Plaintiff sued his former employer in a putative class action alleging that a payroll practice violated Pennsylvania law. The defendant filed a motion to compel arbitration and a separate motion to dismiss. The district court opted to “delay ruling” on the motion to compel arbitration and proceeded to deny the motion to dismiss. The former employer appealed. The Court of Appeal found that the district court erred in not ruling on the motion to compel arbitration first, vacated, and remanded for the district court to consider the motion to compel arbitration in the first instance.
The Court held that the Federal Arbitration Act requires that the gateway issue of arbitrability must be addressed first. Therefore, once a motion to compel arbitration is filed the court must refrain from further action until it determines arbitrability. The court noted that there is an exception if the record is unclear as to the agreement to arbitrate, in which case limited discovery should be permitted limited to the issue of arbitrability. Since the plaintiff did not deny receipt of and consent to the agreement to arbitrate, and did not seek discovery with respect to arbitrability, the district court should have proceeded to consider the motion to compel arbitration before considering the pending motion to dismiss. , No. 16-3725 (3rd Cir. June 13, 2017).