654 F.3d 838
9th Cir.
2011
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Background

  • Petitioners Sheer and Van Dusen, interstate truck drivers, were under ICOAs with Swift; they sued Swift and IEL in NY and later the case was transferred to the District of Arizona.
  • Defendants moved May 21, 2010 to compel arbitration under the ICOAs; Petitioners argued the ICOAs were exempt from arbitration under FAA Section 1.
  • The District Court declined to rule on Section 1 exemption, stating the employer/employee relationship issue should be decided by the arbitrator.
  • The District Court ordered arbitration, finding valid arbitration clauses and citing the scope of the arbitration agreement.
  • Petitioners sought mandamus relief arguing the exemption issue should be resolved before arbitration and that the court cannot compel arbitration if Section 1 applies.
  • Petitioners seek denial of mandamus relief and ask the Ninth Circuit to determine whether the exemption must be decided by the court before arbitration

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether the district court must determine the FAA Section 1 exemption before ordering arbitration. Sheer argues the exemption applies and should be decided by the court prior to arbitration. Swift argues the exemption issue is a “question of arbitrability” that can be delegated to an arbitrator. Exemption must be determined by the court before arbitration
Whether a District Court may compel arbitration under Section 4 when Section 1 exempts a contract from FAA coverage. Petitioners contend district court cannot compel if Section 1 exempts the contract. Defendants contend delegation to arbitrator is permissible and court can compel arbitration. District court may not compel arbitration under Section 4 if Section 1 exempts the contract from FAA
Whether the district court’s decision is clearly erroneous under the Bauman factors to warrant mandamus relief. Petitioners claim clear error given the Bernhardt/First Options framework. Defendants contend the decision fits within permissible interpretations and is not clearly erroneous. Not clearly erroneous; mandamus denied

Key Cases Cited

  • Ex parte Fahey, 332 U.S. 258 (1947) (drastic remedy; exceptional circumstances required for mandamus)
  • Bankers Life & Casualty Co. v. Holland, 346 U.S. 379 (1953) (mandamus requires a clear and indisputable entitlement)
  • Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) (arbitrability depends on what parties agreed; gateway issue neglected)
  • AT&T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643 (1986) (who decides arbitrability depends on agreement)
  • Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) (first question of arbitrability under FAA)
  • Bernhardt v. Polygraphic Co. of America, 350 U.S. 198 (1956) (Section 3 interpretation and relation of Sections 1–3)
  • Rent-A-Center, West, Inc. v. Jackson, 130 S. Ct. 2772 (2010) (courts may enforce delegations but not alter gateway issues)
  • Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (official reporter version of the same decision)
  • Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126 (2000) (addressed scope of arbitrability and punitive misgivings)
  • Hernandez v. Tanninen, 604 F.3d 1095 (9th Cir. 2010) (clear error standard in mandamus review)
  • Rent-A-Center, West, Inc. v. Jackson, 130 S. Ct. 2772 (2010) (emphasizes FAA framework for gateway issues)
  • Republic of Nicaragua v. Standard Fruit Co., 937 F.2d 469 (9th Cir. 1991) (arbitrability and threshold questions)
  • Simula, Inc. v. Autoliv, Inc., 175 F.3d 716 (9th Cir. 1999) (FAA policy favoring arbitration)
  • Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) (classic arbitrability framework)
  • U.S. Insulation, Inc. v. Hilro Constr. Co., Inc., 146 Ariz. 250 (Ct.App. 1985) (Arizona AAA/FAA-like framework; scope of judicial inquiry)
  • Harden v. Roadway Package Sys., Inc., 249 F.3d 1137 (9th Cir. 2001) (district court lacks authority when FAA exemptions apply)
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