In granting a motion to compel the continuation of arbitration, a federal court in New York held that where questions of arbitrability are expressly designated to the arbitrator through the incorporation of an arbitration administrator's rules, the arbitrator has the power to decide whether a party's claims are precluded because of a previous settlement.

In Emilio v. Sprint Spectrum L.P., No. 08 CV 7147(BSJ), 2008 WL 4865050 (S.D. N.Y. Nov. 6, 2008), Emilio, representing a class of plaintiffs similarly situated, was a part of an ongoing arbitration against Sprint at JAMS for over three years. After Sprint settled a separate nationwide class action, known as the "Benny/Lundberg" settlement, Sprint sought to apply the Benny/Lundberg settlement release to Emilio's arbitration claims.

The arbitrator, Judge Roberts, held that the Benny/Lundberg settlement did not satisfy the constitutional requirement of "adequacy of representation." Emilio's action was based on Sprint's allegedly deceptive practices involving New York excise tax charges, while the Benny/Lundberg settlement had released claims involving certain surcharges and other billing practices by Sprint. Despite Judge Roberts's ruling in arbitration, Sprint thereafter refused to participate in the arbitration any further, and also sought relief from a Kansas state court to enjoin Emilio from continuing to arbitrate his claims. Consequently, Emilio moved to compel Sprint to continue participation in the arbitration.

The Court first noted that the arbitration agreement governing Emilio's and Sprint's relationship expressly incorporated the JAMS rules. Next, the Court noted that the JAMS rules grant the arbitrator the authority to decide all issues and disputes regarding the arbitration and the claims arbitrated, including disputes about arbitrability. The Court held that nothing in the arbitration agreement prevented the arbitrator from deciding the effect of the Benny/Lundberg settlement on the parties' dispute; indeed, Judge Roberts had already decided that issue after both parties argued their positions on it.

The Court relied on precedent dealing with issue-preclusion in making its determination that the arbitrator had the authority to determine the claim-preclusion issue. Thus, Sprint attempted to distinguish the precedent because it dealt with issue-preclusion and not claim-preclusion. The Court found the distinction unpersuasive and irrelevant, as "the relevant comparison is that both cases involve the interpretation of a judgment's preclusive effect."

Finally, the Court held that Sprint's actions in refusing to arbitrate and its actions in Kansas state court constituted a "failure, neglect, or refusal to arbitrate" under Section 4 of the Federal Arbitration Act. The Court held that Sprint had essentially asked the Kansas state court to review and overturn Judge Roberts's decision. Accordingly, the Court enjoined Sprint from proceeding in Kansas state court and compelled Sprint to continue its arbitration with Emilio.