Bailey v. St. Louis
268 So. 3d 197
| Fla. Dist. Ct. App. | 2018Background
- Plaintiffs (Spine, Spinal, LMC) sued defendants (owners/operators of Laser Spine Institute) for breach of fiduciary duty, conspiracy, slander per se, tortious interference, and FDUTPA violations after defendants recruited doctors, employees, and business opportunities from plaintiffs and launched a competing business.
- In Bailey I, this court affirmed liability on multiple counts but reversed the trial court's damage awards as unsupported or inadequately explained and held the trial court could award monetary FDUTPA and punitive damages. See Bailey I, 196 So.3d 375.
- The original trial judgment awarded $1,600,000 in damages composed of $300,000 (out-of-pocket losses for Spine) and $1,050,000 (awards to Spinal and LMC under various claims). The appellate court previously found those amounts unexplained and potentially grossly insufficient if intended as disgorgement.
- On remand the trial court again entered the same amounts (plus punitive damages) but provided explanations that largely adopted appellees' arguments previously rejected on appeal, including reliance on a "head start"/six-month interruption concept and plaintiffs' alleged poor business acumen to limit disgorgement.
- The appellate court reverses again: it holds the trial court improperly ignored its prior determinations (law of the case), misapplied disgorgement principles, and mischaracterized the basis for damages; it remands for entry of $6,831,172 in out-of-pocket damages to Spine and for calculation of disgorgement based on LSI's 2009 value plus owner distributions (approximately $264–265 million).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper measure of disgorgement for fiduciary breach/conspiracy/tortious interference | Award disgorgement equal to defendant's net profit attributable to the wrongdoing (use plaintiffs' expert formula: LSI 2009 value plus 2005–2009 distributions) | Disgorgement should be limited by profits actually attributable to wrongdoing or the defendant's independent efforts; alternatively, measure by a "head start" period | Court: disgorgement aims to strip wrongful gains; limiting based on plaintiffs' business failings or a head-start/loss-based measure was error; remand to calculate disgorgement per plaintiffs' expert formula (approx. $264–265M) |
| Trial court's obligation to follow appellate law-of-the-case | Appellants argued remand should implement prior holding that the $1,050,000 award was grossly inadequate if disgorgement | Appellees urged the trial court could adopt limiting theories rejected on appeal and re-explain the award | Court: trial court bound by Bailey I; it erred by accepting appellees' rejected theories and must follow appellate guidance |
| Proper measure of out-of-pocket damages for tortious interference (Spine) | Use plaintiffs' expert testimony establishing $6,831,172 out-of-pocket losses | Defendants did not meaningfully contest the figure at trial and urged the court to reject the expert on remand | Court: trial court previously accepted the expert; its rejection on remand was inconsistent; remand for entry of $6,831,172 |
| Use of plaintiffs' business shortcomings as a limit on disgorgement | Plaintiffs argued such considerations are irrelevant to disgorgement, which targets defendant's wrongful gain | Defendants argued plaintiffs' lack of business skill and independent managerial efforts justified limiting disgorgement | Court: business acumen is irrelevant to disgorgement; focusing on plaintiffs' failures misapplies equitable restitution principles and was error |
Key Cases Cited
- Bailey v. St. Louis, 196 So.3d 375 (Fla. 2d DCA 2016) (prior opinion affirming liability but reversing damages and directing that monetary FDUTPA and punitive damages could be awarded)
- Pidcock v. Sunnyland Am., Inc., 854 F.2d 443 (11th Cir. 1988) (discussed limiting principles for profits attributable to wrongdoing; court rejects its applicability here)
- Duty Free World, Inc. v. Miami Perfume Junction, Inc., 253 So.3d 689 (Fla. 3d DCA 2018) (disgorgement is equitable remedy measured by defendant's ill-gotten gains)
- Guyana Tel. & Tel. Co. v. Melbourne Int'l Commc'ns, Ltd., 329 F.3d 1241 (11th Cir. 2003) (restitution measures recovery by defendant's benefit, not plaintiff's loss)
- S.E.C. v. Monterosso, 756 F.3d 1326 (11th Cir. 2014) (disgorgement as an equitable remedy to prevent unjust enrichment)
- Specialty Rests. Corp. v. Elliott, 924 So.2d 834 (Fla. 2d DCA 2005) (law-of-the-case principle binds trial court on remand)