Arbitration Provisions: The Importance Of Drafting Broad Language

During November 2014, Florida’s Fourth District Court of Appeal addressed the issue of whether claims relating to a bill of sale agreement signed contemporaneously with an employment agreement create an arbitrable issue under the employment agreement’s arbitration provision. The answer may surprise you.

In Sunsplash Events Inc. v. Robles, No. 4D13-4302, 2014 WL 5834288 (Fla. 4th DCA November 12, 2014), an employer appealed the circuit court’s order denying enforcement of an arbitration provision found within an employment agreement. The employer contended that even though the employee’s claims arose out of a separate bill of sale agreement, the arbitration provision within the employment agreement governed nonetheless. In the circuit court, the employee asserted various claims alleging that the company’s president made numerous misrepresentations inducing him to enter into both agreements. Id. at *1. The employment agreement’s arbitration clause states: “[T]he Parties hereby agree and specifically stipulate to all differences, claims or matters of dispute relating to the performance of duties and/or benefits arising between the Parties to this Agreement contained herein shall be submitted to a mutually acceptable arbitrator…. Id. (emphasis original). On appeal, the employer argued that the claims arise out of the same operative facts and that the bill of sale agreement requires the employee to cease and desist certain activities related to his current business, thereby satisfying the “relating to the performance of duties, and/or benefits” language of the arbitration agreement and establishing a significant relationship. Id. at 2

The court’s analysis focused on “whether the employment agreement’s arbitration provision is narrow in scope or broad in scope.” Id. at *3; citing Jackson v. Shakespeare Found., Inc., 108 So. 3d 587, 593 (Fla. 2013) (“Two basic types of arbitration provisions have emerged: (1) provisions with language and application narrow in scope, and (2) provisions with language and application broad in scope.”). In reaching its decision that the claims fall within the scope of the employment agreement’s arbitration provision, the court provided four reasons: (1) the express language of the arbitration provision; (2) the significant relationship between the two agreements; (3) the claims regarding the bill of sale agreement require construction and consideration of the duties arising under the employment agreement; and (4) any ambiguity is resolved in favor of arbitration. Id. at *4-5. Thus, an employer must be mindful of the express language of its arbitration provisions and would be wise to draft broad provisions in order to increase its odds of compelling arbitration.

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Tyler J. Derr is an Associate in our Florida office.