Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University

489 U.S. 468, 109 S. Ct. 1248, 103 L. Ed. 2d 488 (1989)

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Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University

United States Supreme Court
489 U.S. 468, 109 S. Ct. 1248, 103 L. Ed. 2d 488 (1989)

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Facts

The Board of Trustees of Leland Stanford Junior University (Stanford) (plaintiff) hired Volt Information Services, Inc. (Volt) to install electrical conduits on Stanford’s campus as part of a larger construction project. In addition to an arbitration clause, the contract between Stanford and Volt contained a choice-of-law clause providing that California law would govern any disputes arising out of the contract. Stanford also contracted with several third parties to perform other work in connection with the construction project. Stanford’s contracts with the third parties did not contain arbitration agreements. The parties had a dispute concerning payment for extra work, and Volt initiated arbitration proceedings. Stanford sued Volt in state court, claiming fraud and breach of contract and seeking indemnity from two of the other companies involved in the construction project. Stanford also moved to stay arbitration pursuant to a California statute that allowed courts to stay arbitration pending the resolution of a related claim between a party to an arbitration agreement and third parties not bound by the arbitration agreement. Volt moved to compel arbitration, arguing that the California statute was preempted by the Federal Arbitration Act (FAA), which did not allow such a stay of arbitration. The trial court granted Stanford’s motion to stay arbitration, and the California Court of Appeal affirmed, reasoning that the choice-of-law clause incorporated the California arbitration rules into the contract’s arbitration agreement. The California Supreme Court denied Volt’s petition for discretionary review. The United States Supreme Court granted certiorari.

Rule of Law

Issue

Holding and Reasoning (Rehnquist, C.J.)

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