FLORIDA BUSINESS LITIGATION: ARBITRATION PROVISIONS AND THEIR SCOPE

Under Florida and federal law, whether a legal dispute is subject to the requirement that the parties submit to arbitration (what courts refer to as the “arbitrability” of the dispute) depends on what the wording of the arbitration agreement itself states. The parties’ intent as to what issues are to be arbitrated is typically evident from the plain language of the arbitration provision and contract. Courts generally favor arbitration provisions and will try to resolve an ambiguity in the wording of an arbitration provision in favor of arbitration. Jackson v. Shakespeare Found., Inc., 108 So. 3d 587 (Fla. 2013). Courts therefore usually apply the broadest possible interpretation of an arbitration provision and contract to determine whether a dispute is subject to arbitration. Peter Mavrick is a business litigation attorney, practicing in Fort Lauderdale and Miami, who has extensive experience with arbitration proceedings and representing the interests of businesses and business owners.

Contracts containing arbitration clauses often limit the scope of “arbitrable issues” (i.e., the types of disputes encompassed in the arbitration provision) to those that are “related to” or “arise from” the contract. There are cases where courts analyzed the causes of action alleged in the complaint to determine whether the controversy at issue was arbitrable under the contract. For example, in Xerox Corp. v. Smartech Document Mgmt. Inc., 979 So.2d 957 (Fla. 3d DCA 2007), Miami’s Third District Court of Appeal held that the causes of action of defamation, intentional infliction of emotional distress, injunctive relief, respondeat superior (vicarious liability for agent’s actions), and intentional interference with an advantageous business relationship—constituted a “Covered Dispute” under the contract. The appellate court reasoned that each cause of action arose out of or was related to the parties’ relationship under the parties’ contract. In the case of BKD Twenty-One Mgmt. Co., Inc. v. Delsordo, 127 So.3d 527 (Fla. 4th DCA 2012), Florida’s Fourth District Court of Appeal determined that the arbitration provision in the subject lease agreement applied to the tenant’s action for negligence against the retirement facility. The appellate court in Delsordo based is decision on the court’s interpretation of the word “Establishment” used in the parties’ contract. The appellate court held that the negligence claims based on a trip and fall on the defendants’ premises arose out of or related to the defendants’ “Establishment.”

This type of analysis is unnecessary when an arbitration provision is so broad as to encompass all potential claims. For example, in the federal appellate decision Doe v. Princess Cruise Lines, Ltd., 657 F.3d 1204 (11th Cir. 2011), the United States Court of Appeals for the Eleventh Circuit considered a broadly worded contract stating that the parties’ dispute had to relate to, arise from, or be connected with employee’s crew agreement or the employment services that she performed for the cruise line. A broadly worded arbitration covenant will sweep most controversies between the parties into private arbitration.

Broad arbitration provisions commonly use wording such as, “…any controversy or claim arising out of or relating to this Agreement shall be settled by arbitration.” Florida courts have interpreted the key phrase “relating to” in arbitration provisions as being broad in scope and encompassing all controversies which are connected to the contract between the parties. As the Supreme Court of Florida explained in its 2013 precedent Jackson v. Shakespeare Found., Inc., 108 So. 3d 587 (Fla. 2013):

[A]n arbitration provision that is considered to be broad in scope typically requires arbitration for claims or controversies “arising out of or relating to” the subject contract. The addition of the words “relating to” broadens the scope of an arbitration provision to include those claims that are described as having a “significant relationship” to the contract—regardless of whether the claim is founded in tort or contract law.

In Jackson, the Supreme Court held that a tort claim may be arbitrable when an agreement provides for arbitration of all claims “relating to” the agreement, and that claim has a significant relationship to the agreement. Even claims of fraud which are related to an agreement may be arbitrable.

Both federal and Florida law are very similar in their interpretation of this type of arbitration provision. “It is an axiom of federal and Florida law that arbitration clauses like this are to be given the broadest possible interpretation to accomplish the salutary purpose of resolving controversies out of court.” Royal Caribbean Cruises, Ltd. v. Universal Employment Agency, 664 So.2d 1107 (Fla. 3d DCA 1995). The federal Eleventh Circuit Court of Appeals in John B. Goodman Ltd. P’ship v. THE Constr., Inc., 321 F.3d 1094 (11th Cir.2003), explained that “[g]iven the similarities between the Florida Arbitration Code and the Federal Arbitration Act, and the Florida courts’ frequent citation to federal cases…when interpreting the Florida Arbitration Code, we think the Florida rule and the Federal rule are the same….”

Peter Mavrick is a Fort Lauderdale and Miami business litigation lawyer who represents businesses in arbitration and other legal proceedings. This article does not serve as a substitute for legal advice tailored to a particular situation.