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Legal Memorandum: Motion to Compel Arbitration under FAA

Issue: STANDARDS FOR EVALUATING A MOTION TO COMPEL ARBITRATION UNDER THE FEDERAL ARBITRATION ACT.

Area of Law: Alternative Dispute Resolution, Litigation & Procedure
Keywords: Motion to compel arbitration; Standards for evaluation; Federal Arbitration Act (FAA)
Jurisdiction: Federal
Cited Cases: 328 F.3d 1165; 537 U.S. 79; 921 F.2d 507; 473 U.S. 614; 134 F.3d 72; 401 F.3d 529; 531 U.S. 79; 500 U.S. 20; 475 U.S. 643
Cited Statutes: None
Date: 11/01/2005

In deciding a motion to compel arbitration under the Federal Arbitration Act (“FAA”), a court must conduct a two-step inquiry.  John Hancock Mut. Life Ins. Co. v. Olick, 151 F.3d 132, 137 (3d Cir. 1998).  The first step is to determine whether the parties agreed to arbitrate the dispute in question.  This determination involves asking whether there is a valid agreement to arbitrate between the parties, and whether the dispute in question falls within the scope of that arbitration agreement.  Id. at 137; AT&T Techs. v. Communications Workers of Am., 475 U.S. 643, 649 (1986); PaineWebber, Inc. v. Hartmann, 921 F.2d 507, 511 (3d Cir. 1990), overruled on other grounds by Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002), as recognized by Trippe Mfg. Co. v. Niles Audio Corp., 401 F.3d 529, 532 (3d Cir. 2005).  “[O]rdinary state-law principles that govern the formation of contracts” should apply when deciding whether the parties agreed to arbitrate the dispute in question.  First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995).  “Arbitration agreements . . . are subject to all defenses to enforcement that apply to contracts generally.”  Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1170 (9th Cir. 2003), cert. denied, 540 U.S. 1160 (2004).

The second step is to determine “whether legal constraints external to the parties’ agreement foreclosed the arbitration of those claims.”  Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., […]

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