The Third Circuit Court of Appeals ruled that the parties must arbitrate, not litigate, product liability claims against the defendant even though the arbitration forum in defendants terms and conditions was no longer available. In Kahn v. Dell, Inc., 669 F.3d. 350 (Third Circuit 2012) plaintiff in a class action purchased a computer online through defendants website. To complete the purchase, plaintiff was required to click on a box stating “I agree to Dell’s terms and conditions of sale.” Among the terms and conditions of sale was one requiring binding arbitration administered by the National Arbitration Forum (NAF). At the time suit was filed the arbitration forum was unavailable and plaintiff contended that the arbitration provision was unenforceable because it provided for the parties to arbitrate exclusively before a forum that was unavailable when plaintiff commenced suit. The district court agreed with that contention and also refused to appoint a substitute arbitrator, finding it could not compel the parties to submit to an arbitral forum to which they had not agreed.
The Court of Appeals reversed and held that the district court’s contrary conclusion was at odds with the fundamental presumption in favor of arbitration. The court said:
“Although the courts are divided on the issue we conclude that the “liberal federal policy in favor of arbitration” counsels us to favor the Brown line of cases. The language relied upon by Kahn is at best ambiguous as to whether the parties have intended to have their disputes arbitrated in the event that in NAF (the arbitration forum named in the terms and conditions) was unavailable for any reason. Because of the ambiguity, it is not clear whether the designation of NAF is ancillary or is as important a consideration as to the agreement to arbitrate itself (see Brown 2011 F.3d. at 1222). Therefore we must resolve this ambiguity in favor of arbitration (citations omitted).”