Legal Memorandum: Motion to Compel Arbitration and Burden

Issue: Under federal law, what is required to establish that a case is subject to arbitration?

It is well established that the party seeking dismissal of an action or a stay of judicial proceedings pending arbitration bears the burden to show in the first place that the matter is properly referable to arbitration.  Am. Fin. Capital Corp. v. Princeton Elec. Prods., No. CIV. A. 95-4568, n.12 (E.D. Pa. Mar. 20, 1996).  See Zurich Am. Ins. v. Watts Indus., Inc., 466 F.3d 577, 580 (7^th Cir. 2006) (to compel arbitration a party must show an agreement to arbitrate and a dispute that is within the scope of the agreement); Nederlandse Erts-Tankersmaatschappij v. Isbrandtsen Co., 339 F.2d 440, 442 (2d Cir. 1964) (defendants who seek stay have burden of establishing such a stay is warranted); Miletic v. Holm & Wonsild, 294 F. Supp. 772, 774 (S.D.N.Y. 1968) (“The burden is on the party seeking a stay to satisfy the court that a matter is referable to arbitration.”). 

A motion to compel arbitration is reviewed under the summary judgment standard, requiring the court to consider all evidence and inferences in favor of the party opposing arbitration.  Ostroff v. Alterra Healthcare Corp., 433 F. Supp. 2d 538, 541 (E.D. Pa. 2006).

Thus, to rule on a party’s motion to compel arbitration, the court must first decide whether the moving party has established that a particular matter is referable to arbitration.  To make the determination, the court must conduct a two-question inquiry into the “gateway issues”:  “(1) Did the […]