Companies who rely on arbitration agreements that select the American Arbitration Association (AAA) consumer arbitration rules for dispute resolution should take note of a recent decision by the Eleventh Circuit affirming the denial of a motion to compel arbitration and emphasizing the importance of proactively complying with the AAA’s rules and policies.

In Merritt Island Woodwerx LLC et al. v. Space Coast Credit Union, — F.4th —-, 2025 WL 1450492 (11th Cir. May 21, 2025), the AAA declined to administer any requests for arbitration arising out of a consumer arbitration agreement that the defendant had failed to register.  Over a month after the AAA notified defendant of its noncompliance with the registration requirement and two days prior to plaintiffs filing suit, defendant filed its arbitration agreement with the AAA and paid the registry fee.  The district court concluded that defendant had waived its contractual right to arbitrate.

In affirming the district court’s decision, the panel was not persuaded by defendant’s attempts to distinguish a similar case, Bedgood v. Wyndham Vacation Resorts, Inc., 88 F.4th 1355 (11th Cir. 2023), where the defendant in that case had never sought to comply with AAA rules even after it was sued and had moved to compel arbitration.  The Eleventh Circuit in Bedgood held that consumers could proceed to litigation based on a party’s non-compliance with AAA rules, irrespective of whether any party had previously sought to arbitrate their claims.  

The panel in Merritt explained its reasoning as follows:

• The plain text of the parties’ arbitration agreement—which provided for the unilateral selection of a “forum” by the consumer in the event the AAA was unavailable and the parties could not agree on a substitute form—permitted plaintiffs to select any judicial forum (not just an arbitration forum), notwithstanding the substitute-forum clause’s placement under a heading titled “Selection of Arbitrator”. 

• The defendant was found to have defaulted on its right to arbitrate under Section 3 of the FAA as against one plaintiff because the defendant had violated AAA rules by failing to pre-register its arbitration agreement before the suit was filed. 

• The defendant was found to have defaulted as against a second plaintiff who had not formally requested arbitration because the plaintiffs’ agreements contained identical arbitration provisions, which would have rendered the second plaintiff’s request futile.  

• The defendant was not entitled to relief under Section 4 of the FAA because the defendant was aggrieved by its own failure to bring its arbitration clause into compliance with AAA policies.

The Eleventh Circuit also cautioned that post-filing conduct that occurs during the litigation cannot cure a party’s failure to comply with AAA policies.  If a party’s actions result in the AAA’s refusal to arbitrate and are inconsistent with the party’s asserted right to arbitrate, that right will be considered waived.