Bush Ross Business Bulletin - February 2014

Legal Developments Affecting You and Your Business

Florida Supreme Court Further Limits Economic Loss Rule Defense:

The Florida Supreme Court recently restricted the Economic Loss Rule to product liability actions for property damages.  The Economic Loss Rule is a legal doctrine which – until this recent decision – often prohibited contracting parties from claiming both tort and contract damages for the same act.  Absent the Economic Loss Rule, damage and liability limitation provisions in contracts may be the best way to protect contracting parties from duplicate claims. To determine whether your contracts limit your damages or liability, contact John Giordano in our Corporate Law Group.

Fair Labor Standards Act/Overtime Claims: 

You may have noticed the recent spate of ads by plaintiffs’ firms soliciting employees to sue for allegedly unpaid overtime.  Have you properly classified your employees?  Are you keeping adequate records regarding your employees’ hours and compensation?  Do you require your employees to review, correct, and sign their time records?  Protect yourself and your business against FLSA claims. Contact Alicia Schumacher or Bryan Hull in our Employers’ Rights Group.

BP Deepwater Horizon Oil Spill Claims: 

Recently, the U.S. Court of Appeals for the Fifth Circuit upheld the class action settlement related to the Deepwater Horizon Oil Spill. We have teamed with our accountants to assist our clients in submitting claims. Under the Settlement Agreement, a business’s lost profits are generally deemed to be caused by the oil spill if the business experienced a dip in revenue during the latter half of 2010 as compared to prior years. The current deadline for submitting claims is July 10, 2014. Contact Ed SavitzDavid Banker, or Bryan Hull to have your business’ financial information analyzed at no charge.  If your business is eligible, we and our accountants will work with you to submit your claim under a contingency fee agreement payable from any settlement your business receives with no out of pocket cost to you or your business.

Is Arbitration Too Arbitrary?

By Michelle Drab

If you are considering adding an arbitration clause to your contracts, here are three reasons to reconsider. 

First, arbitration clauses often beget litigation.  Parties inevitably litigate over whether the issues in dispute are arbitrable.  Sometimes these disputes can be resolved quickly, but other times, these disputes can take months, even years.

Second, arbitration is not always simpler or faster than litigation.  Unfortunately, the entities setting the rules for arbitration, such as the AAA and FINRA, have not set clear parameters – and few limits - on discovery and dispositive motions.  To the contrary, the AAA just implemented new rules, effective October 1, 2013, that specifically provide for dispositive motions in arbitration and give the arbitrator the power to issue sanctions for discovery violations.  This leaves the door wide open for parties to demand discovery and dispositive motions and for individual arbitrators and arbitration panels to use their discretion to allow - or prohibit - these litigation-type practices.  Accordingly, parties electing to include an arbitration clause in their contracts will not know what they are getting until they actually go to arbitration and find out what their assigned panel will permit.  In the end, arbitration can take nearly as long and be just as complicated as litigation. 

The third reason to avoid arbitration stems from the first two: cost.  Arbitration can be as or more expensive than litigation.  Absent controls on discovery and dispositive motion practice, parties will face the same costs and legal fees as they would in litigation.  In addition, the parties also endure an arbitration filing fee which can be significantly more than the judicial filing fee (AAA filing fees range from $400 to $71,000, depending on the amount of the claim), as well as the cost of the arbitration panel (typically one to three arbitrators, each charging by the hour), along with the cost of those pesky pre-arbitration motions to determine whether the issues are even arbitrable. 

If you think your budget for legal services is substantial and you want to economically intimidate your contracting parties from suing you, an arbitration clause may be a good idea.  But if not, you may want to save your money and stick with the courts.


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