Legal Memorandum: Motion to Stay Proceedings Pending an Arbitration

Issue: Under what standard does a court review a motion to stay proceedings pending an arbitration and which party bears the burden of proof?

Area of Law: Alternative Dispute Resolution, Litigation & Procedure
Keywords: Motion to stay proceedings pending an arbitration; Burden of proof
Jurisdiction: Federal
Cited Cases: 363 U.S. 574; 328 F. Supp. 944; 169 F.3d 501; 514 U.S. 938; 475 U.S. 643
Cited Statutes: 9 U.S.C. § 3,4
Date: 02/01/2009

It is well-established that the party seeking a stay pursuant to the Federal Arbitration Act (FAA), 9 U.S.C. § 3, bears the burden to show the matter is properly referable to arbitration.  Am. Fin. Capital Corp. v. Princeton Elecs. Prods., No. CIV. A. 95-4568, 1996 U.S. Dist. LEXIS 3412, *17-18 n.12 (E.D. Pa. Mar. 20, 1996); see also Nederlandse Erts-Tankersmaatschappij, N.V. v. Isbrandtsen Co., 339 F.2d 440, 442 (2d Cir. 1964) (defendants who sought stay have burden of establishing such 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.”).

Thus, to rule on the stay, 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 or threshold issues: “(1) Did the parties seeking or resisting arbitration enter into a valid arbitration agreement? (2) Does the dispute between those parties fall within the language of the arbitration agreement?”  John Hancock Mut. Life Ins. Co. v. Olick, 151 F.3d 132, 137 (3d Cir. 1998).  Unless the defendant’s evidence answers both questions in the affirmative, the matter is not referable to arbitration and the motion cannot be granted.

In reviewing the motion, “the District Court uses a standard analogous to the summary judgment standard.”  Schwartz v. Comcast Corp., 256 Fed. […]

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