Florida Supreme Court Makes Clear that Bargain-for-Exchange is a Defense to Unjust Enrichment

Feb 16, 2022   

On February 3, 2022, the Florida Supreme Court issued its opinion in Pincus v. American Traffic Solutions, Inc. clarifying that under Florida law, where a plaintiff has received adequate consideration in exchange for a benefit conferred, the plaintiff cannot state a claim for unjust enrichment as a matter of law. A copy of the Florida Supreme Court’s decision can be read here.

The case arose after plaintiff filed a class action lawsuit in the Southern District of Florida against American Traffic Solutions (“ATS”) stemming from the company’s charging of a five percent convenience fee to process payments for red light camera citations. The complaint alleged that the charging of the convenience fee violated numerous Florida laws and that ATS was unjustly enriched as a result. ATS moved to dismiss. The Southern District dismissed plaintiff’s complaint finding the complaint failed to state a cause of action because: (1) ATS’s fee was not prohibited under section 316.0083(b)(4) because the fee was not a “commission” within the meaning of the statute; (2) ATS’s fee was not prohibited under section 318.121 because this statute only applies to violations assessed under chapter 318, Florida Statutes (2017), and Pincus’s violation was assessed under chapter 316, Florida Statutes (2017); and (3) section 560.204 does not provide a private right of action, as violations of this statute are enforced by the Financial Services Commission’s Office of Financial Regulation. Plaintiff appealed. 

On appeal, in addition to its previous arguments, ATS also argued that plaintiff could not state a claim because he had received a benefit in exchange for the fee he paid, to wit: the convenience of being able to pay immediately with a credit card instead of having to mail a check. The Eleventh Circuit determined there was no guiding precedent on this issue or other key issues raised in the case and certified the following questions to the Florida Supreme Court:

(1) Did ATS violate Florida law when it imposed a five percent fee on individuals who chose to pay their red light traffic ticket with a credit card? In particular:

Does the challenged fee constitute a “commission from any revenue collected from violations detected through the use of a traffic infraction detector” under Fla. Stat. § 316.0083(1)(b)(4)? 

Was the fee assessed under Chapter 318 and therefore subject to § 318.121’s surcharge prohibition? 

Was ATS a “money transmitter” that was required to be licensed under Fla. Stat. § 560.204(1)? 

 

(2) If there was a violation of a Florida statute, can that violation support a claim for unjust enrichment? In particular: 

 

  • Does Pincus’s unjust enrichment claim fail because the statutes at issue provide no private right of action?
  • Does Pincus’s unjust enrichment claim fail because he received adequate consideration in exchange for the challenged fee when he took advantage of the privilege of using his credit card to pay the penalty?

Pincus v. American Traffic Solutions, Inc., 986 F.3d 1305, 1320-1321 (11th Cir. 2021). 

In its opinion, the Florida Supreme Court focused solely on question 2(b) concerning adequate consideration finding that its resolution would be dispositive of the case before the Eleventh Circuit. The Court noted that to successfully state a claim for unjust enrichment, a plaintiff is required to allege that it would be inequitable under the circumstances for the defendant to retain the benefit conferred upon it without paying the value thereof. Based on the circumstances presented, the Court held that even if the collection of the fee violated Florida law, ATS’s retention of the fee would not be inequitable because Pincus received adequate consideration in exchange for the privilege to pay by credit card. This adequate consideration included: (1) Pincus did not have to procure postage and a check or money order; (2) he could pay the balance over time; (3) he avoided the risk of his payment being delayed, stolen, or lost en route; (4) he was afforded more time to make the payment because it was instantaneous; and (5) ATS provided immediate confirmation that Pincus’s payment was received and his obligation to pay the penalty was fulfilled. Thus, the Court found that it was not inequitable to retain the processing fee because ATS had provided adequate consideration through a bargained-for-exchange. Phrased differently, it was not inequitable to retain the fee because ATS had already paid the value of the fee to the plaintiff by providing him with numerous benefits associated with using his credit card to pay the citation in lieu of other forms of payment.

The Court’s decision is interesting in multiple respects. First, practitioners should recognize that bargained-for-exchange is not an affirmative defense to unjust enrichment. Instead, it is a defense that attacks the inequity prong of the cause of action. Thus, plaintiff bears the burden of demonstrating any consideration received was inadequate. A defendant can therefore attack the sufficiency of plaintiff’s pleading by pointing to a bargained-for-exchange between the parties concerning the benefit at issue. As inequity is the plaintiff’s burden to establish, plaintiffs who anticipate defendants raising an adequate consideration argument would be wise to allege facts concerning circumstances that demonstrate why the consideration received was inadequate. 

Second, the decision is interesting in that it seems to ignore the underlying illegality of ATS’s actions that was presumed in the question presented by the Eleventh Circuit when addressing the inequity issue. A review of the Court’s opinion makes clear it focused on the consideration received for the benefit conferred. It remains to be seen how this case’s holding is construed as it appears, on the surface, to stand for the broad proposition that bargained-for-exchange will trump any argument that a defendant’s unclean hands prohibits the retention of a benefit received. 

Third, from an opinion prospective, the opinion is an example of judicial restraint in that the Court focused solely on the issue it found to be dispositive rather than answering all questions certified to it by the Eleventh Circuit. In this way, the Court was able to resolve the issue without entangling itself in multiple complex statutory analyses. 

Regardless of which side you’re on, FIDJ’s seasoned trial and appellate litigators can help you. Our appellate and trial support practice group is chaired by Jeffrey J. Molinaro, B.C.S., who is recognized by the Florida Bar as a Board Certified Specialist in Appellate Practice. For more information on how we can assist in your appellate or trial support needs, contact us at 305-350-5690 or info@fidjlaw.com.