To read more on the cases referenced, please access full docket information at onlinedocketssc.flcourts.org.
The Airbnb case arises from a Texas couple’s (the Does) decision to use the popular Airbnb website to rent a condominium unit owned by an individual named Wayne Natt. Upon learning that Mr. Natt had installed hidden cameras throughout the unit and secretly recorded their entire stay, the Does brought suit in Florida circuit court against both Mr. Natt and Airbnb.
In response to the Does’ complaint, Airbnb filed a motion to compel arbitration, arguing that the Does’ claims were subject to arbitration under Airbnb’s Terms of Service. The Does had agreed to the Terms of Service pursuant to the “clickwrap” agreement Airbnb users must execute when first creating their Airbnb accounts. The agreement contained a dispute resolution clause providing for arbitration to be administered by the American Arbitration Association (AAA) in accordance with its rules (AAA Rules). Further, the dispute resolution clause provided a link to the AAA Rules, which state, inter alia, that “[t]he 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.” AAA Commercial Arbitration Rules, R-7 (2013). The trial court granted Airbnb’s motion to compel.
The case came before the Florida Second District Court of Appeal, which broadly described it as presenting “the ‘rather arcane’ issue in arbitration of who decides whether a dispute is subject to a contract’s arbitration provision: an arbitrator or a judge.” Doe v. Natt, 45 Fla. L. Weekly D712, D712 & D716 n.1 (Fla. 2d DCA 2020) (quoting First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 945 (1995)). In First Options of Chicago, Inc. v. Kaplan, the U.S. Supreme Court had explained that “Courts should not assume that the parties agreed to arbitrate arbitrability unless there is ‘clea[r] and unmistakabl[e]’ evidence that they did so,” and, since then, the “clear and unmistakable” standard has governed the determination of whether parties agreed to delegate arbitrability issues to an arbitrator. 514 U.S. 938, 944 (1995) (quoting AT&T Techs. v. Communs. Workers of Am., 475 U.S. 643, 649 (1986)).
Applying that standard, the Second District held “that the [Airbnb] clickwrap agreement’s arbitration provision and the AAA rule it references that addresses an arbitrator’s authority to decide arbitrability did not, in themselves, arise to ‘clear and unmistakable’ evidence that the parties intended to remove the court’s presumed authority to decide such questions,” and it certified a conflict with the decisions of two other Florida district courts of appeal, sending the case to the Florida Supreme Court. Doe v. Natt, 45 Fla. L. Weekly at D716.
Importantly, at issue before the Florida Supreme Court was not just the “arcane” issue of whether the Does had agreed that an arbitrator would decide if their dispute was subject to arbitration, but, more broadly, Florida’s standing in the world of arbitration. This is because, on facts nearly identical to those in the Does’ case, virtually every U.S. state and federal court that has considered the issue has concluded differently than the Second District – that is, that by expressly agreeing to arbitration rules that include an unambiguous delegation of authority to the arbitrator to decide their own jurisdiction, parties agree that the arbitrator, and not a court, will do so. Further, although most courts have concluded that the incorporation of such rules is sufficient, the issue nonetheless has become the subject of considerable national debate, not least because the Restatement of the U.S. Law of International Commercial and Investor-State Arbitration recently endorsed the view that a reference to the AAA rules (and other arbitral rules) does not satisfy the Supreme Court’s clear and unmistakable test.
The Florida Supreme Court received multiple amicus submissions, including from the Miami International Arbitration Society (MIAS). MIAS argued that the court should reverse the Second District’s opinion, explaining, in summary, that:
If allowed to stand, the district court’s decision would decrease legal stability and predictability, undermine parties’ expectations when entering into arbitration agreements, and make the arbitration process far less efficient and more costly. As a result, it would have a chilling effect on arbitration in Florida and fundamentally undermine decades of legislative and judicial efforts aimed at making arbitration a viable alternative to litigation in Florida.
MIAS Brief, at 2. Reed Smith Miami Partner Ed Mullins (GCD) and Reed Smith Miami Associate Anabel Blanco (GCD) were among the authors of the MIAS brief.
On March 31, 2022, the Florida Supreme Court issued its decision, overturning the Second District and “hold[ing] that, because Airbnb’s Terms of Service incorporate by reference the AAA Rules that expressly delegate arbitrability determinations to an arbitrator, the agreement clearly and unmistakably evidences the parties’ intent to empower an arbitrator, rather than a court, to resolve questions of arbitrability.” Airbnb, Inc., Case No. SC20-1167, at 18.
The ruling brings Florida in line with the norm in other jurisdictions and further secures the state's popularity as an arbitral forum. MIAS, with help from Reed Smith, has now filed three amicus briefs on behalf of the prevailing parties.
About Reed Smith’s international arbitration practice
Reed Smith is strongly positioned to provide the highest level of service in dispute resolution to our clients. With offices in the world’s leading arbitration centers, including London, Paris, New York, Singapore, Hong Kong, Dubai, Miami, and Houston, we have one of the largest and most diverse international arbitration practices in the world, with the ability to represent clients in every significant arbitral center and seat around the globe.
We are a recognized leader in international arbitration, and are ranked in the elite GAR 30, Global Arbitration Review’s ranking of the world’s leading international arbitration practices. We have substantial experience representing both claimants and respondents, and a strong track record of obtaining successful results. Our deep knowledge of industry sectors including energy, natural resources, life sciences, transportation, telecoms, insurance, and banking enables us to understand the industry-specific factors and environments affecting our clients’ disputes. This combination of deep arbitration experience, our lawyers’ advocacy skills, and industry knowledge gives us a competitive advantage when representing our clients.
Updates on the go
Listen to our international arbitration updates on the go and at your convenience through our podcast channel, Arbitral Insights. Presented by our international arbitration lawyers from across the Reed Smith global platform, the series explores trends, developments, challenges, and topics of interest in the field. Access our episodes at reedsmith.com.
The Reed Smith Arbitration Pricing Calculator
The Reed Smith Arbitration Pricing Calculator is a first-of-its-kind mobile app created to help arbitration users calculate the costs of arbitration around the world. The app is free and is available to download through the Apple and Google Play app stores. For more details, please visit reedsmith.com.
Client Alert 2022-100
