### D ISTRICT 

### C OURT 

### O F 

### A PPEAL 

### O F 

### T HE 

### S TATE 

### O F 

### F LORIDA

F OURTH D ISTRICT

MARINO PERFORMANCE, INC.

, Appellant,

v.

JOSE CARLOS ZUNIGA and JUAN C. ZUNIGA, JR.

, Appellee s

.

No. 4D 20

- 1463

[ August 18, 2021 ]

Appeal of a nonfinal order from the Circuit Court for the Fifteenth

Judicial Circuit, Palm Beach County ; Howard K. Coates , Jr. , Judge; L.T.

Case No. 50

- 2018

- CA

- 015200

- XXXX

- MB

.

Hinda Klein and Samuel B. Spinner of Conroy Simberg, Hollywood, for

appellant.

George W. Kramer and Debra D. Klingsberg of the Law Offices of Kramer

& Klingsberg, Delray Beach, for appellees.

W ARNER

, J

.

Marino Performance (“Marino”), an automobile dealer, appeals a

nonfinal order granting the plaintiff s ’ Jose Zuniga and Juan Zuniga’s

(“plaintiff s ”) motion to certify a class in an action against Marino for unfair

and deceptive trade practices . In the order , the circuit court also found

that Marino waived its right to compel arbitration as to both the named

plaintiff s and the unnamed class members. M arino contends that the

court erred in denying the motion to compel arbitration as to the unnamed

class members. The trial court concluded that Marino waived its right to

arbitrate because it failed to provide fair notice of its intent to rely on the

arbi tration provision during litigation and only raised it on the eve of the

class certification hearing. We agree and affirm.

Background

In December 2018, after purchasing vehicles from Marino, plaintiff s

filed a class action complaint alleging that Marino engaged in deceptive

practices regarding certain fees. Marino answered the complaint and2 raised seven affirmative defenses. At no time did Marino raise the issue of

arbitration even though a n arbitrati on provision was included in the

contract between Marino and each vehicle purchaser. The parties engaged

in discovery, with both sides serving interrogatories and requests for

production of documents. P laintiff s filed a motion to compel responses

from Ma rino, but again Marino did not raise the existence of an arbitration

agreement.

In April 2019, Marino moved for judgment on the pleadings, arguing

that the type of damages sought in the class action were unavailable under

the Florida Deceptive and Unfair Trade Practices Act (“ FDUTPA ”) . The

circuit court denied the motion.

In November 2019, plaintiff s moved to certify the class, and the court

set a hearing on the motion. Days before the hearing, in January of 20 20

, Marino filed its motion to compel arbitration “in opposition to plaintiff’s

motion for class certification,” raising arbitration as an iss ue for the first

time fourteen months after the class action complaint had been filed.

Marino contended that it did not waive its right to arbitrate because its

prior filings were defensive in nature.

Following the hearing, the court entered an order on the motion for

class certification

, determining:

[T]here has been a waiver of the right t o compel arbitration

in this case. Whether the state or federal test for waiver

applies is immaterial as both standards have been met. The

Answer did not demand arbitration [ ; ] discovery was tendered

and responded to. There was a delay of 14 months before the

motion to compel was filed on the eve of the hearing on the

motion to certify. Therefore, the arbitration issue is

insufficient to defeat numerosity

. . . .

At a later hearing on an issue related to the element of representation

as to one of the class representatives, Marino argued that even if the court

previously found a waiver of its right to arbitrate as to plaintiff s , it did not

follow that a waiver occurred as to the unnamed class members.

After supplemental briefing on the issue of whether the waiver should

also apply to the unnamed class members, the court entered its

supplemental order on motion for class certification. The court ruled t hat

Marino waived its right to arbitrate as to the unnamed class members. In

so ruling, the ultimate question for the court was whether:3 [B]y its a c tions in t he litigation, [Marino] provide[d] f air notice

to Plainti f fs that it i ntended to enforce its rights to arbitration

in this case, or at a minimum that it i ntended to treat the

named Plaintiffs differently from the unnamed putative class

members with respect to its decision or not to seek

arbitration.

The court emphasized that Marino did not raise arbitration as an

affirmative defense in its answer or affirmative defenses “or otherwise

reserve the right to assert arbitration as an affirmative defense against

either the named Plaintiffs or the unnamed putative class members.”

The court discussed Marino’s filing of a motion for judgment on the

pleadings, where Marino “took the chance of seeking a dismissal of all

claims without advising the Court or the Plaintiff that if it lost it would

then seek arbitration of the claims of the unnamed putative class

members.” The court e m phasized that Marino d i d nothing prior to the

filing of its motion to compel arbitration to indicate that it was preserving

its rights to seek arbitration in the event of cla s s certification.

The court ultimately concluded that Marino “substantially invoke[d] the

litigation machinery prior to demanding arbitration.” The main c oncern for

t he court w as that Marino engaged in class discovery without objecting or

preserving its right to compel arbitration as to the unnamed class

members.

This timely appeal followed.

Analysis

“The question of w a iver [of a r bitration] is one of f act, reviewable for

competent substantial evidence.” M a r i n e En v ’ t P a r t n ers, I n c. v. John s on

, 863 So. 2 d 423, 4 2 6 (Fla. 4 t h DCA 2 0 03) (citations omitted) . “A party

claiming waiver of arbitration must show: 1) knowledge of an existing right

to arbitrate and 2) active participation in litigation or other acts

inconsistent with that right.” Id

. (citation omitted).

Marino argues that the circuit court did not have jurisdiction over the

unnamed class members until after the class was certified, and therefore,

prior to certification, Marino had no right to demand arbitration against

the unnamed members. Thus, Marino contends that its p re

- certification

conduct could not operate to waive its right to arbitration since the right

did not exist at that time.4 In response, plaintiff s argue that the circuit court correctly determined

that Marino waived its right to compel arbitration as to the unnamed class

members

. Plaintiff s maintain that Marino acted inconsistently with its

arbitration rights and did not assert its intent to arbitra te prior to engaging

in extensive discovery.

We agree with the circuit court that the reasoning in Gutierrez v. Wells

Fargo Bank, NA , 889 F.3d 1230 (11th Cir. 2018), is instructive in analyzing

this case. In Gutierrez , Wells Fargo appealed the d istrict c ourt’s denial of

its motion to compel arbitration with the unnamed plaintiffs comprising

the classes after the bank’s customers filed five class actions. Id

. at 1233.

The Eleventh Circuit ultimately reversed the d istrict c ourt’s finding of

waiver as to the unnamed plaintiffs, determining that Wells Fargo did not

waive its right to arbitrate as to the unnamed class members , because it

had provided fair notice that it reserved its right to arbitrate against the

unnamed class members. Thus, it had not acte d inconsistently with its

arbitration rights.

I n order to find a waiver of arbitration, the Eleventh Circuit concluded

that the trial court must find that the party attempting to invoke

arbitration acted inconsistently with the arbitration right. “ A key factor in

deciding this is whether a party has ‘ substantially invoke[d] the litigation

machinery prior to demanding arbitration. ’ ” Id

. at 12 36 (quoting S & H

Contractors v. A.J. Taft Coal Co., Inc. , 906 F.2d 1507, 1514 (11th Cir. 1990)

. It also explained:

[T]he key i ngredient in the wa i ver analysis is fa i r notice to the

op p osing party and t he District Court of a party’s arbitration

rights and its intent to exerci s e them

. If the court and the

opposing party have such notice at an early stage in

litigation, they can manage the litigation with this contingency

in mi n d. For e x ample, if the court knows a party has

potential arbitration rights that could throw the case out of

court, it can limit the scope of early discovery with this

possibility in view, in order to a void signi f icant expenditures if

it t u rns out that the a r bitration provision governs.

Accor d i ng l y, f a i r n o t i ce at a re l a ti v e l y e a r l y s ta g e o f l i t i g a t i o n

is a p r i m a ry f a

c t

o r i n con s i de r i ng w h e th er a p a r t y h a s a c t e d

i n c on s i s t e n t l y w i t h i t s a rbi t r a ti o n r i g h t s

.

I

d

. at 12 3 6

– 37 (footnote omitted) (emphasis added).

In finding that Wells Fargo did not waive its right to arbitration as to5 the unnamed class members, the Eleventh Circuit emphasized that Wells

Fargo’s “conduct with respect to the unnamed Plaintiffs differed starkly

from its conduct as to the named Plainti ffs.” Id . at 1237 (emphasis added).

Specifically, Wells Fargo:

[S]tated expressly in its resp o nse to t h e District Court ’ s scheduling order that it did not plan to seek arbitration with

the named Plaintiffs, and it thus joined other d e fendants in

filing an omnibus motion to dismiss the complaints. I n t h at

s a me response, h o w e ver, which it filed well before any

discovery had been conducted

, Wel l s F a r g o exp l a i ned t o t h e

D i s t r i c t Cou r t t h at i t w a s n o t i n a po s i t i o n t o a sse r t i t s

a r bi t r a ti o n r i g h t s a g ai n s t th e un n a med P l a i n ti ff s b u t w i s h e d

t o preserve t hose r i g h t s f or w h en th e matter be c a me r ipe f or

the Cou r t t o c on s i der t h em

. . . .

Id . (emphasis added). The court further discussed the fair notice factor:

[W]e have found no authority that requires a party to file a

conditional arbitration motion against possible future

adversaries

— at a juncture in which adjudicating, much less

exercising jurisdiction over, those claims is impossible

— in

order to a void waiv i ng its ri g hts with r egard to those parties.

Because the Di s trict Court lacked jurisdiction over su c h

motions until the c lass was certified, such a pla c eholder

document could only serve the purpose of putting the Court

and the parties on notice of the movi n g party ’ s i ntent to

invoke its arbitration rights u pon certification of the class.

B u t th at s a me pu r pose wa s served by Wel l s F a r g o ’ s express

reser v a t i on o f i t s a rb i t r a ti o n r i g h t s a s to f u t ure p l a i n ti ff s i n

response t o t h e Cou r t ’ s schedu l i n g order

. Accordingly, we

conclude that Wells Fargo did not a ct inconsistently with its

arbitration rights, and, consequently, it did not waive those

rights.

Id . at 1239 (emphasis added); see a l so I n re Che ck i ng Acct

. Over dr a

f

t L i t i g

. , 780 F.3d 1031, 1035 (11th Cir. 2015) (finding that a defendant did not

waive its right to arbitrate claims against unnamed class members, but

specifically noting that when the defendant filed its answer, it tw i c e g a ve

n o t i c e t h at i t w a s reser v ing i t s r i g h t t o a r bi t r a te t h e c l a ims o f a ny fu t ure

p l a i n ti f

f

s , sta t ing that, “[a]bsent members of the putative classes have a

contractual obligation to arbitrate any claims they have against Wells

Fargo”).6 T he Gutierrez court acknowledged that Wells Fargo could not have

moved to compel arbitration prior to the certification of the class, because

the court would not have had jurisdiction to impose arbitration on the

unnamed class members

. Further, the court determined under the totality

of the circumstances that Wells Fargo’s litigation strategy and conduct

prior to class certification were not inconsistent with its right to

arbitration. Because the Gutierrez court found that Wells Fargo had not

acted inconsistently with its right to arbitration, Wells Fargo could assert

its right once the class was certified.

In this case, by contrast, Marino did nothing to signal that it was

preserving its arbitration righ t in the event of class certification prior to

filing its motion to compel on the eve of the certification hearing

. W hen

Marino filed its answer a n d affirmative defenses, it did not raise its

arbitration right or otherwise reserve the right to assert a r bitration as

an aff i rmative defense as to the unnamed class members. Further, in

responding to p laintiffs ’ interr o gatories and document requests, Marino’s

responses were not limited only to its vehicle sales t o the class

representatives but were also directed at sales to proposed class members.

Marino did not object to the discovery of unnamed class members on

the basis that Marino intended to enf o rce its ri g hts to arbitration when

the matter was ripe for the court to consider it.

Notably, Marino attempted to have t h e entire action dismissed on t h e

merits, and then, when that was unsuccessful, it attempted to compel

arbitration, months later but just days prior to the hearing on the motion

for class certification. This is the type of “ outcome

- oriented

gamesmanship” which the Eleventh Circuit criticized in Gutierrez , where

one acts “ in a manner inconsistent with one’s arbitration rights and then

change [ s ] course mid

- journey ” and pursues arbitration “ when its

prospects of victory in litigation dim.” Gutierrez, 889 F.3d at 1236.

We also note that other jurisdictions have embraced a position

consistent with the fair notice reasoning in Gutierrez . For example, in

Tennyson v. Santa Fe Deal ership Acquisition II, Inc. , 364 P.3d 1273, 1277

(N.M. Ct. App. 2015), the defendant presented the same argument that

Marino presents here. Specifically, the defendant argued that, because an

order compelling arbitration would not bind absent class member s until

the class was certified, moving to compel arbitration as to unnamed class

members would be futile. Id . The court disagreed and determined that

the defendant waived its right to compel arbitration against absent class

members who were joined by th e district court’s certification order despite

the fact that the court would not have jurisdiction to compel members to

arbitrate prior to certification

. Id . at 1277. The court explained:7 Defendants retort that an order compelling arbitration would

not bind absent class members until the district court entered

an order certifying this case as a class action, so moving to

compel arbitration before this case was certified as a class

action would have been futile

. But the question is not whether

or when absent class members would be bound by an order

compelling arbitration; the question is whether Defendants

waived their right to invoke their right to arbitrate disputes with

absent class members. Simply because th e district court did

not have jurisdiction to compel absent class members to

arbitrate their claims does not mean that Defendants had no

obligation to rely upon the clause before the district court

granted Plaintiffs ’ motion to certify. See [ In re Cox Enters., Inc.

Set

- Top Cable Television Box Antitrust Litig

., 790 F.3d 1 1 12

, . 1119 (10th Cir. 2015)] (“The [district] court may not have been

able to compel arbitration of absent class members [before it

certified a class], but [the defendant ’ s] assertion or mention of

its right at that point would have fundamentally changed the

course of the litigation, ensured a more expedient and efficient

resolution of the trial, and prevented [the defendant ’ s]

gamesmanship.

Id. at 1279

– 80 (emphasis added); see also Elliot t v. KB Home N. Carolina,

Inc. , 752 S.E.2d 694, 703 (N.C. Ct. App. 2013) (holding that a defendant

waived its rights to compel unnamed class members to arbitration, noting

that the defendant “litigated this case

. . . while sitting on any contractual

right s it had to arbitrate

. . . [and] [t]he fact that [plaintiffs’ and their

attorney’s investment of significant time and sums of money] occurred

before the class was certified does not negate the fact that, upon

certification, the class became tangible benef iciaries of that expenditure”).

Conclusion

In sum, consistent with the reasoning in Gutierrez , we hold that under

the totality of circumstances, t he circuit court correctly determined that

Marino waived its right to arbitrate as to the unnamed class members. It

never provided fair notice to plaintiffs or the court of its right and engaged

in a litigation strategy of “outcome oriented gamesmanship.”

Affirmed

.

G ROSS and D AMOORGIAN , JJ., concur.8 * * *

Not final until disposition of timely filed motion for rehearing.