First Options of Chicago, Inc. v. Kaplan
United States Supreme Court
514 U.S. 938 (1995)
- Written by Rich Walter, JD
Facts
Manuel Kaplan’s (plaintiff’s) wholly owned company, MK Investments, Inc. (MKI), broke its agreement to repay a debt to First Options of Chicago, Inc. (First Options) (defendant). First Options took over MKI, liquidated its assets, and insisted that Kaplan cover any deficiency. When Kaplan failed to do so, First Options invoked the loan agreement’s arbitration clause. Kaplan argued that he was not a party to MKI’s loan agreement, and that therefore he was not subject to the arbitrator’s authority. The arbitrator, however, ruled that First Option’s claim against Kaplan was arbitrable. The arbitrator also ruled in First Option’s favor on the merits of its claim. Kaplan asked a federal district court to overturn the arbitrator’s rulings. The district court affirmed the arbitrator, but the Third Circuit reviewed the district court’s judgment de novo and reversed. First Options appealed to the United States Supreme Court.
Rule of Law
Issue
Holding and Reasoning (Breyer, J.)
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