Arizona Court of Appeals Division One, holds that when there is a valid arbitration agreement between parties, questions of whether claims are precluded must be decided by the arbitrator.

An employee signed a “Mutual Agreement for Dispute Resolution” that provided for mutually binding arbitration governed by the Federal Arbitration Act (“FAA”). When the employment relationship soured and after the woman resigned, the woman sued the company in various New York courts. A year later, she filed a similar suit in Maricopa County Superior Court.

In response to the Arizona action, the company filed a combined motion to compel arbitration and to dismiss the action. The company argued it was seeking to compel arbitration on “cognizable claims,” but, because the woman’s claims were barred by claim preclusion, there were no cognizable claims to arbitrate. So, the company argued, the only option was for the court to dismiss the woman’s claims with prejudice. The superior court agreed and dismissed the woman’s claims with prejudice. The woman appealed.

After rejecting arguments as to jurisdiction and waiver, the Arizona Court of Appeals vacated the superior court’s order. The superior court had dismissed the woman’s claims on the basis that they were not cognizable, and thus there was nothing to arbitrate. But, the Court explained, whether a claim was cognizable under the arbitration agreement was itself a matter for an arbitrator to decide. This likewise extended to a determination of whether claim preclusion or other preclusion doctrines applied. Consequently, the superior court had improperly usurped the role of the arbitrator when it determined there were no claims that qualified for arbitration. As such, the Court vacated the superior court’s order and remanded so that the superior court could order arbitration.

Judge Brown authored the opinion for the Court, joined by Judges Cruz and Thumma.

Posted by: Joshua J. Messer