Despite the fact that a matter was first filed in an Arizona court, a North Carolina federal district court has refused to transfer a dispute over the enforcement of an employment-related arbitration agreement to Arizona, holding that Ninth Circuit precedent could deny the parties' bargained-for contractual remedy through arbitration.

In Jefferson Pilot Life Ins. Co. v. Griffin, No. 1:07CV0096, 2008 WL 2485598 (M.D.N.C. June 16, 2008), an employment-related dispute arose between Griffin and Jefferson Pilot. After his dismissal, Griffin filed suit in an Arizona state court. Jefferson Pilot removed the matter to an Arizona federal district court and moved to dismiss the matter due to the existence of a valid arbitration agreement between the parties that required arbitration of the claim in North Carolina.

Before the Arizona court ruled on the motion to dismiss, Jefferson Pilot sought a declaratory judgment from a North Carolina federal court that the arbitration agreement between the parties was valid and enforceable and that the dispute be resolved by binding arbitration in North Carolina. In response, Griffin filed a motion with the North Carolina court to dismiss, stay, or transfer venue to Arizona. Before the North Carolina court rendered a decision on the parties' motions, the Arizona court temporarily stayed the proceedings there pending the determination of the North Carolina motions.

After noting that none of the traditional balance of convenience factors favored one forum over another, the Court noted that the usual "first-filed" rule mandating the matter proceed in the forum where the first action was outweighed by other factors here. See Ellicott Machine Corp. v. Modern Welding Co., 502 F.2d 178, 180 n.2 (4th Cir. 1974) (recognizing the "first-filed" rule in the Fourth Circuit).

First, the Court noted the Arizona court's deference pending the Court's resolution of the parties' motions before it. In light of that deference, the Court found that transferring the matter back to Arizona would not serve the goals of judicial economy and effective disposition.

Second, the Court cited Fourth Circuit precedent requiring it to apply a forum selection clause in the arbitration agreement as the clause existed. See Elox Corp. v. Colt Indus., Inc., No. 90-2456, 1991 WL 263127 (4th Cir. 1992). The Court found that there was considerable doubt as to whether the Arizona court could order the appropriate relief in light of the forum selection clause should the agreement be enforced, because Ninth Circuit precedent had held that federal courts are statutorily proscribed from ordering arbitration outside its own federal district. See Continental Grain Co. v. Dant & Russell, 118 F.2d 967, 969 (9th Cir. 1941). Therefore, to preserve Jefferson Pilot's access to appropriate relief should the agreement be found valid, the Court retained jurisdiction over the matter to the exclusion of the Arizona court.

Ultimately, the Court granted Jefferson Pilot's motion for declaratory judgment, finding that the arbitration agreement clearly encompassed all of Griffin's claims, as all claims related to his employment at Jefferson Pilot.