88 F.4th 1355
11th Cir.2023Background
- Wyndham Vacation Resorts ("Resorts") entered timeshare contracts with purchasers containing mandatory AAA arbitration clauses.
- Several purchasers, dissatisfied with their timeshares, attempted to arbitrate claims before the AAA, which refused to administer the arbitrations due to Resorts' noncompliance with AAA policies (relating to forum selection and damages clauses).
- The AAA instructed purchasers they could proceed in court; subsequently, purchasers (joined by others with similar contracts) filed suit in federal court.
- Resorts and related entities (Development, WorldMark) moved to compel arbitration or appoint a substitute arbitrator, despite their own failure to comply with the AAA's requirements.
- The district court denied the motions, finding Resorts in "default" under the FAA; Resorts and co-defendants appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Resorts was "in default" under FAA Section 3 due to AAA noncompliance | Resorts' AAA noncompliance should bar them from compelling arbitration | AAA's determination of noncompliance was improper; arbitrator should decide | Resorts in default; court may deny stay |
| Whether court could compel arbitration under FAA Section 4 | Plaintiffs never refused to arbitrate; inability was Resorts' fault | Plaintiffs "refused" to arbitrate; AAA would comply with court's order | Court cannot compel; Resorts not "aggrieved" by plaintiffs |
| Appointment of substitute arbitrator under Section 5 | Inappropriate because default was due to Resorts' own actions | Court should appoint substitute under FAA | Court lacks interlocutory jurisdiction to review this issue |
| Whether district court improperly determined arbitrability | Not relevant; district court did not reach merits/arbitrability | Arbitrability should be for arbitrator, not the court | District court did not decide arbitrability; no error |
Key Cases Cited
- Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (U.S. 1983) (discusses the "parallel devices" of stays and motions to compel arbitration under FAA)
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (U.S. 1985) (establishes liberal federal policy favoring arbitration)
- E.E.O.C. v. Waffle House, Inc., 534 U.S. 279 (U.S. 2002) (a contract cannot bind a nonparty)
- Ivax Corp. v. B. Braun of Am., Inc., 286 F.3d 1309 (11th Cir. 2002) (standard for default under FAA Section 3)
- Cmty. State Bank v. Strong, 651 F.3d 1241 (11th Cir. 2011) (requirements under FAA Section 4 for compelling arbitration)