One Step Forward, Two Steps Back: Roofers, Insurance And Commercial Speech | Butler Weihmuller Katz Craig LLP
On July 11, 2021, Chief Judge Mark Walker of the U.S. District Court for the Northern District of Florida issued an injunction ordering the Secretary of the Florida Department of Business and Professional Regulation to take steps to enforce subsections 489.147(2)(a) , (3), and 4(b), the Florida Statutes, as they pertained to “prohibited advertising” until otherwise ordered. The provisional injunction binds “Defendant and her officers, agents, employees, employees and attorneys – and others in active consultation or participation with any of them.”
On June 11, 2021, Florida Governor Ron DeSantis signed SB 78, creating Section 489,147, the Florida Bylaws. Subsection 489.147(2)(a) prohibits any contractor from directly or indirectly recruiting a homeowner through a “prohibited advertisement.” “Prohibited Advertising” is defined as “any written or electronic communication by a contractor that encourages, instructs, or induces a consumer to contact a contractor or public claims adjuster for the purpose of making an insurance claim for roof damage The term includes, but is not limited to, door hangers, business cards, magnets, flyers, pamphlets and emails.” § 489.147(1)(a), Fla. Stat. However, personal, verbal communication of the same message does not appear to be illegal, Subsection 489.147(3) will subject a contractor who violates this section to disciplinary action and to a fine of $ 10,000 for each violation Subsection 489.147(4)(b) provides that any unlicensed person who engages in prohibited expressions is guilty of entering into unlicensed contracts, and is subject to civil penalties through disciplinary action by the department and fines up to $10,000 per violation.
Ten days later, on June 21, 2021, Plaintiff, Gale Force Roofing & Restoration, LLC, filed a complaint and a request for injunctive relief. After procedural issues were resolved, the court filed the plaintiff’s first amended complaint and amended motion for injunctive relief for an expedited briefing and hearing schedule. The hearing took place on July 9, 2021. The plaintiff argued that the new statute distorts his business practices and prohibits him from providing truthful information to consumers. Plaintiff further alleged that the law cooled her First Amendment rights because, under penalty of disciplinary action, Plaintiff forced Plaintiff to discontinue her written advertisements encouraging consumers to contact for the purpose of making an insurance claim for roof damage. .
The court ruled that the statute was subject to interim review, as set forth in: cent. Hudson Gas & Electric. Corp. v. Pub. serve. Comm’n from NY., 447, US 557, 561 (1980). By that standard, if the speech in question is false, misleading, or involves unlawful activity, the speech is not protected by the First Amendment and the government has a free hand to regulate it. If not, the government’s interest in regulating the speech must be substantial. If the government advances a substantial interest, the scheme must advance that claimed interest directly. Even if that is the case, the court must determine whether the public interest can also be served by a more limited restriction on commercial expressions.
The court noted that while the state may prohibit commercial expressions that are fraudulent or deceptive without further justification, the defendant in this case admitted that expression was simply encouraging consumers to contact a contractor or public adjuster for the filing an insurance claim for roof damage is not false or misleading and does not involve illegal activity. Addressing the next point of the test in Central Hudson, the court ruled that Florida had a significant interest in addressing the behavior of predatory contractors who exploit consumers by engaging in unauthorized public accommodations and inducing homeowners to allocate their insurance benefits, then fail to complete work despite full payment by the homeowners’ insurance company. The court also noted the state’s interest in addressing the threat to Florida’s insurance market from the alleged onslaught of insurance disputes created by these practices.
However, the court questioned whether the ban on commercial expressions that were not false, misleading or related to illegal activities directly served the interests of the state. The court advised that it was unclear why a homeowner would knowingly or unknowingly “go down a path to supporting insurance fraud” by simply learning that their insurance could pay for roof repairs from a contractor’s ad, rather than during a conversation. that takes place once the contractor has already inspected their roof. The court ruled that the Florida legislature overstepped the limits of the First Amendment when it determined that the proper remedy for speech it deemed “evil” was “enforced silence,” as opposed to “more speech.” According to the court, the state tried to enforce silence where the downstream effects of speech – rather than the speech itself – were considered ‘bad’. The court noted that Florida’s Insurance Consumer Advocate’s “educational initiative” was already in place to offer “more speech” to combat the “evil” allegedly stemming from contractor advertising encouraging consumers to contact contractors. or public claims adjusters to file insurance claims for roof damage.
Finally, the court noted that the same bill that contained the provision in question contained additional measures targeting licensed contractors acting as public adjusters, advance notice requirements for potential claimants, and limitation of attorney fees in insurance claim disputes. The Court noted that, other than the state’s ban on certain advertisements, the remaining provisions appear to target directly the ills that have emerged in Florida’s insurance market. These targeted laws directly address the conduct that contributes to Florida’s insurance problems and belies the defendant’s claims that the “banned advertising” ban is quite appropriate to further the state-identified substantial interests.
While the court’s order is only a preliminary injunction, the court’s detailed ruling indicates that the Florida legislature will need to address this part of the Florida insurance crisis in a different way.