Newsletter, February 2011

In a payday loan lawsuit, Florida’s Fourth District Court of Appeal (South Florida area) recently held that a trial court properly denied the defendants’ motion to compel arbitration in class action based on Florida Deceptive and Unfair Trade Practices Act and other remedial statutes, in which plaintiffs alleged that defendants, under deceptive guise of check cashing service, were in reality loaning money to Florida consumers at usurious rates.

The appellate court held that the class action waiver provision defeated the remedial purposes of the consumer protection statute at issue, and thus violated public policy. The court certified the following question to the Florida Supreme Court as one of great public importance: When asserted in a claim involving a violation of Florida Deceptive and Unfair Trade Practices Act or another remedial statute, does a class action waiver in an arbitration agreement violate public policy when the trial court is persuaded by evidence that such a waiver prevents consumers from obtaining competent counsel?

Manufacturers and dealers often include arbitration clauses in contracts and warranties requiring arbitration. Those clauses might set forth that the arbitrator will not conduct class arbitration and will not allow the consumer to serve as a representative for others in the arbitration. Or, the clause might ask the consumer to waive her right to serve as a representative or to participate as a member of a class action in any lawsuit filed against us the manufacturer, dealer or related third parties.

The decision found those provisions contrary to public policy when applied to a FDUTPA claim and does not allow them, although the Florida Supreme Court might ultimately decide this issue.