Smith v. American Arbitration Association

Lisa Smith (plaintiff) contracted with Argenbright, Inc. to sell her controlling interest in the PIMMS Corporation for $65 million. The parties contractually agreed that disputes would be resolved through the American Arbitration Association, Inc. (AAA) (defendant). Argenbright initiated an AAA dispute against Smith for breach of warranty, claiming that Smith inflated PIMMS’s revenue, resulting in $14 million in damages. The AAA provided the parties with a list of 15 arbitrators, including 14 men and one woman. Argenbright struck the only woman arbitrator, Smith’s first choice, resulting in a panel of three male arbitrators. Smith filed suit in federal district court, claiming that Argenbright striking the woman arbitrator was a breach of contract. Smith argued that because she was a woman against a male-controlled company, a male panel of arbitrators would be insensitive and unsympathetic to her position. Smith’s suit was dismissed under Federal Rules of Civil Procedure 12(b)(6), and Smith appealed. Smith argued that preemptory strikes based on gender that are precluded in jury-trial voir dire under the Fifth Amendment should be equally prohibited in arbitration. Additionally, Smith argued that she should be allowed to litigate her claims because the limited grounds available to her to object after arbitration under the Federal Arbitration Act would make it difficult for her to win.