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Jurisdiction of Superior Court In Face of Binding Arbitration Clause in Contract

Posted by Ted A. Schmidt | Sep 07, 2022 | 0 Comments

Gray v. Apple, No. 1 CA-CV 21-0533 (App. Div. I, September 1, 2022) (J. Brown)

Plaintiff sued her former employer for wrongful termination and violation of a number of federal statutes in New York where the claim was dismissed for unknown reasons. She refiled in Maricopa County Superior Court. The trial court dismissed the lawsuit under rule 12(b)(6) of the Arizona Rules of Civil Procedure—failure to state a claim upon which relief can be granted and on the basis of res judicata.  Plaintiff appeals claiming she has a right to binding arbitration under her employment contract.  The defense claimed she waived that right by bringing this lawsuit.  The Arizona Court of Appeals vacates the trial court decision and remands the case.

When a contract is alleged to have a binding arbitration clause, the Arizona Superior Court must first decide if that clause controls the dispute. If it decides it does not, it may then decide the case on the merits. If it decides the arbitration clause does control the dispute it has no jurisdiction to decide the case on the merits. 

This case is sent back to the trial court to determine whether binding arbitration is required and only if it determines it is not, can it decide the case on the merits.

About the Author

Ted A. Schmidt

Ted's early career as a trial attorney began on the other side of the fence, in the offices of a major insurance defense firm. It was there that Ted acquired the experience, the skills and the special insight into defense strategy that have served him so well in the field of personal injury law. Notable among his successful verdicts was the landmark Sparks vs. Republic National Life Insurance Company case, a $4.5 million award to Ted's client. To this day, it is the defining case for insurance bad faith, and yet it is only one of several other multi-million dollar jury judgments won by Ted during his career. He is certified by the State Bar of Arizona as a specialist in "wrongful death and bodily injury litigation".


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