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There are only four ways to avoid an arbitration agreement. You can prove: 1) it was never formed; 2) it was formed, but is invalid under state law; 3) the current dispute is outside the scope of it; or 4) the other party waived their right to arbitrate (through litigation conduct). Today’s post is about the third method. Because of the federal presumption in favor of arbitrability, which applies when courts are determining whether the parties’ dispute falls within the scope of the clause, it is not the most common way to evade an arbitration agreement. Yet, I collected four recent decisions in which courts find the parties’ dispute is not covered by their arbitration agreement.
In Anderson v. Deere & Co., 2018 WL 5262778 (Mont. Oct. 23, 2018), the Montana Supreme Court found that a fight between John Deere Company and the former owner of one of its dealerships was not arbitrable. The Dealer Agreement had an arbitration clause obligating the Dealer, and its guarantors, officers, and shareholders, to arbitrate “any dispute” “between Dealer and Company.” The plaintiff signed the Dealer Agreement as managing partner of the Dealer and as guarantor. Later, the plaintiff sold his interest in the Dealer and sued Deere for tortious interference. The trial court denied the motion to compel and the supreme court affirmed. It focused on the language saying arbitrable disputes were those “between Dealer and Company,” and found that because the plaintiff alleged defendant committed torts against him personally, not as part of “Dealer,” there was no obligation to arbitrate. One judge wrote a special concurrence, disagreeing with the majority’s finding on scope.Read original article