Published in Law360 (March 25, 2019) You are in federal court facing a motion to compel arbitration, and you reach for your well-worn copy of the Federal Rules of Civil Procedure in order to confirm how to go about your next step -- demanding a jury trial for example. Better reach for your perhaps less well-worn copy of the Federal Arbitration Act (“FAA”) first. Fed. R. Civ. P. 81 tells you that procedures set out in the FAA supersede the corresponding Federal Rules. And then the courts weigh in and it gets complicated. Regarding a demand for a jury trial, for example, on the one hand, (a) Fed. R. Civ. P. 38(b) tells you that you must “serv[e] the other parties with a written demand -- which may be included in a pleading -- no later than 14 days after the last pleading directed to the issuer is served” and then file that demand in accordance with Fed. R. Civ. P. 5(d); but (b) FAA §4 (9 U.S.C. §4) says that “where ... an issue [a material fact in dispute] is raised, the party alleged to be in default [of an alleged arbitration agreement] may ... on or before the return date of the notice of application [to compel arbitration], demand a jury trial of such issue....” What to do? Fed. R. Civ. P. 81 provides that “These Rules [i.e., the Federal Rules of Civil Procedure], to the extent applicable, govern proceedings under the following laws, except as these laws provide other procedures: ... (B) 9 U.S.C., relating to arbitration....” Fed. R. Civ. P. 81(a)(6)(B) (emphasis added). Thus, the Federal Rules apply only where the FAA is silent.[1] Clearly, then, FAA §4 determines the proper timing of your jury demand. But it may dictate its content as well. The courts are divided on that point. The FAA says that a proper party may demand a jury trial of “such issue,” meaning one or more disputed issues of material fact concerning either (i) the making of the arbitration agreement or

Federal Court JurisdictionA suit to compel arbitration is properly filed in federal court only if such court could hear “a suit arising out of the controversy between the parties.” 9 U.S.C. § 4. To determine the “controversy,” a federal court must “look through” the Section 4 petition “to the parties’ underlying controversy.”

SeeHall Street Assocs., L.L.C. v. Mattel, Inc., 552 U.S 576, 582 (2008). For motions to compel under the Federal Arbitration Act (FAA), 9 U.S.C. §4, federal courts “look-though” the underlying claim and find jurisdiction when the underlying dispute has a federal question, such as equal protection. Vaden v. Discover Bank, 556 U.S. 49 (2009).As the Supreme Court recently held, that rule does not apply to motions to confirm, vacate, or modify an arbitration award.

In so ruling, the Court explicitly declined to extend its holding in Vaden v. Discover Bank, 556 U.S. 49 (2009). In Vaden, the Court found that in the context of deciding a motion to compel arbitration, the text of 9 USC § 4 of the FAA instructs federal courts to “look through” the motion to the underlying claims and controversy to ensure it has jurisdiction, even though the underlying matter is technically not before the Court. Utilizing this “look through” process, a district court has jurisdiction to rule on a motion to compel arbitration if the underlying dispute falls within its jurisdiction (e.g. raises a federal question or diversity jurisdiction exists).

Courts Must Enforce Arbitration Agreements According to Their Terms The FAA requires courts to enforce arbitration agreements in accordance with their terms. See, e.g., 9 U.S.C. § 4. The interpretation of such clauses is typically a matter of state contract law.

ernandez dismissed her lawsuit and submitted the claim to the AAA. Treating the matter as a “consumer agreement” under the AAA Consumer Arbitration Rules, the AAA administrator assigned to the matter notified MicroBilt that the damages limitation included in the arbitration provision conflicted with Principle 14 of the consumer due process protocol of the rules, which requires that an arbitrator “should be empowered to grant whatever relief would be available in court under law or equity.” MicroBilt refused to waive the damages limitation and the AAA declined to administer the arbitration under Rule 1(d). Hernandez then reinstated her claims in the district court and MicroBilt moved to compel arbitration. The district court denied the motion to compel, finding Hernandez had fully complied with the arbitration provision.In affirming the district court’s denial of the motion to compel, the Third Circuit recognized the arbitration provision covered Hernandez’s claims but noted that under 9 U.S.C. § 4, it “may compel arbitration only where there is a ‘failure, neglect, or refusal … to arbitrate under a written agreement.’” The court found the district court’s denial of MicroBilt’s motion was correct because Hernandez was in full compliance with the relevant arbitration provisions. As a result, the court concluded it lacked authority under section 4 to compel arbitration. The court also rejected MicroBilt’s argument that the AAA administrator’s requirement that MicroBilt waive the damages limitation was an “arbitrability” issue that should have been resolved by the arbitrator. The court found that, under Consumer Rule 14(a), arbitrators have the exclusive power to rule on “the existence, scope, or validity” of an arbitration provision, and the administrator’s decision to dismiss the arbitration did not implicate any of those issues. The court also rejected MicroBilt’s argument that the “exclusive resolution” clause of the arbitration provision conflicts with Hernandez pursuing her c

Key highlight:“Because the district court mistakenly issued a nonfinal order denying LMB’s motion to compel arbitration, while stating its intent to schedule a trial to resolve the factual issues, we have jurisdiction to consider this appeal. But in order to ensure consistency with the procedures required by 9 U.S.C. § 4, we vacate the district court’s order and remand for further proceedings.”Background:Bill Hansen received an automated text message fromLowerMyBills.com.

kable manifestation of the parties’ intention to delegate arbitrability questions to an arbitrator in the first instance? (The current consensus in the federal Circuit Courts is that it is, placing in doubt whether SCOTUS needs to address this question other than in dictum.)2. Regarding delegation, if so, is such a delegation to an arbitrator exclusive, so as to divest the court of its presumptive authority to decide such issues when presented to it in first instance? Prof. Bermann maintains (the “Bermann Objection”) that the incorporation by reference of an institutional competence-competence rule does not delegate arbitrability issues exclusively to an arbitrator, but merely authorizes an arbitrator to rule on such issues when presented to him/her in the first instance. That is, Prof. Bermann argues that such an institutional rule does not divest the court of its authority to decide arbitrability issues that are presented to it in the first instance in accordance with the FAA (e.g., 9 U.S.C. § 4, petition to compel arbitration).3. Regarding delegation, what effect on the analysis does a subject matter “carve-out” in the relevant arbitration agreement have? A&W had brought suit against HS asserting an antitrust claim, concerning which A&W sought injunctive relief among other things. But actions seeking injunctive relief were expressly carved out of the relevant arbitration agreement (although Henry Schein was not a party to that agreement).3.1 Does the express carve-out from arbitration of a class of claims preempt the delegation of arbitrability questions concerning such claims?

In an arbitration dispute brought in the Western District of Wisconsin over the inability of the parties to choose an arbitrator for reinsurance disputes, the court found that venue was improper and transferred the case to the Southern District of New York under 28 U.S.C. § 1404. Petitioners sought an order compelling the respondent to comply with the method for choosing arbitrators provided for in the arbitration agreement and respondent counterclaimed asking the court to choose an arbitrator since the parties could not agree on one. Respondent also argued that venue was not proper as to petitioners claims because the arbitration agreements included an agreement to hold arbitrations in New York, but argued at the same time that it should be allowed to assert its counterclaim in Wisconsin because it related to appointing an umpire under 9 U.S.C. § 5, which does not include a venue limitation, rather than enforcing an arbitration agreement under 9 U.S.C. §4, which includes a venue limitation. The court determined that the transfer of all claims was appropriate because the Seventh Circuit held in Haber v. Biomet that § 4 requires district courts to enforce forum selection clauses in arbitration agreements and that the counterclaim could not be tried separately from petitioners’ claims because the claims were too intertwined.

The important thing to remember is that you must take prompt action in order to protect the right to the confidential arbitration you bargained for in the first place. 9 U.S.C. Section 4. N.Y. C.P.L.R. 7503(a).