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A party who failed to pay arbitration filing fees is in default of the arbitration proceedings, and the FAA does not empower courts to grant that party's motion to compel arbitration, a federal court in Pennsylvania held.
In Stowell v. Toll Brothers, No. 06-cv-2103, 2007 WL 30316 (E.D. Penn. Jan. 4, 2007), Stowell brought sexual discrimination and other claims against her former employer, Toll Brothers.
Stowell's employment contract contained an arbitration agreement. However, after the dispute was filed with the American Arbitration Association (AAA), Toll Brothers failed to pay the filing fee. AAA subsequently declined to administer the arbitration.
As a result, Stowell filed an action in court, and Toll Brothers petitioned the Court to compel arbitration. However, the Court refused to do so, holding that Toll Brothers waived its right to arbitrate when it failed to pay the arbitration filing fee.
Under the Federal Arbitration Act (FAA), a district court may stay an action pending arbitration, "providing the applicant for the stay is not in default in proceeding with such arbitration." 9 U.S.C. § 3. Additionally, district courts may issue an order compelling arbitration. 9 U.S.C. § 4.
Since Toll Brothers defaulted by failing to pay the arbitration failing fee, the Court reasoned, it could not stay the proceeding under § 3 of the FAA or compel arbitration under § 4.
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