Wednesday, March 26, 2008

Bales and Ireland on Federal Question Jurisdiction and the Federal Arbitration Act

Bales Ireland_jamie Rick Bales has been quite a busy camper putting out new scholarship. Today, we feature his new piece, co-authored with student Jamie Ireland, just posted on SSRN and forthcoming in the Colorado Law Review: Federal Question Jurisdiction and the Federal Arbitration Act.

Here's the abstract:

The Federal Arbitration Act gives signatories to an arbitration agreement the right to have that agreement specifically enforced. The FAA does not, however, confer federal subject matter jurisdiction. Absent federal jurisdiction, a party seeking enforcement under the FAA must sue in state court. State courts, however, are far more likely than federal courts to use state contract law doctrines to avoid enforcing arbitration agreements. This has led parties seeking enforcement to look for other ways into federal court.

Some federal courts have found jurisdiction over enforcement actions when the underlying dispute involves a federal question, such as when an employer is seeking to enforce an arbitration agreement against an employee who has sued for employment discrimination under Title VII. These courts reason that the text and history of the FAA require courts to "look through" the dispute about enforceability to the underlying dispute. Other courts, however, have concluded that such a "look through" is inconsistent with the text and history of the FAA and with the well-pleaded complaint rule.

Our article explains that the difficulty of choosing one approach over the other is exacerbated because the same interpretive tools can be marshaled in favor of each approach, and because the arguments made using each interpretive tool are not mutually exclusive. Our article argues that courts should adopt the "look through" approach.

Another very timely piece on an issue that the Supreme Court is now scheduled to hear oral argument on in the Fall in the case of Vaden v. Discover Bank.


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