News
NAVIGATING THE CORPORATE TRANSPARENCY ACT AND BENEFICIAL OWNERSHIP INFORMATION REPORTING REQUIREMENTS
The Corporate Transparency Act (“CTA”) was enacted on January 1, 2021 as part of the Anti-Money Laundering Act of 2020 in the National Defense Authorization Act for Fiscal Year 2021.[i] On September 30, 2022, FinCEN issued a final rule (87 Fed. Reg. 59,498 (Sept. 30, 2022)) (the “Final Rule”) implementing the CTA's Beneficial ownership information (“BOI”) reporting requirements which take effect on January 1, 2024 (the “Effective Date”).[ii] The principal mandate of the CTA is to require certain business entities to information about the reporting company, any company applicants and its beneficial owners.
THE INFORMATION THAT MUST BE REPORTED
Report certain beneficial ownership information (“BOI”) to the US Department of the Treasury's Financial Crimes Enforcement Network (“FinCEN”) and to promptly report any subsequent change in BOI; and disclose information about the “reporting company” and “applicant” who created such entity or registered it to do business in the US.
The term “beneficial owner” means, with respect to a reporting company, any individual who, directly or indirectly, either exercises substantial control over such reporting company or owns or controls at least 25 percent of the ownership interests of such reporting company.[iii]
The term “applicant” means any individual who--files an application to form a reporting company; or registers or files an application to register a foreign reporting company to do business in the US.[iv]
WHICH ENTITIES MUST REPORT
Domestic corporations, LLCs, LLPs or other entities created by the filing of a document with a secretary of state of any State or similar office.
Non-US entities that are corporations, LLCs, LLCs, LLPs or similar entities formed under the law of a foreign country and registered to do business in any state by the filing of a document with a secretary of state of any State or any similar office.
Exempt entities, include, but are not limited to, large operating companies,[v] public companies,[vi] investment companies or investment advisers, [vii]venture capital fund advisers,[viii] insurance companies and insurance producers[ix] and public accounting firms.[x]
WHEN THE REPORT MUST BE FILED
Reporting Entity From date of existence or registration
Any domestic reporting company created
on or after January 1, 2024, and before January 1, 2025................................................ 90 calendar days
Any domestic reporting company created
on or after January 1, 2025.......................................................................................……………... 30 calendar days
Any entity that becomes a foreign
reporting company on or after
January 1, 2024, and before January 1, 2025........................................................................ 90 calendar days
Any entity that becomes a foreign
reporting company on or after January 1, 2025.................................................................. 30 calendar days
Any domestic reporting company
created before January 1, 2024
and any entity that became a foreign
reporting company before January 1, 2024......................................…………………….……....... no later than January 1, 2025[xi]
PENALTIES FOR VIOLATION; LIMITED SAFE HARBOR
Among other penalties, penalties for willfully providing false or fraudulent information can be up to $10,000 and imprisonment for not more than 2 years, or both.
The CTA provides a penalties safe harbor if a reporting company that has reason to believe that a submitted BOI report contains inaccurate information files a corrected report within 30 days after becoming aware or having reason to know of the inaccuracy.
[i] 31 U.S.C. § 5336
[ii] Beneficial Ownership Information Reporting Requirements, 87 Fed. Reg 59,498-01, September 30, 2022.
[iii] 31 C.F.R. § 1010.380
[iv] 31 U.S.C. § 5336(a)(2)
[v] 31 C.F.R. § 1010.380(c)(2)(xxi)
[vi] 31 C.F.R. § 1010.380(c)(2)(i)
[vii] 31 C.F.R. § 1010.380(c)(2)(x)
[viii] 31 C.F.R. § 1010.380(c)(2)(xi)
[ix] 31 C.F.R. § 1010.380(c)(2)(xiii)
[x] 31 C.F.R. § 1010.380(c)(2)(xix)
[xi] 31 C.F.R. § 1010.380(a)(1)
Author
Ricardo A. Arce
February 25, 2021
Florida Summary Judgment Standard Changing May 1, 2021
The Florida Supreme Court has amended the Florida Rules of Civil Procedure, adopting the federal standard pertaining to motions for summary judgment, which some argue, could make it easier for trial judges to grant motions for summary judgment.
The impetus for this amendment came from the Fifth District Court of Appeal’s certified question concerning great public importance involving Florida’s summary judgment standard. See Lopez v. Wilsonart, LLC, 275 So. 3d 831, 834 (Fla. 5th DCA 2019).
In accepting jurisdiction, the Florida Supreme Court sua sponte asked the parties to brief the following questions:
Should Florida adopt the summary judgment standard articulated by the United States Supreme Court in Celotex Corp. v. Catrett, 477 U.S. 317 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986); and Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986)? If so, must Florida Rule of Civil Procedure 1.510 be amended to reflect any change in the summary judgment standard?
In its Wilsonart, LLC v. Lopez opinion issued on December 31, 2020 and in a separate opinion, In Re: Amendment to the Rules of Civil Procedure 1.510 issued on the same day, the Court responded to the former question in the affirmative, finding that “[w]e are persuaded that Florida should adopt the federal summary judgment standard.” Wilsonart, LLC v. Lopez, 46 Fla. L. Weekly S2 (Fla. Dec. 31, 2020); In re Amendments to Florida Rule of Civil Procedure 1.510, 46 Fla. L. Weekly S6 (Fla. Dec. 31, 2020). To the latter question, the Court articulated that “[t]he right way to enact that change is through a prospective rule amendment.” Id. The Civil Procedure Rules Committee is expected to provide comment sometime later this month.
In the Amendment opinion, the Florida Supreme Court wrote that “as a purely textual matter, the critical sentences in Florida’s summary judgment rule and in the federal summary judgment rule are materially indistinguishable.” It further wrote that “[d]espite consistency of purpose and text, Florida and federal courts have not been aligned in their summary judgment jurisprudence.”
The Florida Supreme Court cited three “particularly consequential differences” between the federal rule (Rule 56) and the Florida rule (Rule 1.510) that stand out:
First, Florida courts [have] repeatedly declined to recognize the fundamental similarity between a motion for directed verdict and a motion for summary judgment. By contrast, SCOTUS has held that the federal summary judgment standard “mirrors” the standard for a directed verdict. Although it recognized that there are procedural differences in the two motions (one is made before trial and the other during trial), SCOTUS concluded that the inquiry under each is the same: whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.
Second, since this Court’s decision in Holl v. Talcott, 191 So. 2d 40 (Fla. 1966), Florida courts have required the moving party conclusively to disprove the nonmovant’s theory of the case in order to eliminate any issue of fact. By contrast, SCOTUS has held that there is no express or implied requirement in Rule 56 that the moving party support its motion with affidavits or other similar materials negating the opponent’s claim. Rather, SCOTUS explained that the burden on the moving party may be discharged by ‘showing’—that is, pointing out to the district court—that there is an absence of evidence to support the nonmoving party’s case. Upon motion and provided there has been an adequate time for discovery, SCOTUS has held that summary judgment should be entered against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial. In other words, under the federal summary judgment standard, the extent of the moving party’s burden varies depending on who bears the burden of persuasion at trial.
Third, Florida courts have adopted an expansive understanding of what constitutes a genuine (i.e., triable) issue of material fact. While the caselaw is not entirely uniform, a leading treatise characterizes the Florida standard this way: the existence of any competent evidence creating an issue of fact, however credible or incredible, substantial or trivial, stops the inquiry and precludes summary judgment, so long as the “slightest doubt” is raised. By contrast, SCOTUS has described the federal test as whether the evidence is such that a reasonable jury could return a verdict for the nonmoving party. If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted. A party opposing summary judgment must do more than simply show that there is some metaphysical doubt as to the material facts. More recently, SCOTUS explained that when opposing parties tell two different stories, one of which is blatantly contradicted by the record, so that no reasonable jury could believe it, a court should not adopt that version of the facts for purposes of ruling on a motion for summary judgment. (internal citations and quotation omitted).
In the Amendment opinion, the Florida Supreme Court reiterated that “our rules of civil procedure are meant ‘to secure the just, speedy, and inexpensive determination of every action.’ Yet Florida courts’ interpretation of our summary judgment rule has unnecessarily failed to contribute to that objective.”
In finding that the “the federal summary judgment standard is more rational, more fair, and more consistent with the structure and purpose of our rules of civil procedure,” the Court provided that “[t]he federal summary judgment standard better comports with the text and purpose of rule 1.510 and that adopting that standard is in the best interest of our state.” In adopting this amendment, the Florida Supreme Court reaffirmed its belief in “[t]he bedrock principle that summary judgment is not a substitute for the trial of disputed fact issues.”
The amendment will not take effect until May 1, 2021 in order to allow an opportunity for public comment, with a specific invitation for comment to the Florida Bar Civil Procedure Rules Committee. The Committee Chair, Ceci Berman, later commented: “[j]ust to be clear, we’re not going to be sending in a comment to the Supreme Court that the standard should not change. That ship has sailed.”
Writing a dissenting opinion, Justice Labarga wrote that “I nonetheless dissent to today’s decision, which infringes upon the role of the jury in deciding disputes in civil cases,” believing that the amendment “discards long-settled law—interpreting the standard for summary judgment in Florida’s state courts—in favor of the less restrictive federal interpretation.” Justice Labarga expressed concern that “the trial court’s analysis goes far beyond evaluating whether an issue of material fact is in dispute. Instead, the trial court assumes a role traditionally reserved for a jury and engages in weighing evidence.”
The Amendment changes the text of the fifth sentence of subsection (c) of Rule 1.510 by replacing the word “issue” with the word “dispute” so as to read as follows:
The judgment sought must be rendered immediately if the pleadings and summary judgment evidence on file show that there is no genuine issue dispute as to any material fact and that the moving party is entitled to a judgment as a matter of law.
The amendment also adds a seventh sentence to subsection (c) clearly announcing the applicability of the federal summary judgment standard:
The summary judgment standard provided for in this rule shall be construed and applied in accordance with the federal summary judgment standard articulated in Celotex Corp. v. Catrett, 477 U.S. 317 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986); and Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986).
There were no changes to subsections (a)-(b) or (d)-(g) of Rule 1.510.
In its Wilsonart, LLC v. Lopez opinion, the Court drew limits to the shift in standards by providing that “[w]e cannot say that the jurisprudence underlying Florida's existing summary judgment standard is clearly erroneous, so we will not recede from that jurisprudence or ‘reinterpret’ it here,” further signaling to the Civil Procedure Rules Committee that “[t]o the extent that the Fifth District's question points to a deeper flaw in Florida's existing summary judgment standard—specifically, its unreasonable definition of what constitutes a “genuine issue” in need of resolution by a jury—this problem is better addressed through our prospective rule amendment.” Id.
Despite the Court’s attempt to curtail potential unintended consequences to the adoption of the federal standard, it is unclear whether pre-amendment Florida case law interpreting Rule 1.510 will be followed by Florida trial courts, especially those cases analyzing the existence or absence of “genuine issues” of material fact under the prior standard.
It would also appear that Federal jurisprudence interpreting Rule 56 and applying the standards set forth in Celotex, Anderson and Matsushita, as well and its respective progeny shall henceforth be binding on Florida courts. As mentioned above, the Civil Procedure Rules Committee is expected to provide comment later this month which may address these and other questions concerning the adoption of the federal standard.
What is clear is that the standard applicable for summary judgment motions is changing effective May 1, 2021, and that it will likely make it easier for moving parties to obtain summary judgment.
The full opinion in In re: Amendments to Florida Rule of Civil Procedure 1.510, Case No. SC20-1490, can be found here.
Authors
Ricardo A. Arce
Partner
Antonio C. Castro
Partner
Congratulations to Carlos Zumpano
Congratulations to our very own Carlos Zumpano for his speech last week on how 25 years ago he co-founded the Cuban American Undergraduate Student Association (CAUSA) at Harvard University. This organization has had a great impact on many Harvard students along the years.
CLE Hosted by Zumpano Castro
Zumpano Castro partner Sidney Needelman enlisted a fellow George Washington University graduate Marc Hurwitz, president of Crossroads Investigations, to conduct an exciting free CLE (Florida Bar 1 hour, with a half hour technology credit) entitled “A former CIA Officer’s Guide to Investigations for Litigation.” Topics included interesting stories from Marc’s days working with the government, asset searches for collectability of judgments, what is legal and illegal for a law firm to have an investigator do on their behalf, and Google “ninja” techniques.
Seminar with Judge John Thornton
Zumpano Castro attorneys attended a seminar with Complex Business Litigation Judge John Thornton, which was moderated by Steven Davis, past president of the Dade County Bar Association.
2015 Mercedes-Benz Corporate Run
Zumpano Castro participated in the 2015 Mercedes-Benz Corporate Run in Miami. Rick Arce clocked the firm’s best time with 24:35, which ranked 752 overall out of more than 27,000 participants. Congratulations to Rick! Pictured here are Rick Arce and Tony Castro.
Belen Jesuit Mock Trial
Tony Castro served as head coach of the Belen Jesuit Mock Trial Team. In only its second year in existence, the Belen Jesuit Mock Trial Team advanced to the District Finals after remaining undefeated in four rounds of competition from a field of 21 participating schools at the Miami-Dade County Mock Trial Competition at the James L. Knight Center.
Pictured are attorney coaches Rob Suarez, Danny Hanlon and Tony Castro with Dr. Reyes-Garcia, who is the team moderator team and school principal, and the members of the Mock Trial Team.