Outsourcing Justice

arbitration agreements involving multiple parties

Town & Country Salida, Inc. v. Dealer Computer Services, Inc., No.12-1850 (6th Cir. Apr. 9, 2013)

In an unpublished decision, the Sixth Circuit reviewed a district court’s order partially vacating an arbitration award involving a particular car dealership.  This case involved a computer software provider that entered into a relationship to provide computer services to certain car dealerships owned by one person.  The district court vacated an arbitration award with respect to one dealership because the corporation that operated the particular dealership was not a party to the arbitration agreement.  The Sixth Circuit affirmed.

This case shows a potential pitfall when drafting an arbitration clause in a complex corporate context.  When entering into a relationship involving several related corporate entities, careful drafting of an arbitration clause is paramount to make sure all corporate entities are bound by the agreement.

This case is also interesting because the district court debated the appropriateness of a partial vacatur under the Federal Arbitration Act, an issue the Sixth Circuit did not address.