FI L ED U.S. COURT OF A P P E A LS E LE V E N T H C IR C U IT MAY 29, 2008 THOMAS K. KAH

N CL ERK [PUBLIS H]

IN THE UN ITED STATES COURT OF APPEALS FO R T HE EL EV EN TH CIRC UI T

____ ____ ____ ____ ____ ____ ____ _ N o. 06- 1325 4

____ ____ ____ ____ ____ ____ ____ _ D. C. Docket N o. 03-02353 -CV -T -17-TB M FEDERAL TRADE COMMISS ION, Plaintiff-Appellee,
ve rs us SHAUN OLMSTEAD, JULIE CONNELL, D ef en dants -Appe llants , ve rs us MARK BERNET, Rece iver-Appellee.

____ ____ ____ ____ ____ ____ ____ ____ ____ ____ _ Appeal f rom the United State s District Court for the Middle District of Florida

____ ____ ____ ____ ____ ____ ____ ____ ____ ____ _ (M ay 2 9, 200 8)Ho n o ra b l e Arthur L . Alarc ón, United States Circuit J udg e for the Ninth Circuit, sitt ing by * desig nation. 2 Be fo re E D MO N D SO N , Ch ie f Judg e, KRA V IT CH and A L A RC Ó N , Ci rc uit * Judg es . PE R CU RIA M: CER TIFIC ATION FR OM T HE U NITE D S TAT ES C OUR T OF APPEALS FOR THE ELEVE NTH CI RCUIT TO THE S UPREME COURT OF FL ORID A, PU RS UA NT TO F LA. R. AP P. P. 9.150(a). TO TH E SU PREME CO UR T OF FL ORID A A ND ITS HON ORA BLE JU STIC ES: In this case, we m

ust decide whether, at the re quest of a j udgm ent-cre ditor,
a co urt m ay

or de r a j udgm en t- de bto r to s ur re nde r al l “ ri ght , ti tle , and i nte re st” in the debtor’ s sing le-m em

ber lim ited liabilitycom

pany (“ LL C”), even thoug h that L L C i s no t a

party to the garn ish m en t a ct ion
. B ec au se thi s qu es tio n is am atte r of Fl or id a la w, we cert ify the qu es ti on to th e Fl or id a Supr em e Co ur t.

I. B ack ground

Shaun Olm stead, w ith the assist ance of Julie Connell (together,

“ D ef en dants ”) , ope rate d an a dvanc e- fe e cr ed it card sc am . T hr oughthe c or

por at e de fen da nt s, Pe op le s C red it Fir st , LLC (“ PCF” ) an d C on su m er Pre ferr ed , LLC (“ CP ”) , D ef

en dants m ai le d c onsum er s ov er te n m ill ionsol ic itatio ns. T he seAmongother thing s, the stipulated preliminary injunction dire cted the rec eiver to “[c]ons erve , 1 hold, a nd manag e,” “pre serve the value of,” and preve nt the “unauthor ized tra nsfer , withdrawa l, or mis a pp lic atio n” of

the re c e ive rs hip a sse ts. 3 sol ic itatio ns c re at ed

the im pr es sio n th at , in ex ch an ge f or apaym en t of

$45 or $49 , a consum er w ouldrec eive a “platinu m ” cr edit card like a V ISAor MasterC ard
w itha$5, 000 cr ed it lin e. Mo re than 20 0, 000 co nsum er s purc ha se d th e cr ed it
card s; b ut the c ar ds the y

r ec ei ve d w er e not

m aj or c re dit c ar ds l ike V IS A or Ma ste rC ar d. I nst ea d, the c ar ds w er e m er el y platinum -c olo re d c ar ds u sa ble onl y fo r pu rch as in g p ro du ct s fr om Defen da nt s’ m erch an di se cat al og or we bs it e. Although som e consum ers used the car ds to m ake purchases, a significant num ber of c onsum er s c la im ed

to ha ve be enm isl ed

and c om pla ine d to P CF and C P as w el l
as to loc al be tte r busi ne ss b ur ea us and s ta te a ge nc ie s. The F ederal T rade Com

m issio n (“ FT C”) filed this action, alleging that D ef en dants , inc lud ing P CF and C P, vio la te d S ec tio n 5( a) of the F ed er al T ra de Co m m iss ionA ct , 15 U
. S. C. § 45 (a ), w hic h pr ohi bit s un fa ir or de ce pti ve tr ad e pr ac tic es . T he dis tr ic t c ourt i m m ed ia te ly iss ue d an e x part e te m

por ar y r es tr ai nin g order (“ TR O” ) fr eezing De fendants’ assets and appoin ting a receiver over PCF and CP. L ater, with the parties’ consent, the district court approved a stipu lated pr el im inary

inj unc tio n e xte ndi ng the a sse t f re ez e an d r ec ei ve rs hip pr ovi sio ns o f the T RO
. A t the r ec ei ve r’ s r eque st, the dis tr ic t c ourt a lso e nte re d ase ri es of

1These non-party , single -member L L Cs are Dy namic Fulfillment & Service s, L L C; Foundation 2 C o m m er ci al P ro p ert i es , L L C ; P ro d u ct Dy n am i cs , L L C ; S o Ho Ho l d i n gs , L L C ; Ge n er at i o nHo u s i n g, L L C; and Nu Products, L L C. Each wa s org anized under F lorida law. A panel of this Court filed an unpublished opinion in No. 06-11827 on 19 J uly 2007, aff irming 3 the district court’s judg ment. 4 orders extending th e re ceivership to includ e severa l non-party LL Cs in which either O lm stead or Connell was the sole m em ber. T he court placed these single- 2
m em ber L LC s into receivership because De fendants’ m anagem ent of them violated th e term s of the asset fre eze. The F TC then m oved for summ ary j udgm ent, which the dist rict court gr an te d, e nte ri ng a

j udgm en t f

or inj unc tiv e re lie f an d f

or m or e than $1 0 m ill ionin restitution against Def

endants. T he district court also entered an am ended j udgm en t, w hic h in cl ude d a ddi tio na l e qui ta ble r el ie f. D ef

en dants appe al ed

the district court’ s grant of summ ary j udgm ent to the FTC
. 3 D ef en dants did

not se ek astay of e xe cu tio n; s o, to sa tis fy

the j udgm en t part ia lly , the F T C m ove d to c om pe l D ef en dants to sur

re nde r the ir

m em be rs hip int er es ts i n th ei r L L Cs to the r ec ei ve r. D ef en dants obj ec te d, a sse rt ing that the FT C only has the rights of an assign ee under Florida law
. The district court
ne ve rthe le ss g rante d th e FT C’ s m oti on and c om pe lle d D ef

en dants to “ en dor se and
su rren de r to th e Rec ei ve r, al l o f th ei r ri gh t, t it le an d i nt eres t” in th ei r LLCs. A la te r or de r iss ue d by

the dis tr ic t c ourt auth or iz ed the r ec ei ve r to l iqu idate theAcc ording to the FTC, the proce eds from the auctions are being held i n an i n t ere st-bear ing 4 acc ount until the resolution of both this appea l a nd Def endants’ appea l of the under lying summar y judgme nt order, N o. 06-11827, which this Court has alre ady decide d. We m us t f ir st a dd re ss t he jur isd ic tio na l qu e sti on that w e e arl ie r p re se nte d to the pa rt ie s: 5 Whe the r thi s Court ha s a pp e llate jur isd ic tio n g ive n th at, a ft e r t he name d d e fe nd ants filed their June 2, 2006, notice of a ppeal, the distri ct co u rt grante d, in part, the interested pa

rty ’s tolling motion for re consideration of a re lated orde r. Be cause the orde r issued af ter the notice of appea l involved completely differ ent assets a

nd differ ent parties, t h e 3 May

surre nder or der — which Def endants soug ht to appeal in their 2 June notice of appea l

— i s appea lable ac cordingto the doctrine of prac tical finality . See Atl. Fe d. Sav. & L oan Ass’n v. B ly

the Eastman Paine Webber, Inc., 890 F.2d 371, 376 (11th Cir. 1989) (treating or ders a s final that dec ide the rig ht to contested proper ty and that direc t the proper ty to be sold or delivere d). Acc ording ly , we c onclude that this Court has appe llate jurisdiction to consider the district cour t’s 3 May surre nder or der. 5 as se ts i n D ef

en dants ’ L L Cs , w hic h th e re ce ive r did thr oughpub lic auc tio ns, and t o pay the pr oc ee ds t o th e FT C. I n th is a ppe al , D ef

en dants onl y

c ha lle nge the 4 d i s t r i c tc o u rt ’s o r d e r

r e qu i r i n g th e m t o s u rr e n d e r th e a s s e t s i n th e i r

n o n - p a rt y, singl e-m em

ber L LC s to the receiver.

II. D isc us sio n 5

U nde r Ru le 69 o f the F ed er al Ru le s of Ci vil P ro ce dur e, pr oc ee din gs i n a id of j udgm en t or

e xe cu tio n are to be c ondu ct ed in ac co rd an ce “ w iththe pr oc ed ur e of the state w he re the c ourt i s lo cate d. ” F ed
. R. Ci v. P
. 69( a) (1 ). D ef en dants arg ue that the surrender order is in error beca use it is contrary

to Florida’ s Lim ited6

L ia bil ity Co m pany A ct ( “ L L C A ct ”) , part ic ularl y F la
. S ta t. § 60 8. 433( 4)
. S ec tio n 608. 433( 4) pr ovi de s: O n a ppl ic at ionto a co urt of

c om pe te nt j ur isd ic tio n by

any j udgm en t cr ed ito r of

am em be r, the c ourt m ay

c harg e the li m ite d li ab ili ty co m pany m em be rs hip int er es t of

the m em be r w ithpaym en t of

the unsatis fi ed

a m ount of the j udgm en t w ithint er es t. T o th e ex te nt s o ch ar ge d, the j udgm en t c re dit or ha s on ly the r igh ts o f ana ssi gne e of suc h in te re st. T his c ha

pte r doe s no t de pr ive any m em be r of the be ne fi t of any e xe m pti on l aw s a

ppl ic ab le to the m em

be r’ s in te re st. Beca use the plain lang uage of this provi sion d raw s no dis tinction betwee n sing lem em be r an d m

ult ipl e- m em

be r L L Cs , D ef

en dants c ont en d th at

ac harg ing or de r is the onl y r em edy that a j udgm en t- cr ed ito r m ay

obt ai n a ga ins t the m em

be rs hip in te res t o f an LLC m em

be r, ev en if t ha t m em

be r is th e so le m em

be r of th e LLC. T he re fo re , a cc or din g to D ef en dants , the dis tr ic t c ourt e rr ed by or de ri ng De fendants to su rrender

“ all of their right, title and int erest” in their singlem em be r L L Cs
. A lth ougha cknow le dgi ng tha t the pla in t ex t of the L L C A ct

doe s no t distin guish betwee n sing le-m em ber and m

ultip le-m em

ber L LC s, the FT C ar gues
ne ve rthe le ss tha t the ove ra ll statut or y c ont ex t “ le ad s to the ine vit ab le c onc lus ion that a charging order is a senseless (and certainly not exclusiv e) r em edy

for a j udgm en t- cr ed ito r ag ai nst the m em be rs hip int er es t i n asin gle m em be r L L C. ” T he FT C p oin ts o ut tha t the c harg ing or de r re m edy or igi na te d inc om

m on l awto7

pr ote ct non de bto r partne rs f

ro m be ing f or ce d un w ill ing ly

int o partne rs hip w itha creditor. T his rationale is los t in the context o f single-m em ber L LC s where , a s he re, n o n on de bt orm em

be rs ex is t wh os e in te res ts ne edpro te ct io n. In addition , the F TC argues that closely relate d provis ions o f the L LC Ac t dem onstrate how De fendants’ contended-for application of the charging order
re m edy to sin gle -m em

be r L L Cs w oul d pr oduc e ab sur d r es ult s. F or ins tanc e, the L L C A ct pr ovi de s th at

an a ssi gne e can be co m e anL L C m em be r w iththe c onse nt of m em bers other than the j udgm ent-debtor. S ee F la. Stat. §§ 608 .432(1)(a) , 608. 433( 1)
. T he F T C c ont en ds tha t this pr ovi sio n, w hic h a llo w s a ssi gne es to be co m e L L C m em

be rs , is re nde re d purp ose le ss f or sin gle -m em

be r L L Cs unl es s they are treate d differe ntly

than m ultip le-m em

ber L LC s: Tr eating sing le-m em ber and m ultip le-m em

ber L LC s alike would produce the absurd result th at assignees could becom e m em

bers in m ultip le-m em

ber L LC s but no t in sing le-m em ber LLCs. Also, a ccording to th e FT C, the LL C A ct directs that an L LC m em ber
ceas es to be a m em

be r up on th e as si gn m en t o f th atm em be r’s in te res t. See id . § 608. 432( 2) (c ). B ut, if

asin gle -m em

be r L L C w er e subj ec t on ly to a ch ar gin g
or de r re m edy , the n th e sin gle -m em be r L L C w oul d be le ft

w ith out any m em be rs to
m an ag e it. B ec au se an L L C m ust be dis sol ve d “ [a ] t any

ti m e the re are no8

m em be rs , ” id. § 60 8. 441( 1) (d ), the F T C c ont en ds tha t no m em be r w oul d r em ai n wit h t he au th or it y

to tak e th e st ep s p res cri be d i n S ect io n 6 08 .44 31 to win d d own the dis sol ve d L L C. G ive n th e fo re goi ng, the F T C c onc lud es that the “ onl y w ay to harm onize these provisi ons in to a coherent w hole is to recognize that where, as he re , an L L C h as onl y

one m em be r, the a ssi gnm en t of

that m em be r’ s in te re st t o a j udgm en t- cr ed ito r ne ce ssari ly e nable s th e cr ed ito r to s te p inand l iqu idate the LL C’ s assets.” N ei the r party

c ite s to F lor ida

c as e lawthat di re ct ly

a ddr es se s th e application o f Se ction 60 8.433(4) to sing le-m em ber L LC s. I nstead, both parties
re ly on w el l- es ta

bli she d c an ons of

statut or y c onstru ct ion
. D ef

en dants c ont en d, fo r ins tanc e, that “ w he re astatut e is c le ar and una m

big uous ac ourt w ill not

loo k be y ond the statut e’ s pl ai n langua ge f or le gis la tiv e int en t. ” Appe llant B r. 12 (c iti ng C ity

of Mi am i B ea chv. G al but , 626 S o. 2d 1 92, 193 ( Fl a. 199 3) ). T he FT C, on the oth er

hand, c ite s th e “ card ina l r ule of statut or y c onstru ct ion , that a le gis la tur e doe s no t i nte nd t o c re at e statut es that l ea d ‘ to an un re as ona ble or rid ic ul ou s re su lt .’ ” App el le e Br. 1 3 (c it in g Gal bu t, 6 26 So . 2dat 1 93 ). A ft er c onsi de ri ng the part ie s’ arg um en ts and g ive n th e ab se nc e of
co ntr oll ing c as e lawon p oin t, w e co nc lud e that F lor ida lawis not

suf fi ci en tly
we l l -e s t ab l i s h ed fo r u s t o d et er m i n e w i t h co n fi d en ce wh et h erth e d i s t ri ct co u rt ’s9

sur re nde r or de r is p er

m iss ibl e unde r Se ct ion608
. 433( 4)
. T he F lor ida Co nst itu tio n auth or iz es thi s C ourt t o c er tif y aque sti on a

bout state lawto the Fl or ida S upr em e Co urt i f it “ is d et er m inativ e of

the c au se and f

or w hic h th er e is
no co nt ro ll in g p rece de nt of t he supr em e co ur t o f Fl or id a.” Fl a. Co ns t. ar t. V, § 3( b) (6 ). B ec au se w e ha ve f ound no s uc h c ontro lli ng p re ce de nt, w e ce rt if y the fo llo w ing que sti on t o th e Fl or ida S upr em e Co urt: Whether, pursuant to Fla. Stat. § 608.433 (4), a court m ay order a j udgm en t- de bto r to s ur

re nde r al l “ ri ght , ti tle , and i nte re st” in the debtor’ s sing le-m em

ber lim ited liabilitycom

pany to satisfy an ou ts ta nd in g ju dg m en t. In certify ing th is questi on, “ we do not intend to restrict the issues
co nsi de re d by

the state c ourt. ” S te ve ns v . Batte lle Me m ’ l I nst . , 488 F
. 3d 8 96, 904 (1 1thCi r. 200 7) ; se e al so M ill er v. S co tts da le I ns. Co
. , 410 F
. 3d 6 78, 682 ( 11th Cir. 2005 ) (“ Our phrasing of the cer tified questio n is m erely

suggest ive and does not in an y w ay r es tr ic t the sc ope of

the inquir

y by the S upr em e Co urt of Fl o ri d a. ”) . We a re i n d ee dm i n d fu l th at “ l at i tu d e e x t en d s t o th e S up re m e C o u rt ’s restatem ent of the issue or issues andthe m anner in which the answ ers ar e given.” St ev en s, 488 F
. 3d at 90 4 ( int er na l qu otatio n m ar

ks o m itt ed ). W e as k f

or guid ance. QUEST IO N CERTIFI ED.