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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