Arbitration & Mediation

Florida House Bill HB1135 (SB 2192) Proposes to Overhaul Florida Arbitration Code, Chapter 682

By Christopher B. Hopkins, Esq.

The State of Florida is making waves in the world of arbitration. In Washington D.C., Senator Mel Martinez re-introduced the Nursing Home Arbitration Fairness Act, which failed to get anywhere last session. Meanwhile, in Tallahassee, lawmakers proposed two paired bills (HB 1135 / SB 2192) which would revise the existing Florida Arbitration Code, Chapter 682, Florida Statutes.

Without question, the bills are going to be subjected to some revisions. So we'll focus on the major points thus far:

1. Chapter 682 will be divided into two sections, "Arbitration" and "Consumer and Small Business Arbitration Act" -- in short, any arbitration which does not involve the consuming public may not be effected.

2. Insurance -- any mandatory arbitration provision is void. The bill writers apparently don't grasp the interstate nature of insurance and the reality that most insurers can or have already invoked Federal Arbitration Act protections.

3. Pre-dispute arbitration -- void unless it complies with the rest of the new changes.

4. Arbitrator disclosure -- unless agreed upon by the parties, prospective arbitrators must reveal any prior proceedings they were involved in, including any proceedings' involving the parties' industry. Of note, as described later, failure to make a complete disclosure is grounds for appeal. Given the vagueness of "industry," a significant basis for appeal exists for the non-prevailing party.

5. Arbitration process -- must be "fundamentally fair," with "adequate and appropriate discovery," and cannot be administered under any rules where the losing party pays. The "adequate and appropriate" language sounds a lot like the nursing home statute so we wonder if this provision is not derived from nursing home arbitration cases where a nursing home corporation sought to create its own fixed discovery rules; either way, existing case law already serves that function.

6. Arbitrations Filed With the Court -- apparently the bill writers forgot that arbitration was supposed to avoid court involvement. Under these procedures, all arbitration awards shall be filed with the court and confirmed. So each arbitration will then involve the court cost of filing as well as at least one hearing.

7. Vacating Awards -- new grounds include failing to meet the new code requirements; inconsistent with law or public policy; arbitrary or capricious ruling; without substantial evidentiary basis; and not fair. In short, the losing party has an opportunity for appeal to a circuit court which appears broader than any other existing appellate grounds. Few losing parties, for example, think it was "fair" that they lost... right?

8. Arbitration Agreement -- arbitration provisions in private contracts must be in 18 point font... and include data such as average daily cost of arbitrators. Contract must include arbitration opt-out provision.

9. Failure to Disclose Arbitration -- failure to follow the disclosure guidelines does not just void agreement or risk that it is unconscionable; it exposes the party who proposed the contract to a lawsuit (with a fee provision) under the Unfair Trade Practice Act. In fact, "any person" can bring such a claim... you do not even need to be the recipient of such a proposed contract.

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Full post as published by Florida Arbitration Law on March 10, 2009 (boomark / email).