public adjuster‘s act of 
 
 
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contacting the claimant is to inform the potential client of the services offered by 
public adjusters and to obtain the customer‘s consent to a contract.  There is no 
reason for a public adjuster—in his capacity as a public adjuster—to contact a 
claimant but to engage in communication about the commercial transaction of 
public adjusting. 
Because section 626.854(6) regulates commercial speech—not merely 
conduct—the First District was correct in applying the test from Central Hudson to 
evaluate the constitutionality of the statute.  The Department has failed to present 
any argument showing that the First District erred in concluding that the 
challenged restriction is more extensive than necessary to serve the State‘s 
interests. 
III.  CONCLUSION 
 
As explained above, the plain language of section 626.854(6), Florida 
Statutes (2008), prohibits all public adjuster-initiated contact with potential 
claimants during the forty-eight-hour period following a claim-producing event.  
Because this statute regulates commercial speech, the First District did not err in 
applying the four-prong test from Central Hudson.  Accordingly, we affirm the 
First District‘s decision and lift the stay that was imposed pursuant to Florida Rule 
of Appellate Procedure 9.310(b)(2). 
 
It is so ordered. 
 
 
 
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POLSTON, C.J., and PARIENTE, LEWIS, QUINCE, LABARGA, and PERRY, 
JJ., concur. 
 
 
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND 
IF FILED, DETERMINED.   
 
 
An Appeal from the District Court of Appeal – Statutory or Constitutional 
Invalidity 
 
 
First District - Case No. 1D10-2459 
 
 
(Leon County) 
 
Michael H. Davidson, Florida Department of Financial Services, Tallahassee, 
Florida; Cynthia S. Tunnicliff of Pennington, Moore, Wilkinson, Bell & Dunbar, 
P.A., Tallahassee, Florida; Maria E. Abate and Elana H. Gloetzner of Colodny, 
Fass, Talenfeld, Karlinsky & Abate, P.A., Fort Lauderdale, Florida,  
 
 
for Appellant 
 
Wilbur E. Brewton and Kelly B. Plante of Brewton & Plante, P.A., Tallahassee, 
Florida; Talbot D‘Alemberte and Patsy Palmer of D‘Alemberte & Palmer, PLLC, 
Tallahassee, Florida, 
 
 
for Appellee