When parties dispute whether a binding arbitration agreement exists, a court typically resolves these disputes using a summary judgment-like procedure. Courts sometimes permit limited discovery regarding the making of the arbitration agreement, and when deciding whether there is an agreement, courts may rely on evidence submitted in support and in opposition of the motion to compel, such as affidavits, deposition transcripts, and exhibits such as the purported agreement and other related documents.
If the making of an arbitration agreement is “in issue,” section 4 of the FAA provides for a jury trial on this very focused, narrow issue of the making of the arbitration agreement. Over the years, I have seen courts order a trial regarding the making of the arbitration agreement pursuant to section 4, and I have seen these types of court orders regarding a trial from time to time. But in the majority of cases, a judge decides whether there is a binding agreement without a trial occurring.
I have not conducted an empirical analysis, and the following is based on just an informal recollection of cases I have read over the last few years (and I try to read every FAA case): I have noticed a possible, slight uptick in the number of trials regarding the making of an arbitration agreement pursuant to section 4. Again, I have not formally kept a record of all such trials, but my hypothesis is that in the current environment where there is more bipartisan support questioning the widespread use of arbitration clauses, some courts may be taking a closer look at arbitration agreements and conducting more trials on the validity of an arbitration clause. Also, I’ve noticed opinions where courts compel arbitration, but at the same time, the court expresses serious reservations about compelling arbitration. I believe such expressions of reservations are more common today than a few years ago.
For example, in a recent employment FLSA case, the Fifth Circuit reversed a district court’s order compelling arbitration, and the Fifth Circuit found that the employee was entitled to a jury trial pursuant to section 4 of the FAA. The employer had submitted evidence that it mailed a copy of the arbitration agreement to the employee’s house, and the employee submitted an affidavit denying receipt of this mail. The employee also submitted evidence that she complained to her employer about problems receiving mail at her house. Although the district court compelled arbitration, the Fifth Circuit held the employee was entitled to a jury trial on the making of the arbitration agreement. The decision is Trammell v. Accentcare, Inc., No. 18-50872 (5th Cir. June 7, 2019) (click here for a copy of the decision). Also, in another recent district court case, the court issued a decision reflecting that a trial on the making of the agreement had occurred, with witness testimony and a live demonstration in court regarding the formation of an online arbitration agreement. Although this particular case involved a bench trial, section 4 of the FAA generally entitles the parties to a jury trial. The district court case is Moltry v. Tony Serra Ford, Inc., No. 2:18-cv-00394-RDP (N.D. Ala. June 6, 2019) (click here for a copy of the decision). In sum, I have not conducted an empirical analysis, but I suspect that over the last year or two, there may have been an increase in trials on the making of an arbitration agreement.