Arbitration & Mediation

You Can't Appeal An Order Compelling Arbitration In Federal Court, But You Can in Florida State Court

By Christopher B. Hopkins, Esq.

Florida state law and federal law differ on several aspects of compelling arbitration. One example is proving waiver of the right to arbitrate. To prove waiver under federal law requires an inconsistent act plus prejudice. Meanwhile, Florida state law has a hair trigger standard where a (poorly defined) inconsistent act alone can amount to waiver.

Slightly less recognized is the difference between federal and Florida state law as it relates to a right to appeal an order on a motion to compel arbitration.

Here are the rules:

Florida law: Florida Rule of Appellate Procedure 9.130(a)(3)(C)(iv) says that non-final orders which "determine... the entitlement of a party to arbitration" are immediately appealable. While, offhand, we don't recall a recent case discussing the breadth of the rule, an order either granting or denying a motion to compel arbitration can be immediately appealed.

Federal law: we look to the Federal Arbitration Act at 9 USC 16(a)(1)(A) which says that "an appeal may be taken from an order... denying an application under section 206 of this title to compel arbitration." The FAA goes on to say, at 9 USC 16(b): "Except as otherwise provided in section 1292 (b) of title 28, an appeal may not be taken from an interlocutory order— (1) granting a stay of any action under section 3 of this title;(2) directing arbitration to proceed under section 4 of this title; and(3) compelling arbitration under section 206 of this title." Thus, the federal rule only permits an immediate appeal if the trial court denies a motion to compel arbitration. There is no right of immediate appeal if arbitration is granted.

In contrasting the two, we see that Florida law is quick to find waiver of arbitration (prejudice alone) while it gives either party full access to appeal the outcome of a motion to compel arbitration. That actually gives the party opposing arbitration the benefit of the doubt by proving waiver or taking an appeal to dodge arbitration (so much for "arbitration is favored"). In federal court, on the other hand, it is hard to waive your right to arbitration and there is no room for the party opposing arbitration to appeal when the court orders arbitration. Thus, we find that parties seeking arbitration benefit from the federal rules whereas parties avoiding arbitration get lots of chances under Florida state law.

We pick up this thread from Kimberly M. Adams v. Monumental General Casualty Company, recently decided by the Eleventh Circuit. The underlying case involved the purchase of a truck and two arbitration clauses in both the sales contract and the insurance contract. The trial court granted arbitration and then modified the opinion, taking out any reference to the sales contract. Thus, the district court "was not deciding whether arbitration of Adam's complaint was required under the [sales] contract."

Adams appealed and the 11th Circuit found it had no jurisdiction under the FAA, 9 USC 16(b)(2) which governs the appealability of interlocutory orders regarding arbitration ("an appeal may not be taken from an interlocutory order... directing arbitration to proceed").

The 11th disagreed that the district court had "denied arbitration" under 9 USC 16(a)(1)(B). They held that the trial court had compelled arbitration without deciding whether arbitration was also available under the sales contract.

The holding of Adams in a nutshell: "When a district court compels arbitration of a dispute under one contract and is silent about whether another contract provides for arbitration of the same dispute, section 16(a)(1)(B) is not implicated."

Full post as published by Florida Arbitration Law on October 02, 2008 (boomark / email).