A federal court in West Virginia recently decided to abstain from hearing a petition to compel arbitration, and the case shows some potential pitfalls when trying to enforce an arbitration agreement. In EQT Corp. v. Toney, No. 2:13–cv–02552 (S.D.W.Va. Apr. 26, 2013), an employee filed an employment discrimination lawsuit against an employer in state court. The employer asked the state court to compel arbitration. However, the state court denied the employer’s request, and the state court further indicated it would revisit the issue of arbitration at a later stage in the proceeding. The employer then filed in federal court an independent petition to compel arbitration pursuant to FAA section 4. The federal court decided to abstain from hearing the petition to compel pursuant to the Colorado River doctrine because, in part, the parallel, ongoing state court proceeding could resolve the issue.
When a case is filed in state court in breach of an arbitration agreement, a party wishing to compel arbitration must carefully consider how and where to ask for enforcement of the arbitration agreement. There is a perception that certain federal courts may be more willing than state courts to compel arbitration, and a party seeking to compel arbitration should examine the applicable federal court to see the court’s prior track record in the enforcement of arbitration agreements. Also, when considering a federal forum, it is important to consider the federal court’s docket and how long the federal court is likely to take in considering a petition to compel arbitration. While a federal court is considering a stand-alone petition to compel, the state proceeding may continue. Also, continued litigation in the state court could give rise to waiver of arbitration arguments. Here, it seems that EQT was trying to get a second-bite at the apple by first asking the state court to compel arbitration and then asking the federal court to compel arbitration, and there is a risk of abstention by the federal court, as occurred in this case.