This case summary originally appeared in the May 2020 edition of the Baker McKenzie Litigation & Arbitration Newsletter, which may be found here: https://bakerxchange.com/rv/ff00619f5914f448de10cd20f54f8fc1693b6bb2/p=4247166
Doe v. Natt, No. 2D19-1383 (Fla. 2d DCA Mar. 25, 2020)
A Texas couple, referred to as John and Jane Doe, filed suit against Airbnb, Inc. and Wayne Natt, the owner of a condominium that the Does rented using Airbnb's website. The Does allege that Natt had installed hidden cameras throughout the unit and recorded them during their stay. Airbnb filed a motion to compel arbitration contending that the Does' claims were subject to arbitration under Airbnb's "clickwrap" agreement, and that the circuit court did not have authority to consider the arbitrability of the Does' claims. The trial court agreed and granted Airbnb's motion. The Second District reversed and remanded the circuit court's decision, holding that, in this case, the judge should be the one to decide the issue of arbitrability.
The issue for the court was the "arcane" question of who decides whether a dispute is subject to a contract's arbitration provision: an arbitrator or a judge. The Second District applied the Supreme Court's test under the Federal Arbitration Act (the "FAA")—the parties may delegate threshold arbitrability questions to the arbitrator, so long as the parties' agreement does so by "clear and unmistakable" evidence. Short of this evidence, the assumption remains that such disputes are to be decided by a court.
The question then became whether the arbitration provision clearly and unmistakably demonstrated that the Does had agreed to submit the issue of arbitrability to an arbitrator. In light of this standard, the Second District looked to the relevant provision in the clickwrap agreement. The arbitration provision stated that the arbitration would be "administered by the American Arbitration Association ('AAA') in accordance" with its rules. The AAA Rules were not reproduced within the clickwrap agreement, but the agreement directed the Does to the AAA website.
AAA Rule 7 provides as follows: "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 the arbitrability of any claim or counterclaim." The Second District noted that numerous other courts have held that provisions like AAA Rule 7 constitute an agreement by the parties for the arbitrators to decide the issue of arbitrability. Nevertheless, the court held that the provision in the clickwrap agreement did not provide clear and unmistakable evidence that only the arbitrator could decide the issue of arbitrability.
First, the court found that the agreement itself is silent on the issue of who should decide arbitrability, and that, although the circuit court concluded that the AAA Rules had been incorporated into the clickwrap agreement, the agreement did not actually so provide. In the court's view, the rules were referenced only as a generic body of procedural rules, and that reference was limited to how the arbitration (once commenced) was supposed to be administered. This directive was necessarily conditional on there being an arbitration, which was not the case yet. As such, the reference did not suffice.
Second, even assuming that the reference was sufficient to incorporate the rules into the agreement, the Second District held that AAA Rule 7 only confers adjudicative power upon the arbitrator, but does not purport to make that power exclusive. Thus, the rule did not strip the court of this presumed power.
Because the evidence on which the parties relied as to who decides arbitrability was found to be ambiguous and not clear and unmistakable, the court retained its presumed authority to decide the arbitrability dispute. Thus, the Second District reversed the circuit court's decision to grant Airbnb's motion to compel arbitration.