The Revised Florida Arbitration Code
The Uniform Law Commission met in St. Augustine, Florida, in July 2000 and approved for enactment in all states the Revised Uniform Arbitration Act.1 The revision was widely supported, receiving endorsements by arbitration groups, such as JAMS and the American Arbitration Association (AAA); by advocates in the consumer, construction, securities, and labor sectors; and by the Torts and Insurance Practice Sections of the American Bar Association, to name a few.2 Almost exactly 13 years later, in June 2013, Florida joined 17 other states and the District of Columbia in adopting the revision by virtue of Gov. Scott signing the Committee Substitute for S.B. 530 into law,3 creating the Revised Florida Arbitration Code, F.S. Ch. 682. This revised code was intended to foster greater understanding of the arbitration process and promote various requirements of due process.4
The revised code addresses several issues that have been the subject of substantial litigation in state and federal courts since the prior code’s enactment in Florida in 1957. These issues include who decides arbitrability of a dispute, the availability of provisional remedies prior to and during the course of an arbitration proceeding, a court of law’s power to enforce pre-award rulings by the arbitrator, the arbitrator’s immunity, and various procedural aspects of the arbitration. The general goal of the revisions is to better achieve the prior act’s purpose of giving effect to parties’ agreements to arbitrate, considering the increase in use of arbitration as a mode of alternative dispute resolution and the resulting increase in complexity of the disputes being arbitrated.
Pursuant to F.S. §682.013, the revised code automatically applies to all arbitration agreements entered into after July 1, 2013. The parties to an agreement entered prior to that date may agree in a record to apply the revised code to their agreement.5 As of July 1, 2016, the revised code applies to all arbitration agreements, regardless of when made.6 Therefore, the revisions should be of interest to professionals from industries in which arbitration provisions are common throughout Florida, including construction and development, consumer, insurance, labor and employment, and securities, and to commercial litigators, contract drafters, arbitrators, and judges. This article discusses some of the more important revisions and compares the revised code to the Federal Arbitration Act (FAA), 9 U.S.C. §§1-16, in light of state and federal decisions coming after the revisions were initially recommended.
The revised code and the FAA can be roughly divided into three sections. The first section deals with general and pre-arbitration matters ( e.g., the scope of the law and the validity of agreements to arbitrate governed by it). The second section deals with the conduct of the arbitrator and the arbitration proceeding itself ( e.g., the ability of the court and the arbitrator to grant provisional remedies, such as injunctions preserving the status quo immediately prior to or during the arbitration proceeding, the remedies an arbitrator may award, including punitive damages and attorneys’ fees, the rules governing the arbitration proceeding, the judicial enforceability of pre-award decisions of the arbitrator, and the immunity of the arbitrator). The third section deals with postarbitration matters ( e.g., the procedure and standard for confirmation, modification, and vacatur of the arbitration award).
This article will be so divided, and the revised code and the FAA is discussed under that rubric. First, however, a brief discussion of federal preemption of state arbitration laws is in order.
FAA Preemption of the Revised Code
The FAA provides that all agreements to arbitrate are “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”7 This provision has been held to preempt all state law contrary to the purpose of the FAA.8 Therefore, to the extent a contract involves interstate commerce, which virtually all contracts arguably do, especially after the U.S. Supreme Court’s decision upholding “Obamacare” in National Federation of Independent Business v. Sebelius, 567 U.S. __, 132 S. Ct. 2566 (2012), the FAA will govern the enforceability of that contract’s arbitration provision,9 and state laws that disfavor agreements to arbitrate will be preempted. One recent example of this concept is the U.S. Supreme Court’s decision in AT&T Mobility, LLC v. Concepcion, 563 U.S. __, 131 S. Ct. 1740 (2011), invalidating as contrary to the FAA a state law providing that class action waivers in arbitration agreements were unconscionable.10 Because the state law pertained only to arbitration agreements, it was preempted by the FAA and the arbitration provision and class action waiver were enforceable despite the state law. Had the state law treated all class action waivers alike — those contained in arbitration agreements and those contained in other contracts — it may not have been preempted.
The only major limitation on the preemptive effect of the FAA on state law governing agreements to arbitrate appears to be the ability of the parties to contractually opt out of the FAA under Volt Information Sciences, Inc. v. Stanford University, 489 U.S. 468 (1989), by inserting a contractual provision expressing their intent that the arbitration agreement be governed by state law rather than the FAA.11
The U.S. Supreme Court’s discussion of FAA preemption of state law has for the most part centered around the enforceability of arbitration provisions (a pre-arbitration matter). The FAA itself recognizes that an arbitration provision’s enforceability is decided based on the state law generally applicable to contracts (e.g., the doctrines of unconscionability, fraud in the inducement, etc.). However, in the eyes of the drafters of the revised code, the FAA’s strong policy favoring arbitration supports the proposition that the FAA preempts all state laws contrary to it, including laws governing post-arbitration matters, such as confirmation, modification, and vacatur, that are broader than those set forth in the FAA.12
The drafters, therefore, wrote the revised code with the belief that crafting provisions directly contrary to the FAA would be a pointless endeavor. This belief served as a major motivating factor for the drafters excluding from the final product several proposed revisions.
Provisions Governing Pre-Arbitration Considerations and General Matters
Perhaps one of the most hotly contested issues after the FAA and the prior arbitration code were adopted was whether the court or the arbitrator determines the arbitrability of a particular dispute. The prior version of F.S. §682.03 did not address that issue. Until recently, Florida courts had for the most part held that under the prior arbitration code, the court should decide both the issue of whether an enforceable contract existed and the issue of whether that contract contained an enforceable arbitration provision prior to compelling arbitration, as stated in Cardegna v. Buckeye Check Cashing, Inc., 894 So. 2d 860 (Fla. 2005).13
Section 682.02 of the revised code now differentiates between the issue of the enforceability of the contract as a whole and the issue of the enforceability of the contract’s arbitration provision. The revised code provides that the issue of the enforceability of the contract as a whole (e.g., unconscionability, fraud in the inducement, and other defenses that if found would mean that the parties had no contract at all) is a matter for the arbitrator to decide during the arbitration proceeding. The issue of the enforceability of the arbitration provision itself (e.g., whether a particular type of dispute is arbitrable under the law and other defenses that would mean the parties may have had a contract, but that their dispute was not subject to arbitration) is a matter for the court to decide when determining whether to compel arbitration. This revision aligns state arbitration law with the FAA as discussed in Buckeye Check Cashing Inc. v. Cardegna, 546 U.S. 440 (2006), in which the U.S. Supreme Court reversed the Florida Supreme Court and held that challenges to the arbitration provision are for the court, but challenges to the entire contract are for the arbitrator. Florida courts have tended to resist the consequences of this holding.14 Section 682.02 of the revised code basically adopts the U.S. Supreme Court’s Buckeye decision as state law.15 Both the revised code and Buckeye leave open the possibility for the court to determine whether a party actually signed the contract before compelling arbitration.16
It should be noted that under §682.14 of the revised code, the provision of §682.02 calling for the court to determine the enforceability of the arbitration provision can be waived. The incorporation of AAA or JAMS rules in an arbitration agreement has been interpreted to constitute such a waiver because those rules grant the arbitrator the authority to decide the enforceability of a contract’s arbitration provision, as well as the enforceability of the contract as a whole.17 Such a waiver right is generally consistent with the parties’ ability to contract for arbitration as they see fit, within reason. Therefore, if the arbitration agreement incorporates either AAA18 or JAMS19 rules, the arbitrator and not the court will decide the enforceability of both the entire contract and the arbitration provision itself.
In addition to bringing state law on the enforceability of arbitration agreements into harmony with the FAA, the revised code also modernizes arbitration law in one significant way. Section 682.02(1) now provides that an arbitration agreement may be contained in a “record” rather than being “in writing,” as the prior code required. Section 682.01(6) includes within the scope of the term “record,” in addition to traditional writings, information stored in an electronic medium. This essentially brings arbitration law into the 21st century, when computer-based and Internet-based transactions are the norm.
Section 682.20 of the revised code also contains minor changes to the statutory bases for appealing to the district courts of appeal orders entered by trial courts under F.S. Ch. 682. These changes are probably insignificant, however, in light of Crawford v. Dwoskin, 729 So. 2d 520 (Fla. 3d DCA 1999), and similar caselaw holding that the prior §682.20 was invalid. According to Fla. Const. art. V, §4(b)(1), the judiciary has the power to create or amend the appellate courts’ jurisdiction over nonfinal orders, not the legislature.20
Provisions Governing the Arbitration Proceeding Itself
The FAA contains several provisions governing pre-arbitration matters,21 and several provisions governing post-arbitration matters,22 but only one provision governing the arbitration proceeding itself.23 The U.S. Supreme Court has stated that “[t]here is no federal policy favoring arbitration under a certain set of procedural rules.”24 As such, the drafters of the revisions were not particularly worried about federal preemption of state laws governing the arbitration proceeding as long as those laws were consistent with the FAA’s general policy favoring arbitration in accordance with the parties’ agreement.25 Consequently, some of the more substantial revisions contained in the revised code appear in these sections.
In the interest of fairness, the revised code inserts some elements into the arbitration proceeding that resemble rules of civil procedure. These include §682.06(1), acknowledging the arbitrator’s power to conduct prehearing conferences26; §682.08, governing the parties’ ability to conduct depositions and discovery as the arbitrator allows27; and §682.06(2), granting the arbitrator the power to enter summary disposition without a formal hearing.28 While such revisions may serve to bring arbitrations closer to the litigation model, they actually serve to streamline the process and they specifically state that the arbitrator retains broad control. Additionally most of the procedural rules created in the revisions may be waived under §682.14.29 As such, the conduct of the arbitration proceeding still remains largely a matter to be decided in accordance with the parties’ agreement. The text of the FAA did not address any of these issues, but federal caselaw gives the arbitrator similar powers to control the conduct of the proceeding.30 AAA and JAMS rules already contain provisions resembling these changes, so the revised code does not represent a significant change to the way arbitrations will generally proceed under state law.
Section 682.11 of the revised code inserts provisions authorizing the arbitrator to award punitive damages and attorneys’ fees.31 It provides that the arbitrator may do so only when these remedies would be authorized in a civil action regarding the same claim, and with respect to punitive damages, only where the generally applicable evidentiary standard for their award is met and when the arbitrator specifies in the award its basis. Both federal and Florida law have recognized the arbitrator’s authority to award punitive damages.32 As to attorneys’ fees, in Moser v. Barron Chase Secs., 783 So. 2d 231, 234 (Fla. 2001), the Florida Supreme Court stated that jurisdiction to award fees was vested in the court, but that the parties could waive the court’s jurisdiction by submitting the issue to the arbitrator. Therefore, the biggest change brought about by §682.11 of the revised code is that where previously the default would be for the court to have jurisdiction over the issue of attorneys’ fees, under the revised code the default is now for the arbitrator to decide that issue.
Section 682.051 of the revised code provides that arbitrators are immune from actions taken in their capacity as arbitrators and are not competent to testify in court as to matters occurring during the arbitration proceeding. Federal law had previously held that when an official’s duty is functionally comparable to that of a judge, the official enjoys the same or similar immunity a judge enjoys.33 The revised code extends this rationale specifically to arbitrators and to arbitration organizations, without affecting whatever immunity was available to them under any other law.
Another important change achieved by the adoption of the revised code is the discussion of courts’ and arbitrators’ ability to grant provisional remedies, such as the issuance of an injunction preserving the status quo, replevin, and attachment. The prior code did not address this issue at all. A body of national caselaw developed, however, recognizing the arbitrator’s ability under state arbitration law and the FAA to issue provisional remedies during the course of the arbitration.34 Nevertheless, few Florida cases discussed this issue.35 Section 682.031 of the revised code, therefore, brings Florida law into accord with federal courts’ interpretation of the FAA, by empowering the arbitrator to grant such provisional remedies that are necessary to “protect the effectiveness of the arbitration proceeding and [] promote the fair and expeditious resolution of the controversy.”
A corollary to the issue of whether the arbitrator had the power to issue provisional remedies under the prior code was whether and to what extent a court had the power to do so when the parties’ dispute was subject to arbitration. If the arbitrator had the power to grant provisional remedies, then arguably a court did not because, for the court to do so, would be to invade the province of the arbitrator.36 The problem with this argument is that its effect is to leave a party facing an emergency situation without any remedy at all when the arbitrator has yet to be selected or is unavailable. Section 682.031 of the revised code solves this problem by clarifying that a court possesses the power to enter orders preserving the status quo and carrying out the purpose of the arbitration provision on an emergency basis when the arbitrator has not yet been appointed and when the arbitrator is unavailable.
The revised code’s grant of power to the arbitrator to award provisional remedies would be of questionable value without granting the court the ability to confirm an arbitrator’s interim award. Section 682.081 of the revised code fills this gap by providing for judicial enforcement of pre-award rulings by the arbitrator.
There are several changes brought about by the revised code that are important enough to mention but that do not warrant discussion because they are relatively straightforward. These include §682.032,37 stating the method for initiating arbitration and providing adequate notice to the opposing party (either in the manner provided in the agreement, by certified mail, or in the manner for service of a summons); §682.033,38 specifically allowing consolidation of arbitration proceedings; and §682.041,39 requiring that arbitrators disclose actual and potential conflicts. These provisions are meant to validate the arbitration process by adding an element of due process, allowing for the speedy resolution of arbitrable disputes, and avoiding the appearance of arbitrator impropriety, respectively. The FAA has no such provisions.
Provisions for Judicial Confirmation, Modification, and Vacatur of Arbitration Awards
Section 682.12 sets forth the standard for confirming an arbitration award. The prior code provided that a court could not confirm the award until the time had passed for the losing party to seek vacatur or modification of the award. The drafters of the revisions thought it prudent to vest the court with jurisdiction over the arbitration award immediately upon the award’s entry in order to prevent the losing party from disposing of assets after entry of the award. To achieve this, they eliminated the reference in §682.12 to the timing of modification or vacatur. This amendment aligns the revised code with §9 of the FAA, with the exception that while the FAA requires a party to seek confirmation within one year of the arbitration award, the revised code is silent on the statute of limitations, leaving that matter to general law.
Under §682.13 of the revised code, the grounds for vacatur of an arbitration award remain generally unchanged, and are, for the most part, identical to the grounds for vacatur contained in the FAA.40 One exception is that the revised code adds a new subsection (f), requiring an arbitration award to be vacated for lack of notice of the arbitration, which substantially prejudices a party. It is unclear what the standard for overturning an arbitration award on this ground is. The FAA contains no provision for vacatur based specifically on lack of notice, but §10(a)(3) allows vacatur for an arbitrator’s “refus[al] to hear evidence pertinent and material to the controversy,” and for “any…misbehavior by which the rights of any party have been prejudiced,” which may include failure to provide a party notice of the arbitration hearing.41
The drafters of the revisions considered whether to insert a provision in the vacatur section of the revised code indicating that the parties may, through their agreement, opt in to additional grounds for vacatur. In 2000, some courts had allowed the parties to do so, based on the notion that the parties were free to contract for whatever they liked, the underlying principle of the arbitration code.42 Some courts, however, had refused to allow the parties to do so based on the notion that allowing the parties to expand the grounds for vacatur would eliminate the perceived favorability of arbitration over litigation as a cost-effective dispute resolution method.43 The drafters of the revisions were wise not to include an opt-in provision because, subsequent to their recommendation, the U.S. Supreme Court decided in Hall Street Assoc. v. Mattel, Inc., 552 U.S. 576 (2008),44 that the FAA precluded the parties from creating their own grounds for vacatur.
The drafters also considered whether to insert provisions in the vacatur section of the revised code explicitly allowing for vacatur when the arbitrator’s award amounts to a manifest disregard of the law or violates public policy. They ultimately decided not to do so, their fear of federal preemption looming large. The U.S. Supreme Court has not specifically decided whether either of these possible grounds for vacatur is available under the FAA after Hall Street. There is presently a federal circuit split as to that issue.45 Florida courts have for the most part held that the prior §682.13 contained an exhaustive list of the grounds for vacatur of an arbitration award.46 They would likely hold the same under §682.13 of the revised code.
Arbitration associations like JAMS and the AAA have begun to write their own procedures for appeal of the arbitrator’s decision.47 This may be a result of reluctance on the part of some lawyers and contract drafters to submit their disputes to determination in a single proceeding without the possibility of secondary review. In general, the appellate arbitration rules call for an arbitration appellate panel (often made up of retired appellate judges) to receive briefs from the parties. These briefs are usually limited to reviewing portions of the arbitration record and making legal argument based on that record. The appellate arbitrators then decide the appeal based on those briefs, without rehearing testimony or reviewing new evidence. These procedures resemble normal court appeal proceedings and adopt the general standard of review of an appellate court: The arbitration award will be overturned by the appellate panel if it is based on an error of law or on a factual finding that is clearly erroneous. The arbitration appeal proceedings are handled within the confines of the arbitration, so Hall Street should not affect them.48
Conclusion
The Uniform Law Commission proposed its revisions in 2000 to modernize the law and to further the prior act’s desire to validate parties’ agreements to arbitrate, by inserting provisions promoting the speedy resolution of disputes while increasing the public’s faith in the arbitration process and promoting uniformity between state and federal law. All-in-all, the drafters succeeded in their endeavor, so the Florida Legislature’s adoption of their revisions 13 years later should be a welcome change in the eyes of most Florida arbitrators, lawyers, and judges.
This article has presented only a highlight of some of the changes made by the revised code. Practitioners should be mindful of these and all other changes when advising their clients of available rights and remedies under existing and future arbitration agreements.
1 Nat’l Conference of Comm’rs on Uniform State Laws, Uniform Arbitration Act, Notes & Commentary, available at http://www.uniformlaws.org/shared/docs/arbitration/arbitration_final_00.pdf.
2 Timothy J. Heinsz, The Revised Uniform Arbitration Act: An Overview, 56 Disp. Resol. J. 28 (2001).
3 Ch. 2013-232, Laws of Fla.
4 See Thomas J. Stipanowich, The Arbitration Fairness Index: Using a Public Rating System to Skirt the Legal Logjam and Promote Fairer and More Effective Arbitration of Employment and Consumer Disputes, 60 Kan. L. Rev. 985, 1008 (May 2002).
5 See Basulto v. Hialeah Auto., 141 So. 3d 1145 (Fla. 2014); Spivey v. Teen Challenge of Fla., Inc., 122 So. 3d 986, 990, n.1 (Fla. 1st DCA 2013); Fi-Evergreen Woods, LLC v. Robinson, 135 So. 3d 331, 335 n.4 (Fla. 5th DCA 2013). Both Spivey and Fi-Evergreen state that the revised code only applies prospectively, not affecting proceedings already commenced.
6 One exception is noted in §682.25, a provision not included in the Uniform Law Commission’s recommendation revisions but added by the Florida Legislature. The revised code does not apply to disputes involving child custody, visitation, or child support. Pursuant to
Fla. Stat. §44.104, those matters are generally not arbitrable.
7 9 U.S.C. §2.
8 See Preston v. Ferrer, 552 U.S. 346, 353 (2008).
9 See Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 275 (1995).
10 The law at issue was California’s Discover Bank rule, which provided that a class action waiver was unconscionable “in a consumer contract of adhesion in a setting in which disputes between the contracting parties predictably involve small amounts of damages,” where it is alleged “that the party with the superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money.” Discover Bank v. Superior Court, 36 Cal. 4th 148, 162-163 (2005). The U.S. Supreme Court found it to be contrary to the FAA’s liberal policy favoring arbitration, and, therefore, held that “[b]ecause it stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress, California’s Discover Bank rule is preempted by the FAA.” Concepcion, 131 S. Ct. at 759.
11 T he language that the court construed to require the arbitration provision to be governed by state law was the contract’s choice-of-law provision. It stated: “[t]he [c]ontract shall be governed by the law of the place where the [p]roject is located.” Volt Information Sciences, 489 U.S. at 494. The court later indicated in Mastrobuono v. Shearson Lehman Hutton, 514 U.S. 52, 60 (1995), that a choice-of-law provision applying state law, in general, does not by itself always indicate an intention to opt out of the FAA, meaning that if the parties wish to opt out, they should include language specifically saying so.
12 See Stephen L. Hayford, Federal Preemption and Vacatur: The Bookend Issues Under the Revised Uniform Arbitration Act, 2001
J. Disp. Resol. 67 (2001).
13 This case was reversed by the U.S. Supreme Court in Buckeye Check Cashing Inc. v. Cardegna, 546 U.S. 440 (2006). The issue was whether the defendant check-cashing store’s motion to compel arbitration should be granted when the class action plaintiffs argued that the agreement they entered was usurious and, therefore, illegal and unenforceable on public policy grounds as a matter of state law. The Florida Supreme Court considered that to be a matter for the court, on the rationale that compelling arbitration of an unenforceable contract required the court to breathe life into an illegal transaction. Cardegna, 894 So. 2d at 864. The U.S. Supreme Court eventually reversed, holding that the usury defense should have been decided by the arbitrator in the first instance, based on the FAA’s policy favoring arbitration in accordance with the parties’ intent. Buckeye Check Cashing, 546 U.S. at 449.
14 See generally Ramirez, Arbitrations in Florida: A Tale of Two Courts, 25 St. Thomas L. Rev. 43 (Fall 2012).
15 Revised §682.02 provides in pertinent part: “(2) The court shall decide whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate. (3) An arbitrator shall decide whether a condition precedent to arbitrability has been fulfilled and whether a contract containing a valid agreement to arbitrate is enforceable.”
16 Fla. Stat. §682.02(2) (2013); Buckeye Check Cashing, 546 U.S. at 444, n.1. Courts have held that the prior code called for an expedited evidentiary hearing when a “substantial issue is raised as to the making of the agreement or provision” to arbitrate, and that resolving the issue on the parties’ affidavits was error. Crystal Motor Car Co. of Hernando, LLC v. Bailey, 24 So. 3d 789, 791 (Fla. 5th DCA 2009). The prior §682.03 contained the word “hear,” and the revised code removed that word. At least one court has suggested, but not decided, that that amendment may “obviate[] the requirement of an evidentiary hearing.” Fi-Evergreen Woods, 135 So. 3d 331, 335, n.4.
17 See Terminix Int’l Co. LP v. Palmer Ranch Ltd. P’ship, 432 F.3d 1327, 1332 (11th Cir. 2005), cited in Bhim v. Rent-A-Center, Inc., 655 F. Supp. 2d 1307, 1311-12 (S.D. Fla. 2009).
18 AAA, Commercial Arbitration Rules, https://www.adr.org/aaa/faces/rules/searchrules/rulesdetail?doc=ADRSTG_004130.
19 JAMS, Comprehensive Arbitration Rules & Procedures, http://www.jamsadr.com/rules-comprehensive-arbitration ; JAMS, Streamlined Arbitration Rules and Procedures, http://www.jamsadr.com/rules-streamlined-arbitration.
20 Fla. Const. art. V, §4(b)(1). “District courts of appeal shall have jurisdiction to hear appeals, that may be taken as a matter of right, from final judgments or orders of trial courts, including those entered on review of administrative action, not directly appealable to the supreme court or a circuit court. They may review interlocutory orders in such cases to the extent provided by rules adopted by the supreme court.”
21 9 U.S.C. §§1-6, 8, and 14-15.
22 9 U.S.C. §§9-13 and 16.
23 9 U.S.C. §7 (a provision giving the arbitrator the power to subpoena witnesses and documents).
24 Volt, 489 U.S. at 476.
25 See generally Stephen L. Hayford and Alan R. Palmiter, Arbitration Federalism: A State Role in Commercial Arbitration, 54
Fla. L. Rev. 175, 213-226 (2002) (declaring that the rules should facilitate and foster commercial arbitration, as well as protect and promote the parties’ arbitral expectations).
26 Fla. Stat. §682.06(1) provides: “An arbitrator may conduct an arbitration in such manner as the arbitrator considers appropriate for a fair and expeditious disposition of the proceeding. The arbitrator’s authority includes the power to hold conferences with the parties to the arbitration proceeding before the hearing and, among other matters, determine the admissibility, relevance, materiality, and weight of any evidence.”
27 Fla. Stat. §682.08 provides: “(2) In order to make the proceedings fair, expeditious, and cost effective, upon request of a party to, or a witness in, an arbitration proceeding, an arbitrator may permit a deposition of any witness to be taken for use as evidence at the hearing, including a witness who cannot be subpoenaed for or is unable to attend a hearing. The arbitrator shall determine the conditions under which the deposition is taken. (3) An arbitrator may permit such discovery as the arbitrator decides is appropriate in the circumstances, taking into account the needs of the parties to the arbitration proceeding and other affected persons and the desirability of making the proceeding fair, expeditious, and cost effective.”
28 Fla. Stat. §682.06(2) provides: “An arbitrator may decide a request for summary disposition of a claim or particular issue: (a) If all interested parties agree; or (b) upon request of one party to the arbitration proceeding, if that party gives notice to all other parties to the proceeding and the other parties have a reasonable opportunity to respond. The parties are entitled to be heard, to present evidence material to the controversy and to cross-examine witnesses appearing at the hearing.”
29 However, some intended to protect employees and consumers may not be waived.
30 See Intercarbon Bermuda, Ltd. v. Caltex Trading and Transp. Corp., 146 F.R.D. 64 (S.D.N.Y. 1993) (summary judgment); Stanton v. PaineWebber Jackson & Curtis, Inc., 685 F. Supp. 1241 (S.D. Fla. 1988) (discovery).
31 Fla. Stat. §682.11 provides: “(1) An arbitrator may award punitive damages or other exemplary relief if such an award is authorized by law in a civil action involving the same claim and the evidence produced at the hearing justifies the award under the legal standards otherwise applicable to the claim. (2) An arbitrator may award reasonable attorney fees and other reasonable expenses of arbitration if such an award is authorized by law in a civil action involving the same claim or by the agreement of the parties to the arbitration proceeding….(5) If an arbitrator awards punitive damages or other exemplary relief under subsection (1), the arbitrator shall specify in the award the basis in fact justifying and the basis in law authorizing the award and state separately the amount of the punitive damages or other exemplary relief.”
32 See Mastrobuono, 514 U.S. at 58; Morton v. Polivchak, 931 So. 2d 935 (Fla. 2d DCA 2006).
33 See Butz v. Economou, 438 U.S. 478, 511-12, 98 S. Ct. 2894 (1978). At least one Florida court has adopted the functional comparability test. See Andrews v. Fla. Parole Comm’n, 768 So. 2d 1257 (Fla. 1st DCA 2000). While that case did not deal with arbitrator immunity, its reasoning can easily be extended to arbitration proceedings.
34 See, e.g., Salvucci v. Sheehan, 349 Mass. 659, 212 N.E. 2d 243 (1965) (temporary restraining order preventing party from transferring or encumbering property subject to arbitration); Island Creek Coal Sales Co. v. City of Gainesville, Fla., 729 F.2d 1046 (6th Cir. 1984) (specific performance of contractual duties).
35 One exception would be Avco Farms, Inc. v. Peeler, 89 So. 3d 977 (Fla. 1st DCA 2012) (holding that the trial court incorrectly found waiver of the right to arbitrate by filing a motion for temporary injunction where the contract contained an express injunction exception to arbitration).
36 See Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Hovey, 726 F.2d 1286 (8th Cir. 1984). In that case, an employer applied to the court for a temporary injunction preventing a former employee from using records and soliciting the employer’s clients in violation of an employment agreement. The Eighth Circuit held that the court could not grant that relief, because “the judicial inquiry requisite to determine the propriety of injunctive relief necessarily would inject the court into the merits of issues more appropriately left to the arbitrator.” Id. at 1292.
37 Fla. Stat. §682.032 of the revised code provides that: “(1) A person initiates an arbitration proceeding by giving notice in a record to the other parties to the agreement to arbitrate in the agreed manner between the parties or, in the absence of agreement, by certified or registered mail, return receipt requested and obtained, or by service as authorized for the commencement of a civil action. The notice must describe the nature of the controversy and the remedy sought. (2) Unless a person objects for lack or insufficiency of notice under s. 682.06(3) not later than the beginning of the arbitration hearing, the person by appearing at the hearing waives any objection to lack of or insufficiency of notice.”
38 Fla. Stat. §682.033 of the revised code provides that: “(1) Except as otherwise provided in subsection (3), upon motion of a party to an agreement to arbitrate or to an arbitration proceeding, the court may order consolidation of separate arbitration proceedings as to all or some of the claims if: (a) There are separate agreements to arbitrate or separate arbitration proceedings between the same persons or one of them is a party to a separate agreement to arbitrate or a separate arbitration proceeding with a third person; (b) the claims subject to the agreements to arbitrate arise in substantial part from the same transaction or series of related transactions; (c) the existence of a common issue of law or fact creates the possibility of conflicting decisions in the separate arbitration proceedings; and (d) prejudice resulting from a failure to consolidate is not outweighed by the risk of undue delay or prejudice to the rights of or hardship to parties opposing consolidation. (2) The court may order consolidation of separate arbitration proceedings as to some claims and allow other claims to be resolved in separate arbitration proceedings. (3) The court may not order consolidation of the claims of a party to an agreement to arbitrate if the agreement prohibits consolidation. Nothing in this section is intended or shall be construed to affect commencing, maintaining, or certifying a claim or defense on behalf of a class or as a class action.”
39 Fla. Stat. §682.041 of the revised code provides: “(1) Before accepting appointment, an individual who is requested to serve as an arbitrator, after making a reasonable inquiry, shall disclose to all parties to the agreement to arbitrate and arbitration proceeding and to any other arbitrators any known facts that a reasonable person would consider likely to affect the person’s impartiality as an arbitrator in the arbitration proceeding, including: (a) A financial or personal interest in the outcome of the arbitration proceeding. (b) an existing or past relationship with any of the parties to the agreement to arbitrate or the arbitration proceeding, their counsel or representative, a witness, or another arbitrator. (2) An arbitrator has a continuing obligation to disclose to all parties to the agreement to arbitrate and arbitration proceeding and to any other arbitrators any facts that the arbitrator learns after accepting appointment that a reasonable person would consider likely to affect the impartiality of the arbitrator. (3) If an arbitrator discloses a fact required by subsection (1) or subsection (2) to be disclosed and a party timely objects to the appointment or continued service of the arbitrator based upon the fact disclosed, the objection may be a ground under s. 682.13(1)(b) for vacating an award made by the arbitrator. (4) If the arbitrator did not disclose a fact as required by subsection (1) or subsection (2), upon timely objection by a party, the court may vacate an award under s. 682.13(1)(b). (5) An arbitrator appointed as a neutral arbitrator who does not disclose a known, direct, and material interest in the outcome of the arbitration proceeding or a known, existing, and substantial relationship with a party is presumed to act with evident partiality under s. 682.13(1)(b). (6) If the parties to an arbitration proceeding agree to the procedures of an arbitration organization or any other procedures for challenges to arbitrators before an award is made, substantial compliance with those procedures is a condition precedent to a motion to vacate an award on that ground under s. 682.13(1)(b).”
40 Fla. Stat. §682.13 of the revised code requires vacatur when: (a) The award was procured by corruption, fraud, or other undue means; (b) there was: (1) Evident partiality by an arbitrator appointed as a neutral arbitrator; (2) corruption by an arbitrator; or (3) misconduct by an arbitrator prejudicing the rights of a party to the arbitration proceeding; (c) an arbitrator refused to postpone the hearing upon showing of sufficient cause for postponement, refused to hear evidence material to the controversy, or otherwise conducted the hearing contrary to s. 682.06, so as to prejudice substantially the rights of a party to the arbitration proceeding; (d) an arbitrator exceeded the arbitrator’s powers; (e) there was no agreement to arbitrate, unless the person participated in the arbitration proceeding without raising the objection under s. 682.06(3) not later than the beginning of the arbitration hearing; or (f) the arbitration was conducted without proper notice of the initiation of an arbitration as required in s. 682.032 so as to prejudice substantially the rights of a party to the arbitration proceeding.
Section 10 of the FAA, similarly, provides that awards may be vacated: (1) where the award was procured by corruption, fraud, or undue means; (2) where there was evident partiality or corruption in the arbitrators, or either of them; (3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or (4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.”
41 See Int’l Union of Painters & Allied Trades, Local Union 1944 v. TNT Plastering & Stucco, LLP, 197 L.R.R.M. 2728, 2013 U.S. Dist. LEXIS 168957 (D. Haw. 2013) (vacating an arbitration award when the arbitrator did not give a party notice of hearing); Generica Ltd. v. Pharmaceutical Basics, 125 F.3d 1123 (7th Cir. 1997) (holding that the fundamental fairness an arbitrator is required to afford under §10(a)(3) includes notice of hearing).
42 See Gateway Technologies, Inc. v. MCI Telecom. Corp., 64 F.3d 993, 996-97 (5th Cir. 1995).
43 See Kyocera Corp. v. Prudential-Bache T Servs., 341 F.3d 987, 998 (9th Cir. 2003); Bowen v Amoco Pipeline Co., 254 F.3d 925, 935 (10th Cir. 2001).
44 The parties’ contract in Hall Street provided that “[t]he United States District Court for the District of Oregon may enter judgment upon any award, either by confirming the award or by vacating, modifying or correcting the award. The [c]ourt shall vacate, modify, or correct any award: (i) where the arbitrator’s findings of facts are not supported by substantial evidence, or (ii) where the arbitrator’s conclusions of law are erroneous.” Hall Street, 552 U.S. at 579.
45 Some circuits extend the statement in Hall Street that the FAA provides the exclusive means to vacate an arbitration award beyond the facts of that case to preclude judicially created grounds for vacatur as well as contractually created grounds. See Citigroup Global Markets, Inc. v. Bacon, 562 F.3d 349 (5th Cir. 2009); Frazier v. CitiFinancial Corp., 604 F.3d 1313 (11th Cir. 2010). Other circuits hold that the judicially created grounds survive because each of them is wrapped up in one or more of the grounds enumerated in the Federal Arbitration Act. See Stolt-Nielsen SA v. AnimalFeeds Int’l Corp., 548 F.3d 85 (2d Cir. 2008). Still other circuits hold that Hall Street precluded only the grounds for vacatur at issue under the facts of that case: contractually created grounds and that previously recognized, judicially created grounds for vacatur of arbitration awards therefore survive the decision. See Coffee Beanery, Ltd. v. WW, LLC, 300 Fed. Appx. 415 (6th Cir. 2008); Comedy Club, Inc. v. Improv West Assoc., 553 F.3d 1277 (9th Cir. 2009).
46 See Schnurmacher Holding, Inc. v. Noriega, 542 So. 2d 1327 (Fla. 1989). The court stated that “it is well settled that the award of arbitrators in statutory arbitration proceedings cannot be set aside for mere errors of judgment either as to the law or as to the facts; if the award is within the scope of the submission, and the arbitrators are not guilty of the acts of misconduct set forth in the statute, the award operates as a final and conclusive judgment.” Id. at 1328.
47 JAMS, Optional Appeal Procedures, http://www.jamsadr.com/rules-optional-appeal-procedure/ ; AAA, Optional Appellate Arbitration Rules, http://go.adr.org/AppellateRules.
48 Hall Street precludes the parties from dictating what the courts may do with an arbitration award; it does not limit the parties’ ability to provide for what the arbitrators may do with it.
Craig R. Lewis practices complex commercial litigation, arbitration, and appeals at Vincent F. Vaccerella, P.A., a construction law firm in Ft. Lauderdale. He received his bachelor’s degree from the University of Pittsburgh, where he studied philosophy and political science; and his law degree from the Florida International University College of Law, where he was a member of the FIU Law Review editorial board.
Juan Ramirez, Jr. , former chief judge of the Third District Court of Appeal, recently started his own firm, ADR Miami LLC and is a partner at Diaz Reus & Targ, LLP, an international law firm with offices worldwide. He served as a district court judge from January 2000 until his retirement in April 2012. He previously served as a circuit court judge (1990-99) and as a county court judge (1988-90). From 2012 until January 2014, he was a neutral with JAMS.
