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Standard “broad language,” such as “arising out of,” is not required for an arbitration provision to be construed as broad in scope, according to a federal district court in Texas.
In Innerwireless, Inc. v. Johnson Controls, Inc., Civ. A. No. 3:07-CV-312-M, 2007 WL 2428591 (N.D. Tex. Aug. 27, 2007), Johnson entered into an agreement with Innerwireless to market Innerwireless’s products to Johnson’s customers. The agreement included a provision stating that “all disputes” were to be subject to arbitration. Innerwireless later suspected that Johnson was marketing competing products in violation of the agreement.
Johnson filed a demand for arbitration, while Innerwireless filed a lawsuit under various tort and contract theories. Johnson moved to have the suit dismissed or stayed, maintaining that all claims were subject to arbitration. Innerwireless argued that the scope of the agreement did not encompass all of the claims, because the language of the provision was not sufficiently broad.
The Court held that the arbitration provision was broad, and therefore encompassed all the claims brought by Innerwireless. The Court rejected the argument that the arbitration provision was to be construed as narrow in scope because it did not use “standard broad language,” such as “relate to,” “are connected with,” or “arising out of,” and stated “there is no requirement that a clause include any of those phrases to be interpreted as broad.”
The Court interpreted the “all disputes” language as equivalent to “any dispute,” especially since the provision did not employ any limiting language. Combined with the heavy presumption in favor of arbitration, the Court held that language sufficient to constitute a broad arbitration provision. Therefore, all claims were held as within the scope of the arbitration agreement, since broad provisions embrace all disputes bearing a significant relationship to the contract, instead of those just arising under the contract.
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