_ The Second District Court of Appeal recently certified to the Florida Supreme Court the following question to be of great public importance:

DOES SECTION 95.011, FLORIDA STATUTES, APPLY TO ARBITRATION WHEN THE PARTIES HAVE NOT EXPRESSLY INCLUDED A PROVISION IN THEIR ARBITRATION AGREEMENT STATING THAT IT IS APPLICABLE?

Raymond James Fin. Services, Inc. v. Phillips, 36 Fla. L. Weekly D2479 (Fla. 2d DCA Nov. 16, 2011).  In answering this question in the negative as a matter of first impression, the second district held that Florida's statutes of limitations do not apply to arbitrations where the arbitration agreement does not expressly provide for their application. 

In Phillips, the client agreements (“Agreements”) between the claimant Account Holders and Raymond James required any disputes to be submitted to the National Association of Securities Dealers, Inc. (NASD) for arbitration.  The NASD Code of Arbitration Procedure (Code) includes a 6-year time limit on submissions for arbitration.  The Code states that this rule “shall not extend applicable statutes of limitations; nor shall the six-year time limit . . . apply to any claim that is directed to arbitration by the court.”  The Agreements provided:

Nothing in this agreement shall be deemed to limit or waive the application of any relevant state or federal statute of limitation, repose or other time bar.  Any claim made by either party to this agreement which is time barred for any reason shall not be eligible for arbitration. The determination of whether any such claim was timely filed shall be by a court having jurisdiction, upon application by either party.

After the Account Holders filed arbitration claims with NASD, Raymond James filed a motion to dismiss based upon the limitations periods in Chapter 95, Fla. Stat.  In response, the Account Holders filed a declaratory judgment action in circuit court, seeking a declaration that Florida’s statutes of limitations do not apply to arbitration proceedings.  The circuit court entered judgment in favor of the Account Holders, and Raymond James appealed.

On appeal, the second district first found that the Agreements did not expressly state that Florida's statutes of limitations would apply to arbitration claims.  The court found that the language stating that the Agreements would not “limit or waive the application of any relevant state or federal statute of limitation” did not affirmatively incorporate Florida's statutes of limitations into the Agreements.

The court then analyzed whether Florida's statutes of limitations are relevant to arbitration claims.  The court noted that section 95.011 provides: “A civil action or proceeding . . . shall be barred unless begun within the time prescribed in this chapter. . . .”  The court found such phrase to mean a court proceeding and not arbitration, which is an “alternative to the court system.”  Absent a more specific reference to arbitration in section 95.011, and without a clear indication of legislative intent otherwise or case law interpreting the issue, the appellate court found it “too much of a stretch” to extend the statutes of limitations to arbitration proceedings.  For the full case, click here.

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The U.S. Supreme Court, in a Florida case, has held that where a complaint contains both arbitrable and nonarbitrable claims arising from an agreement that falls within the Federal Arbitration Act ("FAA"), the arbitrable claims must be submitted to arbitration even though the nonarbitrable claims may proceed separately in a different forum.  KPMG LLP v. Cocci, 2011 WL 5299457 (U.S. Nov. 7, 2011). 

In KPMG, the plaintiffs were nineteen individuals and entities who lost millions of dollars after investing in Bernard Madoff's "infamous Ponzi scheme." The plaintiffs sued KPMG, among others, for negligent misrepresentation, violation of the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”), professional malpractice, and aiding and abetting a breach of fiduciary duty.  KPMG LLP v. Cocchi, 51 So. 3d 1165, 1167 (Fla. 4th DCA 2010), vacated, 2011 WL 5299457.  The circuit court denied KPMG's motion to compel arbitration, and the auditor appealed.  The Fourth District affirmed, finding that the arbitration clause could be enforced only if plaintiffs' claims were derivative, and further finding that the negligent misrepresentation and violation of FDUTPA claims were direct rather than derivative under applicable Delaware law.  Id.

The case proceeded directly to the U.S. Supreme Court for immediate review.  The Supreme Court vacated the Fourth District's opinion and remanded the case for a determination as to whether the other two claims in the complaint were arbitrable, in which event such claims must be submitted to arbitration, "even where the result would be the possibly inefficient maintenance of separate proceedings in different forums."  KPMG LLP v. Cocci, 2011 WL 5299457.  For the full case, click here.
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The Florida Supreme Court has adopted significant changes to rule 1.720 (Mediation Procedures), effective January 1, 2012.  In order for a party to be deemed as having appeared at mediation through the physical appearance of the party's representative, that representative must have "full authority to settle." Pursuant to the amended rule, such representative must be the "final decision maker with respect to all issues presented by the case who has the legal capacity to execute a binding settlement agreement on behalf of the party."  It is important to note that ten (10) days prior to appearing at mediation through its representative, the party must file a Certification of Authority, identifying the party representative and confirming that such individual has the full authority to settle as defined above.  Further, the court "shall" impose sanctions if a party fails to appear at a noticed mediation, and the failure to file a Certification of Authority shall create a rebuttable presumption of a failure to appear.
For the full rule change, click here.
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