Appellate Court affirms defendant waived right to arbitration

Courts Appellate Arbitration Deceptive Eleventh Circuit Auto Finance

On August 18, a Florida District Court of Appeals affirmed a district court’s decision that an auto dealer (defendant) waived its right to compel arbitration after failing to mention an arbitration provision until days before the hearing. The plaintiffs filed a class action complaint alleging that the defendant engaged in deceptive practices regarding fees on car sales. While the defendant raised seven affirmative defenses, it did not raise arbitration, even though an arbitration provision was included in the contract between the defendant and each vehicle purchaser. The defendant moved for judgment on the pleadings and argued “that the type of damages sought in the suit were unavailable under the Florida Deceptive and Unfair Trade Practices Act,” but the court denied the motion. According to the opinion, days before the hearing, the defendant “filed its motion to compel arbitration ‘in opposition to plaintiff’s motion for class certification,’ raising arbitration as an issue for the first time fourteen months after the class action complaint had been filed,” contending that it did not waive its right to arbitrate due to prior filings being defensive in nature. Later, the defendant argued that even if the court found a waiver as to the named plaintiffs, it could not have waived its right to arbitrate with the unnamed class members. The court ruled that the defendant “engaged in class discovery without objecting to it or preserving its right to compel arbitration with the unnamed class members.”

In making its decision, the appellate court cited a 2018 decision by the U.S. Court of Appeals for the Eleventh Circuit, which ruled that a bank had not waived its arbitration rights regarding the unnamed class members because it expressly stated it wished to preserve arbitration rights against those class members when the matter became ripe (covered by InfoBytes here). The appellate court agreed with the court, finding that the defendant acted inconsistently with regard to arbitration in the dispute and therefore waived any right to force the plaintiffs into arbitration.