The Ninth Circuit Court of Appeals held that where an employee makes an informal request for arbitration that is not in accord with the parties' arbitration agreement, an employer does not repudiate the arbitration agreement nor waive its right to arbitration by responding that the dispute is not yet ripe for arbitration.

In Cox v. Ocean View Hotel Corp., No. 06-15903, 2008 WL 2813057 (9th Cir. July 23, 2008), Cox signed an employment contract with Ocean View (OV) that contained an arbitration agreement. The arbitration agreement incorporated the American Arbitration Association's (AAA's) arbitration Rules.

A dispute arose between Cox and his supervisor, Jutz. Cox wrote a letter to Jutz's supervisor, Guinn, and Cox called the letter a "request to enter into arbitration." At the end of the letter, Cox requested that Guinn "provide the date and time of the arbitration hearing and any questions" to his attorney.

Guinn responded with a letter that said "if you continue to pursue the activities which Jutz has complained of, you run the risk of being terminated. At that point, assuming you then consider it a wrongful termination, arbitration may be in order." Cox was subsequently terminated, so he sued OV. OV moved to compel arbitration.

The trial court denied the motion to compel, holding that Cox properly initiated arbitration, but OV breached the arbitration agreement and waived its right to arbitration by refusing to arbitrate. OV appealed.

On appeal, the Court reversed the trial court's judgment and compelled arbitration. The Court determined that it was proper to consider the question of arbitrability because Cox did not challenge the contract as a whole, but rather he argued that he was not bound by the arbitration agreement itself because OV revoked the agreement through its breach.

Cox argued that OV repudiated the arbitration agreement because it refused to arbitrate when he "demanded" arbitration, thus breaching the agreement. However, the Court held that before it could reach the repudiation question, Cox first had to establish that he properly initiated arbitration.

The Court held that Cox did not properly initiate arbitration, so OV could not have repudiated the arbitration agreement or waived its right to arbitration through its "refusal" to arbitrate. The Court held that the arbitration agreement clearly incorporated the AAA Rules, which required Cox to file a written demand with the AAA and provide a copy to OV. Cox failed to comply with those requirements, so the Court held that Cox did not properly initiate arbitration.

Furthermore, the Court held that OV did not waive its right to arbitration because "it did not resort to litigation itself and acted to invoke arbitration immediately upon learning that Cox had instituted litigation." Consequently, the Court compelled arbitration of the dispute.