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Bernhardt v. Polygraphic Co. of America, Inc., 350 U.S. 198 (1956)

Bernhardt v. Polygraphic Co. of America, Inc.

No. 49

Argued December 5, 1955

Decided January 16, 1956

350 U.S. 198


Petitioner's action against respondent in a Vermont state court, for damages for the discharge of petitioner under an employment contract, was removed to the Federal District Court on grounds of diversity of citizenship. The contract had been made in New York, where both parties resided at the time, and provided that the parties would submit any dispute to arbitration under New York law, but petitioner had later become a resident of Vermont, where he was to perform his duties. Respondent's motion for a stay of the proceedings so that the controversy could go to arbitration in New York was denied by the District Court, which ruled that the arbitration provision of the contract was governed by Vermont law and that, under Vermont law, the agreement to arbitrate was revocable any time before an award was actually made. The Court of Appeals reversed.

Held: the judgment of the Court of Appeals is reversed, and the cause is remanded to the District Court. Pp. 350 U. S. 199-205.

1. The provision of § 3 of the United States Arbitration Act for stay of the trial of an action until arbitration has been had does not apply to all arbitration agreements, but only to those covered by §§ 1 and 2 of the Act (those relating to maritime transactions and those involving interstate or foreign commerce), and there is no showing that the contract here involved is in either of those classes. Pp. 350 U. S. 200-202.

2. The differences between arbitration and judicial determination of a controversy substantially affect the cause of action arising under state law, and make the doctrine of Erie R. Co. v. Tompkins, 304 U. S. 64, applicable. Pp. 350 U. S. 202-204.

3. If, in this case, arbitration could not be compelled in the Vermont state courts, it should not be compelled in the Federal District Court. Pp. 350 U. S. 204-205.

4. In the circumstances of this case, there is no reason to remand the case to the Court of Appeals to pass on the question of local law. P. 350 U. S. 205.

5. On remand of the cause to the District Court, there will be open for consideration the question whether New York arbitration

Page 350 U. S. 199

law should be applied to the enforcement of the contract -- a question of conflict of laws governed by Vermont law and on which it is not clear that the District Court ruled. P. 350 U. S. 205.

21 F.2d 948 reversed and remanded.

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