USA – FLORIDA Trends and Developments Contributed by: Harry Burnett, Barry Kamar, Renzo Seminario Córdova and Marcio Vasconcellos, King & Spalding LLP
tution was agreed upon. On 27 March 2023, Wood - werx filed a claim with the AAA alleging that Space Coast wrongfully charged fees under the MSA. The AAA declined to administer the case due to Space Coast’s failure to submit its consumer dispute resolu - tion plan and pay the required fees. On 7 June 2023, Woodwerx filed a putative class action against Space Coast alleging the same improper fees. Two days lat - er, Space Coast filed its consumer dispute resolution plan with the AAA and paid the fees. On 24 July 2023, the AAA approved Space Coast’s plan and announced it was prepared to administer the consumer-related disputes, and Space Coast moved to compel arbitra - tion in the putative class action. The district court denied the motion to compel, con - cluding that “Space Coast had failed to perform its contractual obligations under the arbitration agree - ment”, and therefore “waived its contractual right to arbitrate” ( Merritt at 1272). The Eleventh Circuit reject - ed all four of Space Coast’s arguments and affirmed the district court’s order. First, the Court held (at 1273) that a federal court qualifies as a substitute-forum under the MSA, rejecting Space Coast’s argument that the clause was limited to arbitration forums based on its heading. (“The heading doesn’t limit the clause’s scope when its text is clear.”) Second, the Court held (at 1274) that Space Coast effectively waived its right to arbitrate by acting inconsistently with that right. (“Space Coast was therefore in default under Section 3 of the FAA because it acted inconsistently with its arbitration right by not trying to remedy the barrier to arbitration that it had caused.”) Third, the Court rejected (at 1275) Space Coast’s defence that failure to initiate arbitration excused non-compliance with its obligations because doing so would have been futile (“failure to request arbitration doesn’t matter given the evidence of futility in the form of the AAA’s declina - tion letter to Woodwerx”). Lastly, the Court denied (at 1276) Space Coast’s request for an order compelling arbitration under Section 4 of the FAA due to its fail - ure to act consistently with the agreement to arbitrate (“post-filing conduct cannot cure the prior noncompli - ance”). In Woodwerx , the Eleventh Circuit sent a powerful message that courts will take compliance with pro - cedural requirements of arbitral institutions seriously.
Having acted contrary to the agreement to arbitrate, Woodwerx later engaged in what the Court perceived as “gamesmanship”, which it would not tolerate. This case also aligns the Eleventh Circuit with a larger trend to place arbitration agreements on “equal footing with all other contracts” ( Buckeye Check Cashing, Inc. v Cardegna , 546 U.S. 440, 443 (2006)), and federal precedent that “waiver does not generally ask about prejudice” ( Morgan v. Sundance, Inc. , 596 U.S. 411, 417 (2022)). FAA’s three-month deadline for moving to vacate final arbitration award is subject to equitable tolling in “exceptional circumstances” As a matter of first impression, in NuVasive, Inc. v Absolute Med. , LLC, 71 F.4th 861 (11th Cir. 2023), the Eleventh Circuit held that the FAA’s three-month deadline for moving to vacate final arbitration awards is subject to equitable tolling. Finding the reasoning of other sister circuits “thorough and persuasive”, par - ticularly the Ninth Circuit case Move, Inc. v Citigroup Glob. Markets, Inc. , 840 F.3d 1152 (9th Cir. 2016), the Eleventh Circuit held that “the availability of equitable tolling does not contravene the FAA’s text, structure, or purpose” ( NuVasive , 71 F.4th at 874). The facts of this case were, however, “exceptional”. NuVasive, a medical device manufacturer, sued Abso - lute Medical after the latter disclaimed the parties’ exclusive distribution agreement and used former NuVasive salespeople to distribute products for a competitor. The district court compelled arbitration of NuVasive’s breach of contract claims, which led to an award finding that Absolute Medical had breached the distribution agreement but denying NuVasive’s claims for lost profits ( NuVasive at 866). Back in court, dur - ing post-arbitration discovery, NuVasive obtained text messages showing that Absolute Medical’s principal had coached a witness via text messages during their remote testimony before the panel. NuVasive then moved to vacate the award under Section 10 (a)(1) of the FAA, arguing it was procured by fraud, and Abso - lute Medical objected on the basis that NuVasive filed the motion to vacate after the statutory three-month deadline. The district court tolled the deadline and ultimately vacated the arbitral award.
908 CHAMBERS.COM
Powered by FlippingBook