Third District Court of Appeal Affirms in Florida Arbitration Clause Dispute

Arbitration clauses are a common part of many types of contracts, from employment agreements to recreational waivers. Although arbitration is quite popular, at least among contract drafters, agreeing to arbitrate often means relinquishing many important procedural and substantive rights associated with formal legal proceedings. Since many are unaware of the implications of arbitration at the moment of contract formation, courts frequently are called upon to determine the enforceability of these clauses. Fortunately for many hapless prospective litigants, not all such clauses are valid. For instance, the Third District of Appeal affirmed a Miami trial court’s denial of arbitration in Club Mediterranee, SA v. Fitzpatrick.

The plaintiff in Fitzpatrick worked as a costume designer at a Club Med in the Bahamas. While sleeping in an employer-provided dormitory room on the resort, the plaintiff was allegedly attacked by an unknown assailant. Following the alleged attack, the plaintiff brought suit against Club Mediterranee (Bahamas), Ltd. and several parent and affiliate corporate entitles. The defendants made a motion to either compel arbitration or, alternatively, for dismissal on the ground of forum non conveniens. The trial court denied the motion in its entirety, and the defendants appealed the decision.

The key issue on appeal was whether the arbitration clause in the Plaintiff’s employment contract foreclosed formal judicial adjudication of the issue. In relevant part, the plaintiff’s employment contract provides:

“As a condition of your employment, you agree that any claim or controversy arising out of your employment … including but not limited to … tort claim (including negligence and intentional wrongs) … must be pursued internally … [s]hould your matter not be resolved to your satisfaction and should you wish to pursue it further, you will be required to submit your claim to the commercial arbitration tribunal of the American Arbitration Association (“AAA”) for final and binding resolution by an arbitrator …The arbitration will be conducted in Miami, under the commercial arbitration rules of the AAA, as amended from time to time, and as are incorporated herein by reference.”

The Third District found that resolution of this issue was not difficult. The court’s reasoning focused on the phrase “arising out of your employment. ” In this case, the court found that the plaintiff’s allegations of the defendant’s alleged negligence did not arise from her employment but rather from acts not specifically related to the terms of employment. Under Florida law, arbitration clauses are categorized in two varieties, and the construction of a particular arbitration clause depends on its classification. Specifically, arbitration provisions considered narrow in scope typically require arbitration for claims “arising out of the subject contract.” Club Med. Seifert v. U.S. Home Corporation, 750 So. 2d 633, 636 (Fla. 1999). However, “an arbitration provision that is considered to be broad in scope typically requires arbitration for claims or contracts `arising out of or relating to’ the subject contract.” Id. at 637.

In this case, the clause was the former variety because it was meant for claims arising out of employment. The factual allegations at issue did not depend on the existence of an employment relationship. Indeed, one could imagine a guest harmed in the same alleged fashion bringing claims substantially similar to the plaintiff in this case. Accordingly, the court affirmed the trial court’s denial of the motion to compel arbitration. However, the court did not affirm the other issue before the trial court.

As we noted earlier, the defendants also moved to dismiss on the ground of forum non conveniens. This doctrine permits a court to refuse to be a venue for an action that is more appropriate for a venue in a different setting, typically a different country. In this case, the defendants argued that the case should be litigated in the Bahamas, where the alleged tort occurred. The trial court gave superficial treatment to the issue because it interpreted the arbitration clause provision providing for arbitration in Miami to constitute a waiver of a forum non conveniens defense. However, the Third District held that this clause should not be interpreted as a waiver and that the court should perform a full review of the issue.

Although avoiding arbitration will likely be of benefit to the plaintiff, the renewed specter of litigation in a foreign country could ultimately prove to be as burdensome. Indeed, many quirks can arise in even the most seemingly uncomplicated case. If you’ve recently been harmed as a result of possible negligence, it is important to consider finding counsel to helping you tackle the various issues you may encounter, including arbitration or adjudication in a foreign territory. If you’re looking for assistance with a possible claim, the South Florida negligent security attorneys at FK Legal are experienced with many of the obstacles you could encounter in your case. Feel free to contact us for a complimentary case evaluation.

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