June 23, 2015 Practice Points

Court Refuses to Compel Mediation under the FAA

By Jonah Orlofsky

In Trujillo v. Gomez, 2015 WL 1757870 (S.D.Cal. 2015), the defendant moved to dismiss or stay the lawsuit based on the plaintiff’s failure to comply with a contractual requirement that the parties first mediate, and then arbitrate, any disputes. The defendant argued that the requirement to both mediate and arbitrate was enforceable under the Federal Arbitration Act. The court agreed that under the FAA the plaintiff was required to arbitrate, but it did not order the parties to mediation. The court held that the remedies of the FAA apply only to arbitration, not mediation.

There is a limitation on the effect of this ruling, however, because the defendant relied solely upon the FAA as authority for ordering mediation. No argument was made that the court should require mediation under common law contract principles. This distinction is important because the court relied on a prior Eleventh Circuit decision, Advanced Bodycare Solutions, LLC v. Thione Int’l, Inc., 524 F.3d 1235, 1241 (11th Cir. 2008), which similarly refused to order mediation under the FAA, but noted this limitation on the scope of its ruling:

Finally, we emphasize that we do not hold that stays in aid of mediation are per se impermissible. To the contrary, district courts have inherent, discretionary authority to issue stays in many circumstances, and granting a stay to permit mediation (or to require it) will often be appropriate. We merely hold that the mandatory remedies of the FAA may not be invoked to compel mediation.

Courts in prior cases have not hesitated to enforce contractual mediation clauses under basic contract law principles. See, e.g., A. Raymond Tinnerman Mfg., Inc. v. Tecstar Mfg. Co., 2012 WL 1191617 (E.D. Wisc. 2012).

Keywords: alternative dispute resolution, adr, litigation, mediation, stay, FAA, contract principles, discretion

Jonah Orlofsky is the founder of The Law Offices of Jonah Orlofsky in Chicago, Illinois.

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