Jasper Contractors, Inc. v. E-Claim.com, LLC
94 So. 3d 123
La. Ct. App.2012Background
- Jasper Contractors sues E-Claim and Edgewebhosting for fraud in the inducement of a contract for software hosting and data management after data loss and misrepresentation about data storage location and backups.
- The contract provides Louisiana law, AAA Commercial Arbitration Rules, and FAA as applicable to arbitration, with a broad arbitration clause covering all disputes arising from the agreement.
- Jasper alleged misrepresentations by E-Claim, including that data would be stored on Louisiana-located equipment and backed up securely, which allegedly caused significant client harm.
- The district court overruled E-Claim’s exception of prematurity, ruling that validity of the contract should first be resolved before arbitration.
- On writ, the supreme court remanded for briefing and full opinion; on remand, the issue is whether a court or arbitrator should decide the contract’s validity and arbitrability.
- The court ultimately holds that the arbitration provisions govern and the matter should be stayed pending arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides the validity and arbitrability of the arbitration clause | Jasper argues the court should decide fraud/validity issues. | E-Claim argues arbitrator should decide such issues per the contract and AAA rules. | Arbitrator decides arbitrability and validity under AAA rules; court to stay proceedings pending arbitration. |
| Whether the contract’s damages limitations affect arbitrability | Jasper contends the contract’s adhesionary limits are voidable and subject to arbitration. | E-Claim asserts the clause and damages limits are within the arbitration scope. | Arbitration governs; damages limitations do not defeat arbitrability; stay upheld. |
| Whether federal arbitration law preempts state law on arbitrability | Jasper argues state law governs arbitrability. | E-Claim relies on FAA as controlling; AAA rules apply. | FAA governs; arbitration should proceed; arbitrator decides arbitrability under incorporated rules. |
Key Cases Cited
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. 2006) (arbitration clause severable; challenges to contract as a whole go to arbitrator; clause challenges go to court)
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (U.S. 1967) (fraud in inducement generally reserved for arbitrators; severability of arbitration clause)
- George Engine Co., Inc. v. Southern Shipbuilding Corp., 350 So.2d 881 (La. 1977) (Louisiana case on arbitration vs contract validity; state law context for arbit rat with arbitration clause)
- Aguillard v. Auction Management Corp., 908 So.2d 1 (La. 2005) (adopts federal arbitration law guidance; strong presumption in favor of arbitration)
- Three Valleys Municipal Water Dist. v. E.F. Hutton & Co., 925 F.2d 1136 (9th Cir. 1991) (gateway disputes about making of arbitration agreement; arbitral authority to address them)
- Chastain v. Robinson-Humphrey Co., 957 F.2d 851 (11th Cir. 1992) (courts decide whether party signed arbitration; threshold issues before arbitration)
- Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University, 489 U.S. 468 (U.S. 1989) (FAA requires enforcement of arbitration agreements; severability principle)
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (U.S. 1985) (arbitration of antitrust disputes; FAA applicability)