The Supreme Court’s unanimous summary reversal in Nitro-Lift last week sends a strong message that state courts must adhere to the Federal Arbitration Act—a legal principle that is important to businesses seeking to enforce their contractual arbitration rights when plaintiffs file non-removable class actions in state court. Just as importantly, it confirms that the Court is more than prepared to step in when state courts defy its clearly controlling precedents.
But some state courts still may not have gotten the message. Just three days after Nitro-Lift was handed down, the Court of Appeals of Washington issued a puzzling published decision in Weidert v. Hanson (pdf). A Washington appellate court upheld a trial court’s decision not to enforce an arbitration provision in a federal crop insurance contract between the plaintiff and one defendant (the insurer) on the ground that other claims were being asserted against a second defendant not subject to the arbitration provision. According to the state court, “ordering a portion of the proceedings to be arbitrated and the other portion tried in the superior court” would “result in discouraged piecemeal litigation.”
The problem with that rationale is that it simply isn’t a valid basis under the FAA for refusing to enforce an arbitration provision. In fact, it’s been specifically rejected by the U.S. Supreme Court on at least four separate occasions—including as recently as last Term in KPMG LLP v. Cocchi (discussed here). The Supreme Court couldn’t have been clearer: “If a dispute presents multiple claims, some arbitrable and some not, the former must be sent to arbitration even if this will lead to piecemeal litigation.”
We’ll be interested to see what happens next if the crop insurer in Weidert decides to seek further review.
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