Wright v. GGNSC Holdings LLC
2011 SD 95
| S.D. | 2011Background
- Arbitration agreements required disputes to be resolved by binding arbitration under the National Arbitration Forum Code of Procedure (NAF Code).
- The NAF Code allegedly governed the arbitration, with a footnote directing readers to obtain the Code from the NAF.
- The NAF became unavailable to administer its Code after the parties signed the agreement.
- The Wrights filed a wrongful death action in circuit court; GGNSC moved to compel arbitration.
- The circuit court denied arbitration, holding that Section 5 of the FAA could not appoint a substitute arbitrator because the NAF Code was integral.
- The supreme court reversed, holding that Section 5 applies and a substitute arbitrator must be appointed where the designated forum becomes unavailable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FAA Section 5 applies when the designated forum is unavailable | Wright: NAF Code integral, so Section 5 not applicable | GGNSC: Section 5 applies to appoint substitute arbitrator | Section 5 applies; substitute arbitrator must be appointed |
| Whether designation of the NAF Code was integral to the arbitration agreement | Wright: NAF Code integral to arbitration | GGNSC: NAF Code not integral | NAF Code is ancillary, not integral; substitute arbitrator permitted |
| Whether substitute arbitrator can apply NAF rules and same substantive law | Wright: substitute cannot apply NAF rules | GGNSC: substitute can apply substantive law | Substitute arbitrator can apply the same substantive law and appropriate procedural rules |
Key Cases Cited
- Carr v. Gateway, Inc., 241 Ill. 2d 15 (Ill. 2011) (integral designation of arbitration forum vs. administrator matters to Section 5)
- KPMG LLP v. Cocchi, 565 U.S. _ (Sup. Ct. 2011) (strong federal policy favoring arbitration; resolves arbitrability in favor of arbitration)
- Moses H. Cone Mem’l Hosp. v. Mercury Const. Corp., 460 U.S. 1 (U.S. 1983) (federal policy in favor of arbitral dispute resolution; doubts resolved in favor of arbitration)
- Stewart v. GGNSC- Canonsburg, L.P., 9 A.3d 215 (Pa. Super. Ct. 2010) (designating arbitration forum vs. administrator; integral vs ancillary analysis)
- Salomon Inc. Shareholders’ Derivative Litig. v., 68 F.3d 554 (2d Cir. 1995) (example of forum designation affecting arbitration)