Fourth DCA Issues Two Arbitration Opinions

Arbitration Mediation

The Fourth District Court of Appeal rendered two arbitration opinions on February 3, 2016:

In Municommerce LLC v Navidor LTD, the court reversed an order compelling arbitration and held that a termination-for-cause exception to the agreement to arbitrate was valid and there was “no basis for the court to find that the waiver [of arbitration] did not apply…”

In John Cox v. Village of Tequesta, the court reversed a Final Judgment and held that the particular issues of waiver/timeliness were for the arbitrator, not the court, to decide.

We’ll briefly discuss these cases in order.

First, in Municommerce, there was a sales agreement between the parties which contained an arbitration clause.  But, there was a particular provision, Section 10(e), which allowed MuniCommerce to terminate the contract, without triggering arbitration, if MuniCommerce made a good faith conclusion that the other party was using unsound business practices.  A dispute arose and the fight over arbitration was waged on the issue of whether this was an impermissible unilateral ability for one party to avoid arbitration.  Specifically, Navidor argued that the provision was unfair since, if it declared that MuniCommerce was in breach, then MuniCommerce could avoid arbitration by invoking Section 10(e).  The appellate court disagreed, holding that there was no evidence that MuniCommerce’s invocation of Section 10(e) was a pretext and that the arbitration agreement did not allow MuniCommerce to terminate “for any reason to unilaterally avoid… arbitration.”

The “takeaway” finding in MuniCommerce was that (a) use of this particular clause in arbitration agreements would be upheld in the Fourth DCA and practitioners might want to copy the language and (b) not all “escape clauses” from an arbitration agreement are invalid.

Second, in Cox, there was a detailed three-step grievance procedure before the plaintiff could timely and appropriately initiate arbitration.  The plaintiff ultimately filed suit under the Florida Arbitration Code, F.S. 682.03 seeking to compel arbitration.  Citing U.S. Supreme Court precedent, the appellate court noted that a trial court has “limited scope” in determining whether an arbitrable issue exists and that procedural questions typically go to the arbitrator (e.g., conditions precedent, timeliness / time limits, notice, laches, estoppel).  The appellate court held that the alleged failure to make a timely arbitration demand was not akin to waiver of arbitration under the Seifert standards; under Fourth DCA precedent, “an arbitrator decides whether a party has timely invoked the key parts of an [arbitration] agreement.”  Cox serves as a good summary of what “gatekeeping” functions a trial court holds when considering the enforcement of arbitration.

Arbitration Mediation
Before Delegating Arbitrability to Arbitrator, Supreme Court Must Decide FAA Exclusions (New Prime, Inc. v. Oliveira)

The case of New Prime, Inc. v. Oliveira is the second arbitration / delegable / arbitrability question which the U.S. Supreme Court decided in a week. This case may have limited application to disputes involving transportation workers however it is worth discussing to ensure a clear understanding the delegation of …

Arbitration Mediation
“I Like Arbitration,” Says Justice Kavanaugh in His First Opinion on Arbitrability (Schein v. Archer & White)

Justice Kavanaugh issued his first Supreme Court opinion (unanimous) which helped streamline enforcement of arbitration AND provided contract-drafting lawyers some model arbitration language (which, as we’ll see, still needs some work). The question before the Court was whether a trial court could still decide the threshold question of “arbitrability” — …

Arbitration Mediation
Drafting Arbitration Agreement in Florida To Reference AAA or Other Arbitration Rules (Adkins v. Memorial Motors)

When drafting an arbitration agreement, a party often may want the matter to be heard by a professional arbitration panel, such as AAA or JAMS. However, from time-to-time, some of these groups have declined to hear matters governed by pre-incident arbitration waivers in consumer agreements. How do you write a …