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Florida Supreme Court: If Arbitration Provision Included, “Clear and Unmistakable” the Arbitrator – Not a Court – Determines Arbitrability

Mon April 4, 2022 Business

On March 31, 2022 the Florida Supreme Court issued an opinion in what is certain to be one of the most cited cases in Florida for contract cases in the coming years. In Airbnb, Inc. v. John Doe, et al., the Florida Supreme Court held that contract provisions delegating arbitrability determinations to an arbitrator are enforceable, and such provisions constitute “clear and unmistakable” evidence of the parties intent to empower an arbitrator, rather than a court, to make such determinations. With the holding, Florida’s high court has joined all federal circuit courts that have addressed the question of who determines arbitrability.

The facts giving rise to the issue are remarkable. A Texas couple (referred to as John and Jane Doe throughout the proceedings) used Airbnb to book a condo unit in Longboat Key for a three-day stay in May of 2016. Unbeknownst to the Does, the owner of the property had installed hidden cameras throughout the unit. The Does alleged that the unit owner secretly recorded their entire stay, including private interactions. After the Does learned of the unit owners recordings, they filed a complaint in Manatee County, naming the unit owner and Airbnb as Defendants. In relevant part, the complaint included claims against Airbnb of constructive intrusion and loss of consortium. In response to the complaint, Airbnb moved to compel arbitration, arguing that the claims were subject to arbitration under Airbnb’s Terms of Service, which the Does agreed to be bound to pursuant to a “clickwrap” agreement. The Florida Supreme Court cited the Second DCA’s definition of a “clickwrap” agreement “as one that is entered online by proposing contractual terms and conditions of service to a user, who then indicates his or her assent to the terms and conditions by clicking an ‘I agree’ box.” See Doe v. Natt, 299 So. 3d 599, 601 n.2 (Fla. 2d DCA 2020).

In the section of Airbnb’s Terms and Conditions addressing Governing Law, the agreement incorporated by referenced the rules of the American Arbitration Association (AAA) and the Federal Arbitration Act. Previously Rule 7 (now Rule 14) of the AAA Rules provides: “The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim.”

The circuit court granted the motion to compel. In a 2-1 ruling, the Second District Court of Appeal reversed, citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995), finding that the clickwrap contract did not amount to “clear and unmistakable” evidence that the parties intended to remove the court’s presumed authority to make such determinations. The Second District reasoned that “the provision Airbnb relies upon is two steps removed from the agreement itself, hidden within a body of procedural rules, and capable of being read as a permissive direction.” Natt, 299 So. 3d at 609. The Second DCA certified conflict with the Fifth DCA’s decision in Reunion West Development Partners, LLLP v. Guimaraes, 221 So. 3d 1278, 1280 (Fla. 5th DCA 2017). Further, the Second DCA’s decision disagreed with the Third District Court of Appeal’s decision in Glasswall, LLC v. Monadnock Construction, Inc., 187 So. 3d 248, 251 (Fla. 3d DCA 2016).

The Florida Supreme Court settled the issue by quashing the Second DCA’s decision. Writing for the 6-1 majority, Justice Polston noted that even the Second DCA itself characterized its own decision as a outlier. With a barrage of citations to federal decisions on point, Polston’s opinion went to considerable lengths to explain how this was not a particularly close call. In addressing the Second DCA’s decision as well as Justice Labarga’s lone dissent, Justice Polston squarely addressed the contention that the issue was somehow murky given that the AAA rules themselves were incorporated by reference and not contained in the body of the contract itself:

However, the parties do not dispute that the Terms of Service or the AAA Rules are part of the contract, and it is settled law that the parties can incorporate by reference materials, including the AAA Rules, in contracts. Indeed, Airbnb’s Terms of Service incorporate by reference more than one dozen extracontractual policies, programs, rules, guides, and other materials. And consistent with our holding above, incorporation by reference of the AAA Rules that expressly delegate arbitrability determinations to an arbitrator clearly and unmistakably evidences the parties’ intent to empower an arbitrator to resolve questions of arbitrability. 

Considering the Florida Supreme Court’s decision and reasoning, contract drafters and parties to contracts would do well to review all sources incorporated by reference. The review of referenced sources should include any applicable rules of arbitration, all referenced internal company documents like handbooks and policy manuals, and any prior iterations of a contract.