Keeping your personal injury case out of compelled arbitration in premises and vehicle cases

by Shane Newlands

Whether in the world of premises liability, construction, vehicle defect or negligent repair, there have always been untold numbers of contracts and other written agreements in the periphery of our personal injury cases. Perhaps coinciding with the rise of tort reform in Florida and nationwide, these previously unseen contracts have increasingly thrust themselves into injury cases in the form of ever-present “Arbitration Agreements.” These agreements, frequently found in inconspicuous places in standard-form contracts for the purchase or repair of a car or home (the back of the form is all-toocommon) and written in small (but as defense lawyers will quickly point out: bold and capitalized) typeface, threaten to deprive our clients of their constitutionally-protected right of access to the courts,1 relegating them to the closed forum of arbitration. Especially in cases with significant damages, defense lawyers are more and more often taking a flier on the low-risk, potentially high-reward motion to compel and hoping that a court will see it their way. And when faced with the ubiquitous defense citation that “any doubts concerning the scope of an arbitration agreement should be resolved in favor of arbitration,”2 combating these motions can seem daunting.

Over the last two decades, though, the Florida Supreme Court has developed and refined an analytical framework that protects unsuspecting claimants from signing away their rights to a trial by jury. Beginning in 1999 with Seifert v. U.S. Home Corp., the Court has developed a three-part test that a party seeking arbitration must satisfy: (1) a valid written agreement to arbitrate exists; (2) an arbitrable issue exists; and (3) the right to arbitration was not waived.3

While the waiver issue is highly case-specific and beyond the ambit of this article, the law of arbitrability and validity is relatively consistent whether the plaintiff is a home- or vehicle-buyer, renter, or owner seeking repairs. Understanding the nuances of how arbitration provisions are worded, where they are found, and how they are executed is often the difference in whether or not an action is stayed in court or headed to arbitration.

Arbitrability

Any discussion of arbitrability of personal injury claims starts from two rules: (1) “no party may be forced to submit a dispute to arbitration that the party did not intend and agree to arbitrate;”4 and (2) no matter how broad the arbitration clause appears,5 a personal injury claim will not be arbitrable unless, “at a minimum, [it] raise[s] some issue the resolution of which requires reference to or construction of some portion of the contract itself.”6 The former point is important because, like any other contractual construction problem, we must first start with the plain language of the arbitration provision — the “best evidence of the parties’ intent.”7 The latter point is particularly important because the vast majority of arbitration clauses we see outside the contexts of medical malpractice and nursing home cases have nothing to do with

personal injury. Instead, they are found in purchase agreements, repair agreements, and service addendums, and to the extent they non-specifically purport to cover “tort” claims at all, courts have limited those provisions to include only economic torts, not torts based on physical personal injury.8

Seifert and its progeny tell us to start with the words.9 If the words of the agreement specifically make the personal injury claim at issue arbitrable, that is likely the end of the argument as to arbitrability.10 But where these clauses are silent as to the arbitrability of the claim being brought, the caselaw holds that no matter how facially broad the arbitration clause, an issue is not arbitrable unless it bears a “significant relationship” or “contractual nexus” between the claim and the contract.11 What makes a “significant relationship” or “contractual nexus”? The Court gave one answer in Seifert, and then a more specific answer fifteen years later in Jackson v. Shakespeare Foundation, Inc. 12 In Seifert, the Court said that a contractual nexus “at a minimum, raise[s] some issue the resolution of which requires reference to or construction of some portion of the contract itself.”13 In other words, the existence of the contract alone is not enough.14 Then, in Jackson, the Court added that a distinction exists based on whether the claim emanates from the contract or is based in a common law duty owed to the public at large:

More specifically, a claim has a nexus to a contract and arises from the terms of the contract if it emanates from an inimitable duty created by the parties’ unique contractual relationship. In contrast, a claim does not have a nexus to a contract if it pertains to the breach of a duty otherwise imposed by law or in recognition of public policy, such as a duty under the general common law owed not only to the contracting parties but also to third parties and the public.15

Two final points are particularly useful in arguing arbitrability. First, to combat that hornbook citation that “doubts concerning the scope of an arbitration agreement should be resolved in favor of arbitration,”16 Seifert reminds us that when the arbitration provision is part of a standard-form, adhesion contract, any ambiguity about whether a personal injury claim is arbitrable must be construed against the drafter, and thus against arbitrability.17 And second, there is an element of constitutional protection provided by Seifert, which specifically notes “public policy” militates against “depriv[ing plaintiff] of her right to a trial by jury, due process and access to the courts.”18 These two policy preferences, taken together, are a useful pragmatic and common-sense underpinning to what is otherwise a technical argument of contractual interpretation.

Validity

Even where an arbitration provision expressly covers a personal injury claim, that factor alone is not enough to seal that claim’s departure from the court system into arbitration. Like any other contract, Florida courts may properly decline to enforce a contract to arbitrate on the ground that it is unconscionable or against public policy.19 Unconscionability has long been “recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.”20 Or as the U.S. Supreme Court more colorfully described it over a century ago: “‘no man in his senses and not under delusion would make [it] on the one hand, and as no honest and fair man would accept [it] on the other.’”21

While not attempting an in-depth discussion on attacking the validity of arbitration clauses, a couple simple points should be helpful. First, if a court can somehow distinguish Seifert and finds the claim is arbitrable, it can then only decide validity by conducting an evidentiary hearing to “consider the totality of the circumstances” and make findings of fact and conclusions of law.22 A court that does not conduct an evidentiary hearing is in error.

Second, getting a court to determine that an arbitration clause in a contract is unconscionable will require findings of both procedural and substantive unconscionability.23 The former inquiry will focus on the circumstances under which the agreement was executed, where the disparity between the parties’ sophistication and bargaining power is particularly important. As the Florida Supreme Court recently noted:

In the typical case of consumer adhesion contracts, where there is virtually no bargaining between the parties, the commercial enterprise or business responsible for drafting the contract is in a position to unilaterally create one-sided terms that are oppressive to the consumer, the party lacking bargaining power.24

The absence of meaningful choice on the part of a consumer is one of the hallmarks of procedural unconscionability.25 And courts have recognized that when an “arbitration provision is hidden in a maze of fine print and minimized by deceptive sales practices,” that too can support a finding of procedural unconscionability.26

On the other hand, substantive unconscionability analyzes how unfair or unreasonable the contract is.27 One indicator of substantive unconscionability is when an agreement requires customers to give up other legal remedies.28 Another is when the agreement is non-mutual — when it divests one party of certain rights while still affording those rights to the other party, especially when the party retaining the rights is the drafter of the agreement.29 While both procedural and substantive unconscionability need to be present to invalidate an arbitration provision, they need not both be present to the same degree. “Essentially a sliding scale is invoked … the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.”30

Evidence of substantive unconscionability can be adduced in several ways. The low-hanging fruit is a plaintiff’s own testimony that he or she was never informed of the arbitration provision at issue. But useful testimony can be gleaned from seller’s agents as well. It is helpful to take the deposition of the seller’s agents

that your plaintiff interacted with — especially in the context of vehicle or repair contracts. Oftentimes the most powerful evidence will be that even the seller’s agents did not know of the arbitration provision, did not understand it, and could not articulate it in a deposition in a way that a normal person would be able to comprehend.31 Using that evidence — and being creative about uncovering other sources of helpful evidence and testimony — practitioners can put a convincing case to a court in favor of invalidating even an express provision mandating arbitration.

Conclusion

As arbitration provisions continue to pop up in almost every conceivable place consumers are forced to sign standard-form agreements, it will become increasingly important to have the right tools to defeat them. Luckily, the Florida Supreme Court has supplied those tools. While arbitration will likely continue to proliferate among complex commercial interests and in other places where it serves a legitimate and mutual benefit to all parties involved, businesses ought not be able to hedge against their own negligence by forcing their unsuspecting customers into the oftentimes unbalanced playing field of arbitration. With the use of the precedents and tactics discussed above, we can all take steps to ensure that our clients continue to have their cases decided where they belong — in open court before a jury of their peers.

SHANE NEWLANDS

is an associate with Paul Knopf Bigger. He specializes in products liability and catastrophic injury litigation in state and federal court. He is also a member of FJA’s Young Lawyers Board

1 Fla. Const. Art. I, § 21. 2 O’Keefe Architects, Inc. v. CED Const. Partners, Ltd., 944 So.2d 181, 185 (Fla. 2006); Advantage Dental Health Plans Inc. v. Benefical Adm’rs Inc., 683 So.2d 1133, 1134 (Fla. 4th DCA 1996); Ronbeck Const. Co., Inc. v. Savanna Club Corp., 592 So.2d 344, 346 (Fla. 4th DCA 1992). 3 750 So.2d 633, 638 (Fla. 1999). 4 Shotts v. OP Winter Haven, Inc., 86 So.3d 456, 464 (Fla. 2011); Miller v. Roberts, 682 So.2d 691, 692 (Fla. 5th DCA 1996) (“The general rule is that where an arbitration agreement exists between the parties, arbitration is required only of those controversies or disputes which the parties have agreed to submit to arbitration.”). 5 Courts have separated arbitration clauses into two types: “Narrow” arbitration clauses which cover claims “arising out of” the contract, and thus only implicate “claims having some direct relation to the terms and provisions of the contract;” and “broad” arbitration clauses which cover claims “arising out of or relating to” the contract, and thus potentially implicate related tort claims. 6 Seifert, 750 So.2d at 638. 7 BallenIsles Country Club, Inc. v. Dexter Realty, 24 So.3d 649, 652 (Fla. 4th DCA 2009). 8 See e.g. Kaplan v. Kimball Hill Homes Fla., Inc., 915 So.2d 755, 760 (Fla. 2d DCA 2005) (holding that fraud and fraudulent inducement bear a contractual nexus sufficient to make those claims arbitrable, and that an intentional infliction of emotional distress claim based on the same facts was arbitrable as well). 9 See also Crawford v. Barker, 64 So.3d 1246, 1255 (Fla. 2011) (“Where the terms of a contract are clear and unambiguous, the parties’ intent must be gleaned from the four corners of the document.”) 10 Compare Laizure v. Avante at Leesburg, Inc., 109 So.3d 752, 755–757 (Fla. 2013) (finding that an arbitration clause that includes “common law or statutory negligence, gross negligence, malpractice or a claim based on any departure from the accepted standards of medical or nursing care” encompasses personal injury claims); Rodriguez v. Builders Firstsource—Florida, LLC, 26 So.3d 679, 681 (Fla. 4th DCA 2010) (holding a homebuyer’s claim for personal injury from mold exposure arbitrable where the clause includes claims related to defect of the property, construction of the home, or sales of the home, including “any claims for personal injury or death”) with Kaplan v. Divosta Homes, L.P., 983 So.2d 1208, 1212 (Fla. 2d DCA 2008) (holding a personal injury claim was not arbitrable where personal injury was not mentioned in arbitration clause and clause only sought to arbitrate any “controversy, claim, or dispute arising out of or relating to” the contract or purchase of the home). 11 Jackson, 108 So.3d at 593; Seifert, 750 So.2d at 637–638. 12 108 So.3d 587, 593–594 (Fla. 2013). 13 Seifert, 750 So.2d at 638. 14 Id.; see e.g. Terminix Int’l Co., L.P. v. Michaels, 668 So.2d 1013, 1015 (Fla. 4th DCA 1996) (holding that plaintiffs’ personal injury claims were not subject to arbitration because the claims did not relate to interpretation, performance or breach of any provision of the agreement). 15 Jackson, 108 So.3d at 593 (citing Seifert with approval throughout). 16 Supra, n. 2. 17 Seifert, 750 So.2d at 641 (“The absence of any mention of the parties’ rights in the event of personal injuries or death arising out of any alleged tortious conduct such as that which allegedly occurred in this case creates ambiguity and uncertainty as to the intent of the parties. Under a well-established rule of construction, we are constrained to construe the provisions of the U.S. Home contract against its drafter, U.S. Home.”) 18 Id. at 642. 19 Steinhardt v. Rudolph, 422 So.2d 884 (Fla. 3d DCA 1982); see also Belcher v. Kier, 558 So.2d 1039 (Fla. 2d DCA 1990). 20 Basulto v. Hialeah Auto., 141 So.3d 1145, 1157 (Fla. 2014) (emphasis in original). 21 Belcher, 558 So.2d at 1044 (quoting Hume v. United States, 132 U.S. 406, (1889)). 22 Jonathan M. Frantz, M.D., P.A. v. Shedden, 974 So.2d 1193, 1196 (Fla. 2d DCA 2008) 23 It is important to note that a contract must be both procedurally and substantively unconscionable in order to be unenforceable. Basulto, 141 So.3d at 1160–61. 24 Basulto, 141 So.3d at 1160–61. 25 Powertel, Inc. v. Bexley, 743 So.2d 570, 574 (Fla. 1st DCA 1999); see also Frantz, 974 So.2d at 1197 (“Thus, when an arbitration provision is “hidden in a maze of fine print and minimized by deceptive sales practices,” the provision may well be procedurally unconscionable); Palm Beach Motor Cars Ltd., Inc. v. Jeffries, 885 So.2d 990, 992 (Fla. 4th DCA 2004) (finding an arbitration clause from a car dealer to be unconscionable where it was only printed in small print on the back of the contract and the seller made no effort to draw it to the customer’s attention). 26 Frantz, 974 So.2d at 1197. 27 Powertel, 743 So.2d at 574; Kohl v. Bay Colony Club Condo., Inc., 398 So.2d 865, 868 (Fla. 4th DCA 1981). 28 Id.; see also Woebse v. Health Care & Ret. Corp. of Am., 977 So.2d 630, 633 (Fla. 2d DCA 2008); Romano v. Manor Care, Inc., 861 So.2d 59 (Fla. 4th DCA 2003); Bellsouth Mobility, LLC v. Christopher, 819 So.2d 171, 173 (Fla. 4th DCA 2002). 29 Palm Beach Motor Cars Ltd. Inc. v. Jeffries, 885 So.2d 990, 992–993 (Fla. 4th DCA 2004) (finding substantive unconscionability when the purchaser was bound to arbitrate all disputes but the seller was not); see also Christopher, 819 So.2d at 173. 30 Basulto, 141 So.3d at 1159. 31 See e.g. Basulto, 141 So.3d at 1157.

Future Civil Justice Advocates’ Talent Shines at Hon. E. Earle Zehmer Memorial Mock Trial Competition

It’s a competition where the state’s up-and-coming civil justice advocates match their fledgling legal minds, talents, and skills with the sitting circuit judges deciding which team advances and which one goes home. The annual FJA Research and Education Foundation E. Earle Zehmer Memorial Mock Trial Competition hosted by the FJA Young Lawyers’ Section brought together 14 teams from seven law schools for the 2018 competition held in the state-of-the-art courtrooms of Fort Lauderdale’s 17th Judicial Circuit Judicial Complex.

The contest provided students with a realistic trial experience. The competitors engaged in pre-trial matters and presented opening statements, the plaintiff’s case, the defense case, and closing arguments including a rebuttal.

Competition on Saturday featured intense contests. Five teams were undefeated following the preliminary rounds: two teams from FIU Law; two teams from Nova Law; and one of the teams from Barry Law.

In a close match, one of the FIU Law teams was edged out on a tie-breaker.

The semi-finals matched FIU Law v. Nova Law and Nova Law v. Barry Law for an opportunity to advance to the finals.

The Championship Round of the competition pitted Nova Law v. Barry Law with Eleventh Judicial Circuit Judge Gordon Murray I, presiding. Both teams brought their “A game” to the round, with Barry Law winning its first FJA Mock Trial Championship.

“We are extremely proud of the student advocates who compete in this competition. Their natural skills at advocacy will ensure that all who have causes to plea will be heard,” said G.C. Murray II.

Nearly 100 volunteer lawyers, including members of the FJA Young Lawyers’ Section Board of Directors, pitched in to help the competition run smoothly.

Sitting judges from the tri-county area presided over the mock trial competition including General Magistrate Alvan Balent, Jr., Judge Deborah Carpenter-Toye, Judge Thomas J. Coleman, Judge Sherri L. Collins, Judge Luis Delgado, Judge Yael Gamm, Judge Andrea Ruth Gunderson, Senior Judge Joel Lazarus, Judge Michael I. Rothschild, Judge Michael A. Usan, and Judge Daliah H. Weiss.

“We are grateful to Chief Judge Jack Tuter for opening his beautiful courthouse to us and thank all of the judges and lawyers who generously gave their time to participate and provide invaluable feedback to the students,” Murray added.

The FJA Research and Education Foundation is a Florida not-for-profit corporation and a 501(c)(3) charitable organization which was established in 1992. The mission of the Florida Justice Association Research and Education Foundation is to conduct nonpartisan independent research on a variety of consumer issues, as well as provide educational and charitable projects to promote the study and understanding of the civil justice system.

To learn more about the Florida Justice Association Research and Education Foundation and the Hon. E. Earle Zehmer Memorial Mock Trial competition visit: www.fjaresearchand education.org.

The winning team from Barry Law gather with Judge Gordon Murray I (Center), G.C. Murray II (far right), Chris Keller (far left), and Kim Wald (Second to the right).

Bruce Braxton of Fast Funds presents Grace Samarkos (right) with her Best Advocate Award and check. The Final Round Best Advocate from Nova Law chosen by Judge Gordon Murray I.

HAPPY HOUR!

The members-only events were hip and unique, and provided the perfect backdrop to talk shop and connect with fellow FJA members.

This fall, we had an incredible turnout to all three statewide Member Happy Hour events. The events provided valuable time and opportunity to network with local colleagues, while allowing the forum for members to ask FJA Leadership about the latest updates on legislative and political issues that could impact their practice and the state of Florida.

Thank you to everyone who joined in the nights of fun, food and drinks (and Jacksonville video games)! Special thanks also to FJA Leadership, the Membership Team, and the Marketing Team for their hard work coordinating and attending the events. We’d also like to thank the sponsors who help make these events possible: BEC Consulting BiFulco Medical Group Client Legal Funding Millennium Settlement Consulting Milestone Reporting Company Oasis Financial Panhandle Orthopaedics Universal Court Reporting Video Law Services

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SUPPORTING HURRICANE MICHAEL VICTIMS • AIDING RECOVERY • REBUILDING COMMUNITIES

State Sen. Gary Farmer, former FJA president; Matt Foster, FJA EAGLE member and FJA staff. FJA Board Member Steve Cain delivers supplies to hurricane victims.

The storm has passed. Rebuilding is underway. People need help. In the aftermath of devastating storms, through the FJA Research and Education Foundation (FJA-REF), Florida’s civil justice advocates work to provide a helping hand to people in need. To assist in the recovery and rebuilding efforts following Hurricane Michael, FJA-REF has provided storm victims with badly needed supplies. Be a part of FJA-REF’s historic work to help people in need, aid the recovery, and promote rebuilding in the hard-hit Florida Panhandle.

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FJA-REF is powered by generous gifts (major and planned) from individuals and the legal community through cy pres class-action awards. FJA-REF brings together Florida’s civil justice advocates to: • Engage citizens, organizations, and communities in its mission spur civil justice awareness. • Educate Floridians about the key role constitutional civil justice accountability rights play in promoting corporate responsibility, safer consumer products, and cleaner air and water. • Examine critical public policy issues relevant to defending Floridians’ constitutional civil justice rights. • Enhance and strengthen the stature of the civil justice profession through communications, events and education.

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Index To come

Index To come

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