The Eleventh Circuit reversed a lower court's entry of a
default judgment against Acosta Tractors, Inc., that was based
solely on Acosta's default in the underlying arbitration. Julio
Hernandez had filed a claim for unpaid wages against Acosta under
the Fair Labor Standards Act, and Acosta compelled arbitration.
However, the arbitration did not "proceed as planned," as
the arbitrator refused to consolidate Mr. Hernandez's case with
two similar actions and allowed "extensive discovery,"
including 29 depositions, across the three separate arbitrations.
Arbitration fees quickly added up to over $100,000, far exceeding
the amount of the plaintiffs' claims. Acosta refused to pay the
arbitration fees and sought to return to the trial court. Instead,
the trial court entered a default judgment against Acosta, based on
its admission that it had refused to pay the costs of the
arbitration and the lack of evidence establishing its inability to
do so.
