In its opinion filed on August 23, 2021, the First District Court of Appeal State of Florida (“Florida Appellate Court”) stated, “we affirm the trial court’s order compelling the parties to proceed with arbitration. Further, as to whether prohibitive cost can be a stand-alone defense to an arbitration agreement governed by the FAC, we certify conflict with the decisions of the Second District and the Fifth District.”
The Florida Arbitration Code (FAC) provides: “Two or more parties may agree in writing to submit to arbitration any controversy existing between them at the time of the agreement, or they may include in a written contract a provision for the settlement by arbitration of any controversy thereafter arising between them relating to such contract or the failure or refusal to perform the whole or any part thereof.”
While the Florida Appellate Court stated “Wick’s argument on the prohibitive cost defense does not fail for want of legal authority. Several decisions from the United States Supreme Court suggest that a trial court may find an arbitration agreement invalid based only on the prohibitive cost of arbitration when the cost of arbitration prevents a party from effectively vindicating her statutory rights under federal law,” the Florida Appellate Court further stated, “the Supreme Court has repeatedly declined to apply the exception to invalidate an arbitration agreement in any case before it … The Supreme Court has not extended the effective vindication exception or the prohibitive-cost defense to claims arising under state law. And state courts have reached different conclusions about whether to recognize prohibitive cost as a stand-alone defense to an agreement governed by a state arbitration law and raising state statutory claims.”
“The Florida Supreme Court has not addressed whether a trial court may invalidate an arbitration agreement governed by the FAC based only on the prohibitive cost of arbitration. But Florida’s district courts have. And they have reached different conclusions … Based on our examination of these decisions, we find no persuasive authority for extending the judicially-crafted effective vindication exception and prohibitive-cost defense to an agreement governed by the FAC and presenting a claim arising under state law. The United States Supreme Court has not applied the effective vindication exception to the FAA or the prohibitive-cost defense to invalidate an arbitration agreement in any case since it recognized the effective vindication exception in dicta thirty-six years ago. Absent direction from the Florida Legislature or the Florida Supreme Court, we decline to judicially craft an exception to the FAC based on the prohibitive cost of arbitration. It is simply not the role of the judiciary to rewrite the terms of a contract the parties freely negotiated at arms length.”
Source Wick v. Orange Park Mgt., LLC, No. 1D20-3778.
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