39 Fla. L. Weekly D1315a
Employment discrimination claims brought by Florida resident against foreign
corporation pursuant to Americans with Disabilities Act and state and federal
civil rights acts — Contract between Florida resident and foreign corporation
is an agreement evidencing a transaction involving interstate commerce to which
Federal Arbitration Act applied — Choice of law provision mandated that
contract would be governed by Alabama law — Trial court erred in determining
that at-will employment was not adequate consideration to enforce plaintiff’s
agreement to arbitrate under Alabama law — Contractual provisions placing cap
on recovery of punitive damages and placing burden of proving punitive damages
beyond reasonable doubt on the claimant are unenforceable under Alabama law —
Trial court should have severed punitive damages clause from arbitration
agreement rather than denying motion to compel arbitration — Provision
requiring plaintiff to split costs of arbitration and to bear her own attorney’s
fees and costs not basis for denying motion to compel arbitration where
plaintiff failed to demonstrate that arbitration costs would be prohibitively
District. Case No. 5D13-1306. Opinion filed June 20, 2014. Non Final Appeal from
the Circuit Court for Seminole County, Alan A. Dickey, Judge. Counsel: Marc A.
Sugerman, of Allen, Norton & Blue, P.A., Winter Park, for Appellant. Daniel
N. Brodersen, of Brodersen Law Firm, Orlando, for Appellee.
entered by the trial court denying its motion to compel arbitration.1 Determining that the arbitration agreement involved
in this case is enforceable in part, we reverse.
disability and gender discrimination in her employment, in violation of the
Americans with Disabilities Act (Title VII),2 the Florida Civil Rights Act (FCRA),3 and the Civil Rights Act of 1964.4
lawsuit based upon the parties’ employment contract. That contract included a
choice of law provision mandating that the contract would be governed by Alabama
law (where Pilot is incorporated). The employment contract also contained an
arbitration provision, providing that all disputes between the parties would be
resolved through binding arbitration. The arbitration provision also included,
in relevant part, the following language:
Pilot will bear the expense of its panel designee, the Employee will
bear the expense of the Employee’s panel designee, and Pilot and the Employee
will bear the equally bear the expense of the umpire and the
. . .
The Employee and Pilot shall each bear their own attorney’s fees,
costs, and expenses. The Employee and Pilot expressly agree that punitive and/or
exemplary damages shall not be awarded; however, if an agreement precluding such
damages or award is unenforceable, then, in such event, Employee and Pilot agree
that such award shall be limited to a maximum of 10% of any proven recoverable
actual compensatory damages.
. . .
Employee and Pilot further agree that that punitive and/or exemplary
damages, if allowed and recoverable, shall only be awarded only upon a showing
of proof beyond a reasonable doubt of conduct permitting recovery of such
arbitration, concluding that the arbitration provision was unenforceable.
arbitration, arguing that the arbitration provision is valid and enforceable
under the Federal Arbitration Act and Alabama law. We agree, in part.
novo, except that factual findings are reviewed for support by competent,
substantial evidence. Furthermore, a trial court’s decision regarding whether an
arbitration agreement or provision is void as against public policy presents “a
pure question of law, subject to de novo review.” Fi-Evergreen Woods
v. Estate of Vrastil, 118 So. 3d 859, 862 (Fla. 5th DCA 2013) (quoting
Shotts v. OP Winter Haven, Inc., 86 So. 3d 456, 471 (Fla. 2011)).
involving interstate commerce. See Acton CATV, Inc. v. Wildwood
Partners, Ltd., 508 So. 2d 1274 (Fla. 5th DCA 1987); Williams v.
Hardy, 468 So. 2d 429 (Fla. 5th DCA 1985); Donmoor, Inc. v.
Sturtevant, 449 So. 2d 869, 870 (Fla. 5th DCA 1984). A contract between a
Florida resident and a foreign corporation is an agreement evidencing a
transaction involving interstate commerce. See Gilman & Ciocig,
Inc. v. Wetherald, 855 So. 2d 900,904-905, (Fla. 4th DCA 2004). The United
States Supreme Court has explained that the purpose of the FAA is to “reverse
the longstanding judicial hostility to arbitration agreements . . . and to place
arbitration agreements upon the same footing as other contracts.” Green Tree
Fin. Corp.-Alabama v. Randolph, 531 U.S. 79 (2000) (citations omitted).
Consistent with that objective, the FAA creates a strong federal policy in favor
of arbitration. See Picard v. Credit Solutions, Inc., 564 F.3d 1359, 1367
(11th Cir. 2005).
A written provision . . . [in a]contract evidencing a transaction
involving commerce to settle by arbitration a controversy thereafter arising out
of such contract . . . shall be valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the revocation of any
treated like any other contractual provision,” and a trial court is “required to
stay or dismiss proceedings and to compel arbitration if the parties have
entered into a valid contract containing an arbitration agreement.” Service
Corp. Int’l v. Fulmer, 883 So. 2d 621, 633 n.15 (Ala. 2003); Ameriquest
Mortg. Co., Inc. v. Bentley, 851 So. 2d 458, 462 (Ala. 2002).
employment contract was unenforceable for two reasons: (1) Fouche received
inadequate consideration, and (2) the arbitration provision amends federal law.
[T]his Court finds that because [Fouche’s] employment was at-will,
if this arbitration agreement provision is enforced, [Fouche] would have
forfeited her rights to access the courts without having received any meaningful
compensation. In other words, the effect of this arbitration clause is to amend
Title VII, the Florida Civil Rights Act, and the Americans with Disabilities
Act, to limit the Plaintiff’s access to courts, for which she received no
consideration other than at-will employment (which is effectively
consideration to enforce Fouche’s agreement to arbitrate because the Alabama
Supreme Court has consistently held that “at-will employment is sufficient
consideration to make an employee’s promise to arbitrate binding.”
Bentley, 851 So. 2d at 464 (citing Gadsen Budweiser Distrib. Co. v.
Holland, 807 So. 2d 528, 531 (Ala. 2001)); Ex Parte McNaughton, 728
So. 2d 592, 595 (Ala. 1998)).
under Alabama law: (1) whether the punitive damages clause is unenforceable and,
if so, whether it can be severed from the parties’ employment contract, and (2)
whether the arbitration provision is rendered unenforceable because it forces
Fouche to split the costs of arbitration and to bear her own attorney’s fees and
damages violates public policy and is, therefore, unenforceable because it
prevents a party from recovering a complete remedy provided for by law.
See Ex Parte Thicklin, 824 So. 2d 723,732-33 (Ala. 2002) (citing
Cavalier Mfg., Inc. v. Jackson, 823 So. 2d 1237 (Ala. 2001)). However,
Alabama law favors the severability of offending punitive damages clauses. In
Ex Parte Thicklin, the Alabama Supreme Court concluded that a provision
in an arbitration agreement prohibiting punitive damages was invalid, but
severed it out, sending the case to arbitration. Id. at 735. In Ex
Parte Celtic Life Insurance Co., 834 So. 2d 766 (Ala. 2002), the court
explained that trial courts have a duty “to preserve so much of a contract as
may properly survive its invalid and ineffective provisions.” Id. at 769.
Ex Parte Celtic involved an arbitration provision that prohibited the
recovery of punitive damages. The Court severed the invalid provision and then
sent the case to arbitration. Id.
punitive damages, and further provides that, “if an agreement precluding such
damages or award is unenforceable, then . . . Employee and Pilot agree that such
award shall be limited to a maximum of 10% of any proven recoverable actual
compensatory damages.” Title VII and the Civil Rights Act do not place a cap on
the recovery of punitive damages, nor do they place the burden of proving
punitive damages beyond a reasonable doubt on the claimant. The principles that
make a contract clause prohibiting the recovery of punitive damages
unenforceable are equally applicable to contract clauses that limit punitive
damages. Accordingly, these contract provisions are unenforceable. In light of
Alabama law favoring severability, as well as the FAA’s requirement that
arbitration agreements be treated no less favorably than other contracts under
state law, the trial court should have severed the punitive damages clause from
the arbitration agreement.
seeks to invalidate an arbitration agreement on the ground that arbitration
would be prohibitively expensive, that party bears the burden of showing the
likelihood of incurring such costs.” Green Tree Fin. Corp.-Alabama v.
Randolph, 531 U.S. 79, 92 (2000). In that case, Randolph provided the Court
with evidence of costs from “informational material from the American
Arbitration Association” and from “cases involving other arbitrations as
reflected in the opinions of other Courts of Appeals.” Id. The Court held
that “[n]one of this information affords a sufficient basis for concluding that
Randolph would in fact have incurred substantial costs in the event her claim
went to arbitration.” Id. In a footnote, the Court found that Randolph
supported her assertion that arbitration costs were prohibitively expensive with
“unfounded assumptions.” Id. at 97, n.6.
indicating “that she is single and the sole supporter of herself” and that “she
could no longer afford the substantial expense of arbitration mandated under the
Agreement.” She cited to a law review article and a New York Times
article, both of which discuss the potentially high costs of arbitration when
compared to the costs of litigation in court, asserting that arbitration costs
would be higher than court filing fees. This evidence is less than what the
claimant in Randolph provided, which the U.S. Supreme Court determined
was “too speculative.” As such, Fouche has not met her burden of demonstrating
that her arbitration costs would be prohibitively high; therefore, the trial
court erred in denying Pilot’s motion to compel arbitration.6
compel arbitration and remand with instructions to sever the punitive damages
clause and submit the case to arbitration.7
1This court has jurisdiction. See
Fla. R. App. P. 9.130(a)(3)(C)(iv).
2See 42 U.S.C. § 12101 (2012).
3See § 760.10, Fla. Stat. (2012).
4See 42 U.S.C. § 2000e-2 (2012).
5See 9 U.S.C. §§ 1-12 (2012).
6Importantly, Fouche is not left without a
remedy. She can seek judicial review of the cost-splitting provision when her
arbitration expenses become a certainty. The dissent in Randolph, arguing
against the majority on the basis of judicial economy, comes to the same
conclusion. “The Court’s opinion, if I comprehend it correctly, does not prevent
Randolph from returning to court . . . if she then has a complaint about cost
allocation.” Randolph, 531 U.S. at 97.
7Fouche’s contention that the arbitration
agreement is unenforceable because it precludes the recovery of attorney fees in
the arbitration is mooted by Pilot’s concession that attorney fees can be
awarded in the arbitration.
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