Arbitration; Ending Forced Arbitration of Sexual Assault & Sexual Harassment Act (EFAA) applicability; 9 USC § 402(a); CompuCredit Corp v Greenwood; Transaction involving commerce; §§ 1 & 2; Citizens Bank v Alafabco, Inc; Bernhardt v Polygraphic Co

The court held that the trial court erred by applying the EFAA without first determining whether the underlying arbitration agreement involved a transaction affecting interstate commerce under the Federal Arbitration Act. Plaintiff alleged that defendant inappropriately touched her during medical treatment and sued him and his employer, alleging claims including battery and sexual battery. Defendant moved for summary disposition, relying on an arbitration agreement plaintiff signed when she began treatment. The trial court denied the motion after concluding that § 402(a) invalidated the agreement even without any showing that the transaction involved interstate commerce. On appeal, the court held that the EFAA is not free-standing federal legislation that applies to every arbitration agreement. Rather, it operates as an exception within title 9’s existing framework, which by its own terms applies only to a “contract evidencing a transaction involving commerce.” The court explained that § 2 generally makes arbitration agreements enforceable, “save” as otherwise provided in chapter 4, and § 402(a) then qualifies that rule for sexual assault and sexual harassment disputes. The court noted that this reading also avoids constitutional difficulty because Congress may legislate only pursuant to an enumerated power, and the relevant source here is the Commerce Clause. Because the trial court never determined whether this agreement involved commerce under § 2, its ruling could not stand. Vacated and remanded.