Arthur Andersen, LLP, et al. v. Carlisle, et al.
Issues
Whether Section 3 of the Federal Arbitration Act entitles parties who are not signatories to an arbitration agreement to receive a stay of trial for arbitration, and whether Section 16 of the Act entitles non-signatories to an immediate appeal if the court refuses them a Section 3 stay.
Section 3 of the Federal Arbitration Act ("FAA") allows parties who have agreed to arbitrate to move for a stay of trial proceedings until they have had a chance to attempt arbitration. In addition, Section 16 of the FAA allows an immediate appeal of judgments denying stay under such circumstances. At issue in this case is whether these sections of the FAA extend to non-signing parties affected by an arbitration agreement. Petitioner Arthur Andersen advised Respondent Wayne Carlisle on a business transaction. As a result of this transaction, Carlisle eventually signed a contract, to which Andersen was a not party, that contained an arbitration agreement. After a dispute developed, Andersen sought a stay in the litigation proceedings in order to arbitrate with Carlisle, despite the fact that Andersen had not signed the arbitration agreement. After Andersen appealed the initial denial of its request for a stay, the United States Court of Appeals for the Sixth Circuit held that it did not have jurisdiction to hear Andersen's appeal because Sections 3 and 16 of the FAA only apply to signatories of arbitration agreements. The Supreme Court's decision in this case may clarify the scope of the FAA's application to non-signatories, including the availability of appellate review of denials of stays.
Questions as Framed for the Court by the Parties
(1) Whether Section 16(a)(l)(A) of the FAA provides appellate jurisdiction over an appeal from an order denying an application made under Section 3 to stay claims involving non-signatories to the arbitration agreement.
(2) Whether Section 3 of the FAA allows a district court to stay claims against non-signatories to an arbitration agreement when the non-signatories can otherwise enforce the arbitration agreement under principles of contract and agency law, including equitable estoppel.
Arbitration is a form of alternative dispute resolution, outside litigation proceedings, in which parties submit a dispute to an impartial decision-maker for a binding decision. See American Arbitration Association, Arbitration & Mediation.