Suppose a plaintiff files a lawsuit against a defendant in federal court, and further suppose there is arguably an arbitration agreement binding the parties and precluding such a lawsuit. Procedurally, if the defendant desires to seek enforcement of the arbitration agreement, how should a defendant respond? Defendants in this situation have used a variety of procedural motions in seeking enforcement of an arbitration agreement, such as a 12b6 motion to dismiss for failure to state a claim, a 12b1 motion to dismiss for lack of subject matter jurisdiction, Rule 56 motion for summary judgment, FAA section 3 motion to stay, and/or FAA section 4 motion to compel.
Last week, a federal court in Florida compelled arbitration in a routine employment dispute involving the failure to pay overtime wages. Maldonado v. Mattress Firm, Inc., No. 8:13–cv–292–T–33AEP (M.D. Fla. Apr. 24, 2013). Fundamentally, the court should have never enforced the arbitration agreement in this context because, as explained in my book, the FAA was never intended to apply to employment disputes. Putting aside this fundamental problem, the defendants claimed to rely on FRCP 12b1 and 12b6 to dismiss the case and enforce the arbitration agreement, and this procedural choice was interesting.
It seems that 12b1 and 12b6 motions were never intended to cover this fact pattern, where the defendant seeks to enforce an arbitration agreement. Also, it seems that a dismissal under 12b1 would close a case for lack of subject matter jurisdiction, and if the parties want to seek the same court’s assistance in the future in connection with the arbitration proceeding or arbitration award, the parties will have to start a new court case and demonstrate subject matter jurisdiction when commencing the new case. Also, relying on 12b1, 12b6, and Rule 56 seems problematic and unnecessarily confusing because of the potential for the court or the opposing party to drag in “baggage” or procedural standards associated with these particular rules. (Imagine trying to apply Twiqbal’s plausibility standard under 12b6 to this fact pattern of compelling arbitration; the 12b6 standard makes little sense in this context.) It seems that a better procedural option would be to use FAA section 3 to stay the action pending arbitration. (The FAA “purist” in me also believes that FAA section 4 is inapplicable to the fact pattern in this case because section 4 arguably was designed for stand-alone petitions where no case was pending in that particular court where the petition is filed.)