Arbitration

Definition of arbitration + 3 key elements

A private, quasi-judicial adjudication outside the court system; method of ADR

(1) Consent to arbitrate

(2) Neutral third party

(3) Final and binding decision subject to only limited exceptions

Tobey v. County of Bristol

(old case that demonstrates common law hostility toward arbitration)

1. Courts of equity will not specifically enforce an agreement to arbitrate.

2. Even an "irrevocable" arbitration clause could be revoked by either party at any time before the award

3. Only a completed award had legal force.

Kulukindis Shipping v. Amtorg Trading Corp.

1. The FAA reversed the common law rule of hostility toward arbitration.

2. Arbitration agreements in contracts involving interstate commerce are valid and enforceable

3. Courts must compel arbitration when a valid agreement exists.

State arbitration acts

1. UAA (Uniform Arbitration Act) — model state code; adopted by 35 states

2. RUAA (Revised UAA, 2000) — expands on UAA, adopted by 21 states; does not contradict UAA

Mirror the FAA for state courts

Contractual Standards for Arbitration (4 steps)

1. Step 1: Does a valid arbitration agreement exist and are the parties bound by it?

2. Step 2: Does the dispute fall within the scope of the agreement? Did the parties agree to arbitrate this kind of claim?

3. Step 3: Are there any defenses to arbitrability? (fraud, unconscionability, duress, etc.)

4. Step 4: Which procedural rules govern? (AAA, JAMS)

Defining element of arbitration

intent of the parties

An arbitration must be _________ to be an arbitration

BINDING

If not binding, it’s not arbitration (see Wolsey Ltd)

Wolsey Ltd. v. Foodmaker, Inc.

1. For a process to constitute arbitration under the FAA, it must be intended by the parties to produce a binding, final resolution.

2. Courts look to the substance of the process, not what the parties call it.

Exxon Mobil Corp. v. Saudi Basic Indus. Corp. (skim)

Under the Third Circuit's "reasonable commercial expectations" standard, a non-binding arbitration provision falls outside the FAA if it is not reasonably expected to actually settle the dispute.

Salt Lake Tribune Publ. Co. v. Mgmt. Planning Inc.

1. An appraisal or valuation process is not arbitration unless the parties intended it to resolve a legal dispute in a binding, adjudicatory manner

2. Mere valuation by a third party does not trigger the FAA.

3. The nature of the process, not the label, determines FAA applicability

FAA § 2

1. Arbitration agreements in contracts involving interstate commerce or admiralty are valid, irrevocable, and enforceable like any other contract

2. Only generally applicable contract defenses apply

FAA § 3

Courts must stay litigation when the issue is subject to a valid arbitration agreement

FAA § 4

Court may order parties to arbitrate when one side refuses

FAA § 5

If the agreement’s method for choosing arbitrators fails, the court can appoint them.

FAA § 6

Applications under the FAA are handled through motions, not full trials.

FAA § 7

Arbitrators may summon witnesses and documents, with court enforcement if needed

FAA § 9

A court must confirm an arbitration award unless statutory grounds for vacatur or modification exist

FAA § 10

Courts may vacate awards for corruption, fraud, evident partiality, misconduct, or arbitrators exceeding their powers

FAA § 11

Courts may modify/correct awards for clerical errors, miscalculations, or form defects

FAA § 13

Once confirmed, an arbitration award has the same force as a court judgment

FAA § 16

Appeals allowed from orders denying arbitration; NOT from orders compelling it

AAA R-31: Postponement

Arbitrator may postpone any hearing upon agreement of the parties, upon a party's request for good cause, or on the arbitrator's own initiative.

AAA R-52: Modification of Award

Within 20 days after an award, a party may request the arbitrator interpret the award or correct clerical, typographical, or computational errors

The arbitrator cannot re-determine the merits of any claim already decided.

Southland Corp. v. Keating

1. The FAA's § 2 creates substantive federal law grounded in the Commerce Clause that applies in both state and federal courts

2. Any state’s anti-arbitration provision is preempted by the FAA.

AAA R-8: Consolidation & Joinder

1. Consolidation requires agreement of all parties or a ruling by the arbitrator

2. Joinder follows similar rules.

AT&T Mobility LLC v. Concepcion (Ch. 2)

1. The FAA preempts any state law that, in practice, interferes with arbitration — even if the state law is framed as a general contract defense that applies to all contracts, not just arbitration agreements.

2. California's rule that invalidated class action waivers as unconscionable is preempted by the FAA.

Vaden v. Discover Bank

1. FAA itself does not confer federal jurisdiction — you need an independent basis.

2. Under § 4, a federal court may "look through" the FAA petition to the underlying substantive controversy to determine if federal question jurisdiction exists: the underlying dispute must arise under federal law (or diversity must exist) for federal court to have jurisdiction

Badgerow v. Walters (skim)

1. The "look-through" approach from Vaden applies only to § 4 (which contains distinctive language directing it), not to §§ 9 or 10.

2. For confirmation/vacatur petitions, jurisdiction must appear on the face of the petition itself.

Volt Info. Science, Inc. v. Leland Stanford University

1. In your contract, you can choose state law that modifies or adds conditions to how arbitration happens, but you cannot choose state law that says arbitration agreements are invalid or unenforceable.

2. FAA does not preempt when parties opt into state law

DirecTV v. Imburgia (skim)

When a contract references "state law" it means valid state law — not state law that has already been struck down as preempted by the FAA. You can't use a choice of law clause to resurrect a dead law.

What is arbitrability?

Whether a dispute is subject to a valid arbitration clause

What is the presumption of arbitrability?

Any doubts about the scope of arbitrable issues are resolved in favor of arbitration

If some claims are non-arbitrable, what happens to the whole case?

The whole case still gets sent to arbitration

AAA R-7: Jurisdiction

1. Arbitrator has the power to rule on her own jurisdiction, including objections to the existence, scope, or validity of the arbitration agreement

AAA R-9: Interpretation and Application of Rules

1. The arbitrator interprets and applies the Rules as they relate to the arbitrator's powers and duties

2. The AAA interprets all other Rules

First Options of Chicago, Inc. v. Kaplan

1. Courts decide questions of arbitrability (whether parties agreed to arbitrate), unless there is clear and unmistakable evidence the parties agreed to have the arbitrator decide that question

2. Silence or ambiguity = court decides

3. The standard of review for arbitrability decisions is de novo.

Howsam v. Dean Witter Reynolds, Inc.

1. Courts decide "gateway" questions (like whether parties are bound by an arbitration clause at all)

2. Arbitrators decide procedural conditions like time limits and filing rules.

Prima Paint Corp. v. Flood & Conklin Mfg. Co

1. Separability doctrine: the arbitration clause is treated as legally separate from the rest of the contract.

2. Under the FAA, a claim of fraud in the inducement of the entire contract (not the arbitration clause specifically) must go to the arbitrator, not the court

3. Courts only decide challenges directed specifically at the arbitration clause itself

What is the separability doctrine?

The arbitration clause the arbitration clause is treated as legally separate from the rest of the contract. (see Prima Paint)

Buckeye Check Cashing, Inc. v. Cardegna (skim)

1. Under Prima Paint's separability doctrine, a challenge to the validity of the contract as a whole — including illegality — goes to the arbitrator

2. The arbitration clause is severable and enforceable, even if the rest of the contract is allegedly void.

Rent-A-Center v. Jackson

1. A delegation clause is itself a written arbitration agreement under § 2 and is severable from the rest of the arbitration agreement

2. To have a court decide enforceability, a party must specifically challenge the delegation clause itself, so a general attack on the arbitration agreement as a whole is not enough — that goes to the arbitrator.

Circuit City v. Adams

The § 1 exemption ("contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce") is very narrow —- it applies only to transportation workers involved in the movement of goods in interstate commerce, not to all employment contracts.

New Prime, Inc. v. Olivera (skim)

1. The § 1 transportation worker exemption applies to independent contractors as well as employees

2. Also, courts (not arbitrators) must decide whether § 1 exempts a contract from the FAA before compelling arbitration — this is a threshold question for the court.

What are the 10 steps of arbitration?

1. Initiation of the Claim

2. Pre-Appointment Administrative Conference

3. Arbitrator Selection

4. Post-Appointment / Pre-Hearing Conference

5. Discovery

6. Dispositive Motions

7. The Hearing

8. Post-Hearing Submissions

9. Deliberation

10. Award

Step 1: Initiation of a Claim

1. Claimant submits a Demand for Arbitration + Statement of Claim to the institution (e.g., AAA, JAMS)

2. No formal pleading requirements — just names, nature of claim, relief sought

3. Respondent files a Statement of Answer or counterclaim

Step 2: Pre-Appointment Administrative Conference

A logistics conference (phone/Zoom) between all parties before arbitrators are appointed that covers arbitrator selection, timetables, location, payment, possibility of parallel mediation

Step 3: Arbitrator Selection

1. Both parties review a list of potential arbitrators and select one or a panel of three to oversee the case

2. Usually they are specialized in a certain field

Step 4: Post-Appointment/Pre-Hearing Conference

1. The arbitrator or panel holds a preliminary conference on procedural matters. Covers things like discovery protocols, dispositive motions, witness lists/exhibits, protective orders, hearing dates/locations

2. Arbitrators must read the agreement carefully to follow all specified protocols

Step 5: Discovery

1. Parties exchange relevant documents, witness lists, and information.

2. While this is similar to the "discovery" phase in a traditional lawsuit, it is generally much more streamlined and limited in arbitration to save time and money

3. Arbitrator handles the actual exchange

Step 6: Dispositive Motions

Before the main hearing begins, either party may file pre-hearing motions or dispositive motions, as long as rules permit

Step 7: The Hearing

1. The parties present their respective cases in a formal hearing, which may be in-person, virtual, or document-based (desk arbitration)

2. Both sides make opening statements, present evidence, examine witnesses, and give closing arguments.

Step 8: Post-Hearing Submissions

Following the hearing, the arbitrator may allow or request that the parties submit additional written post-hearing briefs or clarify specific points of evidence before officially closing the proceedings

Step 9: Deliberation

1. The single arbitrator decides alone, or the panel deliberates privately.

2. Unlike jurors, arbitrators receive no neutral legal instructions — they just rely on parties' advocacy-based presentations

Step 10: Award

The arbitrator issues an award that is final and binding.

• Time: FAA sets no limit, but most institutions set a deadline from when the record closes

• Form: FAA doesn't require writing, but most institutions do. It must be signed by the arbitrator/panel

• Scope: it must resolve every submitted issue and nothing beyond. It may be partial, interim, or final

• Reasoned award: arbitrators have discretion whether to explain reasoning

• Modification: some forums permit clarification within a short window after issuance

AAA R-3: National Roster of Arbitrators

The AAA maintains a National Roster of Arbitrators from which arbitrators are appointed.

AAA R-11: Administrative Conference

AAA may hold an administrative conference with the parties to address arbitrator selection, mediation, information exchange, hearing timetable, and other administrative matters.

AAA R-21: Vacancies

1. If an arbitrator cannot perform, the AAA may declare the office vacant. Vacancies are filled the same way as the original appointment.

2. A substitute arbitrator may require repeating prior hearings.

Hay Group, Inc. v. E.B.S. Acquisition Corp.

1. FAA § 7 allows arbitrators to summon non-parties to appear as witnesses and bring documents to the hearing, but it does NOT authorize pre-hearing document production from non-parties

2. Documents can only be compelled if the non-party also appears in person.

AAA R-35(d): Subpoenas

An arbitrator or other person authorized by law may subpoena witnesses or documents upon request of any party or independently.

AAA R-34: Dispositive Motions

Arbitrator may allow dispositive motions only if the moving party shows the motion is likely to succeed and will dispose of or narrow the issues. Arbitrator considers time and cost of briefing.

Vento v. Quick & Reilly, Inc.

Arbitration panels can dismiss factually deficient claims with prejudice on the pleadings — as long as the process is fundamentally fair

AAA R-33: Conduct of Proceedings

Claimant presents evidence first, then respondent, but an arbitrator has discretion to vary this procedure so long as parties are treated equally and each has a fair opportunity to present their case.

AAA R-35: Evidence

Parties may offer any relevant and material evidence; strict rules of evidence do not apply. Arbitrator determines admissibility, relevance, and materiality

AAA R-36: Evidence by Written Statements and Post-Hearing Filing

1. Parties must give written notice for any witness who provided a written statement to appear in person.

2. Post-hearing documents must be filed with AAA, and all parties get opportunity to respond.

AAA R-38: Interim Measures

1. Arbitrator may take whatever interim measures deemed necessary, including injunctive relief and measures for protection of property or perishable goods.

2. May take the form of an interim award.

3. A party seeking interim measures from a court does not waive the right to arbitrate.

Shearson/Am. Express, Inc. v. McMahon

1. Securities Exchange Act claims are arbitrable. There is no contrary congressional command in the Exchange Act requiring judicial resolution.

2. The Act's antifraud provisions can be effectively vindicated in arbitration

3. RICO claims are also arbitrable.

What is the test for whether statutory claims must go to court (vs. arbitration)?

Is there a contrary congressional command?

Epic Sys. Corp. v. Lewis (skim)

1. The NLRA does not contain a contrary congressional command overriding the FAA

2. Since the NLRA doesn't override the FAA, the default FAA rule applies — which is that class action waivers in arbitration agreements are valid and enforceable, even in the employment context.

What are the 5 defenses to arbitrability?

1. Lack of mutual assent

2. Unconscionability

3. Waiver

4. Breach of Contract / Structural Unfairness

5. Effective Vindication

Specht v. Netscape Communications Corp.

1. A party cannot be bound by an arbitration clause they had no reasonable notice of.

2. Merely posting terms somewhere on a webpage is not enough — users must be clearly notified of the terms and must clearly manifest assent

3. Browsewrap agreements that don't require affirmative acceptance are unenforceable.

Browsewrap agreements with arbitration clause are only enforceable when they ______________.

Require affirmative agreement from user

Meyer v. Uber Technologies, Inc. (skim)

A user can be bound to an arbitration agreement through a clickwrap or notice-based registration screen if:

(1) the existence of the terms was clearly disclosed;

(2) the user was told that proceeding constituted acceptance; and

(3) a reasonably prudent user would have been on notice.

What is the test for clickwrap agreement arbitration clauses being enforceable?

Whether a reasonable user would have been on notice, not whether the user actually read the terms

(1) the existence of the terms was clearly disclosed;

(2) the user was told that proceeding constituted acceptance; and

(3) a reasonably prudent user would have been on notice.

Chavarria v. Ralphs Grocery Co.

1. FAA preempts rules that single out arbitration. It does not preempt neutral contract defenses that apply equally to all contracts.

2. Under California law, an arbitration agreement is unenforceable if both procedurally and substantively unconscionable, evaluated on a sliding scale.

What is procedural unconscionability?

oppression or surprise (adhesive, hidden terms)

What is substantive unconscionability?

terms so one-sided they shock the conscience

What is waiver?

Intentional relinquishment or abandonment of a known right

What is the test for waiver?

(1) Knowledge of the right to compel arbitration, and

(2) Intentional acts inconsistent with that right

White v. Samsung Electronics America, Inc.

1. Waiver requires knowledge of the arbitration right and intentional acts inconsistent with that right. (See Morgan v. Sundance)

2. A party cannot pursue extensive litigation on the merits and then invoke arbitration when things go poorly — that conduct is inherently inconsistent with the intent to arbitrate.

Hooters of America, Inc. v. Phillips

1. An arbitration agreement is unenforceable if the process is so biased and one-sided that it undermines the basic fairness required of arbitration

2. Courts will strike agreements where the process itself is structurally unfair, not just where individual terms are harsh.

What is the effective vindication doctrine?

Arbitration is fine as a forum for federal statutory claims, BUT only if the arbitration process actually allows the person to pursue and win on those claims in a meaningful way

American Express Co. v. Italian Colors Restaurant

1. Effective vindication only kicks in when the arbitration agreement makes it literally impossible to pursue your statutory right — not just hard or expensive (e.g., waiving the right itself or prohibitive filing fees)

2. Effective vindication does not save class claims just because individual arbitration is economically impractical

AAA R-4: Filing Requirements

A party initiates arbitration by filing a demand with the AAA, including party info, nature of claim, relief sought, requested locale, filing fee, and a copy of the arbitration agreement

AAA R-5: Answers and Counterclaims

Respondent has 14 days to file an Answer. May also file a counterclaim. Failure to answer does not delay the arbitration.

AAA R-37: Inspection & Investigation

1. If an arbitrator finds it necessary to make an inspection or investigation in connection with the arbitration, they shall direct the AAA to notify the parties of the date and time

2. Any party may be present. If a party is not present, the arbitrator shall make an oral or written report to the parties and give them an opportunity to comment.

AAA R-40: Closing of Hearing

Arbitrator asks parties whether they have further proofs or witnesses. If not, declares the hearing closed. The time limit for issuing the award begins upon closing of the hearing.

AAA R-60: Sanctions

Arbitrator may impose sanctions upon a party's request where a party fails to comply with the Rules or an arbitrator's order. Must give the sanctioned party an opportunity to respond. Cannot enter a default award as a sanction.

Features of the arbitration claim

• includes demand for arbitration & statement of claim

• no pleading standards

• limited information (party names, relief sought, nature of claim)

• respondent files an answer

If Respondent doesn’t file an answer, what happens?

arbitration proceeds without him. binding award may still issue

Ortho Pharmaceutical Corp. v. Amgen, Inc.

1. Courts retain authority to grant preliminary injunctive relief pending arbitration where necessary to preserve the status quo and prevent irreparable harm.

2. Arbitration and preliminary court relief can coexist

AAA R-38: Interim Measures

1. The arbitrator may take whatever interim measures they deem necessary, including injunctive relief and measures for the protection or conservation of property and disposition of perishable goods. Interim measures may take the form of an interim award, and the arbitrator may require security for the costs of such measures.

2. A party requesting interim measures from a court is not deemed to have waived the right to arbitrate.

AAA R-22: Preliminary Hearing

After appointment, the arbitrator should schedule a preliminary hearing to establish procedures for a fair, efficient, and economical resolution of the dispute.

AAA R-23: Pre-Hearing Exchange and Production of Information

Arbitrator manages exchange of information among parties. May require parties to exchange documents they intend to rely on and respond to reasonable document requests.

AAA R-24: Enforcement Powers of Arbitrator

Arbitrator has authority to issue orders to enforce R-22 and R-23, including drawing adverse inferences, excluding evidence, allocating costs, and other enforcement orders for willful non-compliance.

Opening statements

Delivered seated

Claimant first

Be concise and avoid hyperbole

Witness examinations

Direct: open questions, clear narrative

Cross: short leading questions, expose inconsistencies

Arbitrators may ask questions!

Objections

Use sparingly: arbitrators rarely sustain them and admit most evidence

Expert testimony

Broadly admissible

Cross focuses on flaws, incomplete data, bias, repeat engagement fees

Closing arguments

• Respondent first, claimant rebuttal

• Summarize facts and law

• State requested relief clearly

• Provide legal authorities (arbitrators don't do independent research)