Litigation

Waiver or breach of arbitration agreement must be resolved by court, Ninth Circuit holds

By Lori Bauman

Once parties have entered into an arbitration agreement, the courts have a limited role in adjudicating a subsequent dispute.  While a court may generally decide whether a valid agreement to arbitrate exists, most other issues must be resolved by the arbitrator.

In a case decided this week by the Ninth Circuit Court of Appeals, the court held that a claim that an arbitration agreement has been breached or waived goes to the validity of the agreement and must be resolved by the court and not the arbitrator.  In Cox v. Ocean View Hotel Corp., an individual filed a discrimination lawsuit against his former employer.  In response to the former employer's motion to enforce an arbitration agreement, the plaintiff claimed that the employer, by earlier refusing to arbitrate, had both breached and waived the agreement.  Judge A. Wallace Tashima, writing for the majority of the Ninth Circuit panel, held that plaintiff's claims went to the validity of the agreement and were properly decided by the district court.   

Judge Diarmuid O'Scannlain dissented regarding the scope of the court's role.  In this case, he wrote, the claim of breach and waiver went to enforceability and not validity, and should have been decided by the arbitrator and not the court.

Full post as published by Northwest Business Litigation Blog on July 25, 2008 (boomark / email).