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Florida Court Rules Fee-Sharing Provision Renders Arbitration Agreement Unenforceability

Florida Court Rules Fee-Sharing Provision Renders Arbitration Agreement Unenforceability
  • September 28, 2001

A recent U. S. Supreme Court decision upholding private agreements to arbitrate employment disputes in lieu of court proceedings has solidified management efforts to resolve disputes internally. However, as demonstrated in a recent Florida case, the Supreme Court's decision in Circuit City, Inc. v. Adams has not given a complete stamp of approval for all arbitration agreements. In one of the first reported decisions following the ruling in Circuit City, a Florida District Court of Appeal has determined an employer's arbitration agreement was unenforceable because the agreement required the employee to pay half the arbitration costs. Flyer Printing Co. v. Hill, Fla. Dist. Ct. App., No. 2D00-5008, decided July 18, 2001.

The Florida case appears to have been argued prior to the Supreme Court's ruling in Circuit City. The Florida court relied on an earlier Supreme Court decision, Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, (1991), upholding private arbitration of statutory employment claims as long as the agreement furnished a satisfactory mechanism for vindicating the claimant's rights. The Circuit City decision held only that employers can require employees to submit their disputes to arbitration rather than file lawsuits. It did not address the practical issues of how to implement mandatory arbitration, such as the situation in the Flyer Printing case. For a full discussion of the Circuit City decision, please see the March/April 2001 Preventive Strategies.

In reaching its decision, the Florida appeals court also looked to earlier decisions by the United States Courts of Appeal for the District of Columbia and the Eleventh Circuit: Cole v. Burns Int'l Servs., 105 F.3d 1465, 72 FEP Cases 1775 (D.C. Cir. 1997) and Paladino v. Avnet Computer Technologies Inc., 134 F.3d 1054, 76 FEP Cases 1315 (11th Cir. 1998). In both these cases, the courts found the arbitration agreements did not provide the full remedies that would have been available to a claimant in a court of law and refused to enforce the agreements.

In the Flyer Printing case, a former account representative for the printing company had attempted to bring a pregnancy discrimination claim under Title VII of the Civil Rights Act of 1964 and the Florida Civil Rights Act. The employer sought to compel the employee to arbitrate her claim pursuant to a mandatory arbitration agreement. At the trial court, the employee argued the agreement was unenforceable based on four provisions: 1) the agreement required the parties to share the costs of arbitration equally; 2) awards exceeding $50,000 were to be reviewed by a second arbitrator; 3) the aggrieved party had to give written notice of a claim within one year; and 4) only retired Florida circuit court judges could be considered for arbitrators unless none was available. The judge agreed with the employee that these four provisions rendered the agreement unenforceable.

On appeal, the District Court agreed with the trial court that the fee-sharing provision rendered the agreement unenforceable because it would contravene the plaintiff's rights to seek full award of attorneys' fees and litigation costs if she won her claim under Title VII and the Florida Civil Rights Act. The District Court did not address the other three provisions.

Editor's Note

Subsequent to the Supreme Court's decision in the Circuit City case, Jackson Lewis attorneys have been working with clients to develop and implement lawful arbitration agreements and other alternative dispute resolution programs.

©2001 Jackson Lewis P.C. This material is provided for informational purposes only. It is not intended to constitute legal advice nor does it create a client-lawyer relationship between Jackson Lewis and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material. This material may be considered attorney advertising in some jurisdictions. Prior results do not guarantee a similar outcome.

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