Wisconsin's Supreme Court Creates More Power for the Arbitrator

27 May 2015 Wisconsin Appellate Law Blog

Most commercial litigators know that a circuit court will enforce an arbitration agreement as long as a given dispute falls within the agreement’s scope. What is or is not within the scope of an agreement, however, has not always been clear. For example, could a court consider whether an arbitration request had been timely filed, or whether it was barred by estoppel or laches, or are such issues to be decided in arbitration?

The Wisconsin Supreme Court recently decided this issue in favor of arbitration in First Weber Group, Inc. v. Synergy Real Estate Group, LLC, a unanimous decision written by Justice Ziegler. 2015 WI 34.

The facts, in brief, are as follows. In 2008, First Weber paid a commission to one of its real-estate brokers, James Graham. First Weber later decided that the commission had been paid in error and tried to recoup the funds. Graham refused to pay, and the two sides agreed to arbitrate the dispute, as required by a realtor-industry code. Graham lost, but still refused to pay. First Weber responded by filing an action in circuit court to confirm the award, which the court did, though it refused to give First Weber its costs or attorneys’ fees.

First Weber then filed a second arbitration request, asking the arbitrators to decide whether the realtor-industry code required Graham to pay the costs and fees it incurred in confirming the first award. Graham refused to attend, so First Weber filed a petition in the circuit court to compel him to do so. The circuit court denied the petition, finding that First Weber’s arbitration request was untimely. The court of appeals affirmed.

The Supreme Court reversed. That court concluded that both lower courts had erred in deciding the issue of timeliness in the first instance, because timeliness is an issue of procedural arbitrability to be decided by arbitrators, not courts. The court specifically rejected the position taken by the court of appeals—namely, that procedural matters, such as timeliness, can be decided judicially, even if they are found within the agreement to arbitrate.

First Weber thus creates a hard-and-fast rule under Wisconsin law (and one that is consistent with its federal counterpart): In an action to compel arbitration, a court may consider only whether there is any reasonable construction of the arbitration agreement that could cover the subject matter of the dispute. If the dispute is within the agreement’s scope, any defenses to arbitration, such as untimeliness, estoppel, or waiver, are left to the arbitrators.

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