Beware Mediation Certificates of Authority

This month, the Second District Court of Appeal reversed a circuit court judge who agreed with exceptions taken to a magistrate's report and recommendation and entered a final order following a failure to show cause, thereby dismissing a residential foreclosure case with prejudice due to a bank's alleged failure to attend mediation. The court also entered a final judgment against the bank for attorney’s fees and costs pursuant to Section 57.105, Florida Statutes. This sanction was given because the bank had technically failed to attend court-ordered mediation because in not timely filing a certification of settlement authority required by Florida Civil Procedure Rule 1.720. Rule 1.720 authorizes a court to award sanctions that include attorney’s fees and costs and mediator expenses resulting from a party’s failure to appear. Violations of Rule 1.720 have typically been addressed only with monetary sanctions. As a mediator, we are not often copied on Certificates of Authority and are not involved in policing this filing, which is the court's domain. A party representative having full authority to settle under the rule means the final decision-maker with respect to all issues presented by the case who has the legal capacity to execute a binding settlement agreement on behalf of the party. Nothing about the rule requires any party or party representative who appears at a mediation conference in compliance with the rule to enter into a settlement agreement. The rule also requires that 10 days prior to the mediation, participants must file a certification of who will be attending the mediation on behalf of the party and who has the authority to settle the case. In the H&R Block Bank v. Perry matter, the complaint was filed on behalf of H&R Block by Nationstar Mortgage, LLC, a mortgage servicer, acting as H&R Block’s attorney-in-fact. At the outset of the case, H&R Block had filed a required form which stated that a representative of Nationstar would attend any mediation on behalf of H&R Block with authority to settle the case. The trial court subsequently entered an order referring the case to mediation. Three days before mediation, H&R Block filed a certification of settlement authority under rule 1.720. H&R Block’s certification was filed seven days later than Rule 1.720 requires. Because the trial court failed to make findings supported by the record that the conduct involved was willful, persistent, or otherwise aggravated and that no lesser sanction would be just under the circumstances, the decision was reversed. See opinion here-- http://www.2dca.org/opinions/Opinion_Pages/Opinion_Pages_2016/September/September%2009,%202016/2D15-1351.pdf

Long-term Care Arbitration Attacked

This month, a decision by the Supreme Court of Florida and a rule by the federal agency that controls Medicaid and Medicare funding have dealt serious blows to the use of arbitration by long-term care facilities. The Centers for Medicare and Medicaid Services, an agency under Health and Human Services (HHS), essentially bars any nursing home or assisted living facility that receives federal funding from requiring that its residents resolve any disputes in arbitration, instead of in court. It is the most significant overhaul of the agency’s rules governing federal funding of long-term care facilities in more than two decades. The nursing home industry has said that arbitration offers a less costly alternative to court. Allowing more lawsuits, the industry has said, could drive up costs and force some homes to close. This was the case over a decade ago, when many excess verdicts were recorded in Florida, forcing players out of the state or out of business altogether. Lawyers who work with the elderly say that people are being admitted to nursing homes at one of the most stressful moments of their lives. Distraught and often desperate for a room, prospective residents do not fully grasp what they are signing. Many times, family members are involved in the admission process. The the Supreme Court of Florida said in a Miami case that a father who was a resident in a nursing home could not be bound by an arbitration requirement that his son had signed without the father’s agreement. However, reportedly, one appeals court refused to throw out an arbitration clause signed by a man who could not read or sign his name, reasoning that “illiteracy alone is not a sufficient basis for the invalidation of an arbitration agreement.” See FL decision in Mendez v. Hampton Court Nursing Center, LLC here-- http://www.floridasupremecourt.org/decisions/2016/sc14-1349.pdf Read more here: http://hrld.us/2dCnHLo and http://nyti.ms/2dCmeVh

Bruce Willis's Yippee Ki-Yay Arbitration Award

Last week, Bruce Willis asked a Superior Court judge to affirm an arbitrator's award and enter it as a formal judgment against Benaroya Pictures in the amount of $5.8 million. An arbitrator found the head of a movie production company thoroughly non-credible after his misrepresentation about a film that died a week into shooting. The award found that the company and its alter ego breached a contract to pay Willis $8 million to star in an action thriller called Wake. Willis was to play a sociopath with a violent history attempting to reconnect with his estranged family at his brother's wake. Reportedly, Willis typically earns $6 million to $8 million to lead a feature film and as much as $3 million for a one or two-day cameo role. The defendant was a producer in more than 20 films, including a 2011 crime thriller called Catch .44 that starred Willis. In the deal for Wake, an escrow agreement was created under which the film company was to place payment in an escrow account before principal photography began. The account holder was to pay Willis a portion of the fee each week over the planned seven-week shooting schedule. The producer failed to find full financing for the $25 million project and managed to put only $3 million into escrow by the time production was abandoned. By that point, Willis already spent two days in front of the camera. Willis took the dispute to arbitration, claiming breach of the escrow agreement. The arbitrator found the producer negligently misrepresented the film was fully funded, but denied remaining tort claims and counterclaims. The producer asked the Superior Court to vacate the award because the arbitrator had gone too far in adding him personally as a defendant, despite being a non-signatory. See more in stories here-- http://bit.ly/2cM7i7y and http://bit.ly/2cInisa and http://bit.ly/2bHVJNW

Uber Arbitration Agreements Upheld

Last week, the Ninth Circuit Court of Appeals in the case of Mohamed v. Uber Technologies, Inc. overturned a District Court’s ruling which originally found Uber’s arbitration agreements to be unenforceable. Last year, the District Court held Uber's arbitration agreements were unconscionable due to the inclusion of a waiver of claims brought under California’s Private Attorneys General Act (“PAGA”). The decision invalidated nearly 250,000 arbitration agreements between Uber and independent drivers, allowing the case against Uber to proceed as a class action in civil court. Uber appealed the decision, arguing that the District Court should have simply severed the PAGA waiver pursuant to a severability provision, rather than invalidating the entire agreement. The Court of Appeals agreed with Uber, ruling that the PAGA waivers be severed from the arbitration agreements and the agreements are otherwise enforceable. The Ninth Circuit dismissed the trial judge's reasons for declaring parts of the arbitration agreement unenforceable as artificial. The appeals panel found the lower court judge also ignored Ninth Circuit precedent, erroneously applying a California Supreme Court decision that itself cited a relevant Ninth Circuit decision. This lastest decision will allow Uber drivers to pursue their PAGA claims in court, but will allow Uber to compel individual arbitration on all other claims. Uber had agreed to a $100 million settlement, which the trial court rejected last month, calling it unfair and inadequate. See more on here-- http://bit.ly/2cB6ylD and full decision-- http://bit.ly/2cnJaco