From Illoominate Media, Inc. v. CAIR Florida, Inc., decided today by Judges Charles Wilson, Britt Grant, and R. Lanier Anderson III:
This suit over attorney’s fees and costs stems from allegations that the CAIR Foundation and CAIR Florida, Inc. (CAIR) had a hand in convincing Twitter to ban Loomer’s account. CAIR removed the first amended complaint to federal court on August 22, 2019. Counsel for Loomer and her corporation (Illoominate) moved for a remand to state court the next day. In its response two weeks later alleging fraudulent joinder of CAIR Florida, Inc., CAIR filed a sworn statement from Nathan Bernard. He explained that he pranked Illoominate by fabricating evidence to convince “Loomer that CAIR Foundation was the reason Twitter banned her account.” In the interim, CAIR had filed a motion to dismiss in late August.
On October 2, 2019, CAIR sent Illoominate an “offer of judgment” proposing to settle the entire case for a nominal $1, including costs and attorney’s fees. Illoominate had 30 days to respond. On October 22, the district court dismissed CAIR Florida from the suit and scheduled a hearing on CAIR’s motion to dismiss for November 18. Nevertheless, Illoominate chose litigation over settlement. On October 31—shortly before the offer of judgment deadline—Illoominate filed a response to CAIR’s motion to dismiss, where it voluntarily dismissed all its claims except Count II (for tortious interference with an advantageous business relationship). Once the deadline passed, the district judge dismissed the remaining claim at the November hearing, and this Court affirmed the dismissal in December 2020. On April 12, 2021, CAIR filed a motion seeking reimbursement from Illoominate pursuant to a Florida law requiring select parties who decline an offer of judgment to pay their opponent’s reasonable costs and attorney’s fees. Fla. Stat. § 768.79(1).
The lower court referred the matter to a magistrate judge, and both parties had the opportunity to brief the issue in full. The magistrate judge issued an order granting CAIR’s motion for costs and attorney’s fees, but reducing their magnitude to comport with federal and state laws limiting recovery. Illoominate appealed to the 11th Circuit again, though we dismissed for lack of a final dispositive order to review.
This (third) appeal flows from a motion Illoominate filed in the district court in opposition to the magistrate judge’s order. The district judge allowed CAIR to submit a written response to Illoominate’s objections. In disposition, the district court adopted the magistrate judge’s order in full, awarding CAIR recompense for fees and expenses incurred while litigating all aspects of the case from October 2, 2019 (when the offer of judgment was made) through the end of the first appeal. Illoominate now asks that we review and reconsider.…
First, Illoominate claims that Florida’s cost-shifting law is inapplicable because its suit was for both money damages and injunctive relief. Fla. Stat. § 768.79(1); see also Diamond Aircraft Indus., Inc. v. Horowitch (Fla. 2013) (“Courts have also held that when a plaintiff seeks both monetary and nonmonetary relief, and a party makes a general offer of settlement, section 768.79 is not applicable.”). In Illoominate’s view, all they “had a chance to do was plead, and they clearly pled non-monetary relief.”
Not quite. The prayer for relief in Illoominate’s complaint seeks “damages in an amount to be proved at trial” and (without elaboration) “preliminary and permanent injunctions to prevent defendants from continuing their unlawful conduct.” Yet as the magistrate judge correctly pointed out, in the eight-and-a-half-month period between the filing of the amended complaint and the district court’s decision to dismiss, Illoominate “never filed a motion for a preliminary injunction or temporary restraining order” in state or federal court.
Nor could it have. Three of the four counts directed at CAIR conclude that Illoominate has been injured in an “amount to be proved at trial,” completely synonymous with the prayer for relief’s phrasing of the damages claim. The fourth count, a restraint of trade claim, does not specify the relief sought. But the harm is phrased entirely in the past tense: Illoominate and Loomer “have been injured in their business or property by reason of defendants’ unlawful act.” There is no ongoing harm to be enjoined. The request for injunctive relief only makes sense in the context of Count I, which is directed solely against never-served defendant Twitter. Illoominate seeks “recission or reformation of those provisions of the Twitter Terms of Service which, as a matter of equity, might otherwise prevent or limit this Court’s ability to provide just and complete remedies for defendants’ unlawful conduct.” Without Twitter, the suit reads as a claim for money damages from CAIR.
The Florida Supreme Court has approved of applying section 768.79 to cases that involve a notional nonmonetary claim, but that actually involved disputes solely over monetary damages. Diamond Aircraft. Florida state courts interpret Diamond Aircraft by looking beyond the procedural posture of a complaint to assess the “true relief” a party seeks, and apply section 768.79 if it is damages.
Viewed through this prism, the lower courts appropriately applied the statute here. Illoominate made only a glancing gesture toward injunctive relief directed at another defendant, and then totally failed to pursue it when that defendant was not served. Instead, as the magistrate judge correctly pointed out, the language of their complaint against CAIR sounds entirely in damages…. Illoominate … cannot dodge responsibility for its own choice to continue litigation by pointing to a single throwaway line in its complaint. To hold otherwise would defeat the entire purpose of the Florida statute—any party could upend the law by inserting a single sentence into its pleadings….
If section 768.79 applies, “the sole basis on which a court can disallow an entitlement to an award of fees is if it determines that the offer was not made in good faith.” Unsurprisingly, Illoominate argues that CAIR’s offer of judgment was not made in good faith. That contention is wrong, for two reasons.
First, Illoominate waived this argument through inaction. In this fact-bound inquiry, we review the lower court’s finding of good faith for clear error. The district court, in turn, also reviews the magistrate judge’s order for clear error or to assess if it is contrary to law. But the magistrate judge was clear: “there is no dispute as to whether Defendants’ offer was made in good faith.” Illoominate did not raise the good-faith issue until its objections to the magistrate judge’s order—which was too late to afford it meaningful relief, given the district court’s mandate to review record-based factual arguments for clear error. This is reason enough for us to affirm the judgment under clear error review, too.
If Illoominate’s bad-faith argument is not waived, the only question of law presented by it is whether a nominal offer of judgment—here, $1—can be made in good-faith. Yes it can. “Although nominal offers are suspect where they are not based on any assessment of liability and damages, they can be valid if the offerors have a reasonable basis at the time of the offer to conclude that their exposure was nominal.” Offerors need not have the kind of evidence necessary to support a judgment when they propose settlement, only “some reasonable foundation on which to base an offer.”
Here, CAIR had introduced sworn statements showing that its purported involvement in Illoominate’s claims derived from a hoax. Those statements should have given Illoominate pause about pressing its claims. And apparently they did: during the 30-day window to accept the offer of judgment, Illoominate voluntarily dismissed three of its claims (and the district judge dismissed CAIR Florida, Inc. from the case). That left only one of Illoominate’s five counts operative, and that claim too was dismissed within three weeks after the settlement window closed. Given this context, CAIR had a wholly sufficient basis to conclude a nominal settlement was appropriate. So even if the argument had been properly presented, the district court did not err in concluding that CAIR’s offer was made in good faith….
[W]e affirm the holding of the district court that Illoominate must pay the full amount of costs and fees ordered by the magistrate judge: $124,423.37….
Congratulations to Yasir Billoo (Golden & Grimes, LLP), Darren Joel Spielman (The Concept Law Group, PA), and Gadeir I. Abbas, Lena F. Masri, Justin Sadowsky & C. Danette Zaghari-Mask (CAIR), who represented defendants.
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