2004 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

6-18-2004

Palcko v. Airborne Express

Precedential or Non-Precedential: Precedential

Docket No. 03-2227

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Recommended Citation

"Palcko v. Airborne Express" (2004). 2004 Decisions. Paper 546.

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PRECEDENTIAL

UNITED STATES COURT OF

APPEALS FOR THE THIRD CIRCUIT

 

No. 03-2227

 

MARGARET PALCKO

v.

AIRBORNE EXPRESS, INC.,

Appellant

 

On Appeal from the United States

District Court

for the Eastern District of Pennsylvania

(D.C. No. 02-cv-02990)

District Judge: Hon. Thomas N. O’Neill,

Jr.

 

Argued January 12, 2004

Before: SLOVITER, RENDELL, and

ALDISERT, Circuit Judges

(Filed: June 18, 2004)

 

Sharon M. Erwin (Argued)

Law Offices of Sharon M. Erwin, LLC

Philadelphia, PA 19129

Attorney for Appellant

David L. DaCosta (Argued)

Joseph J. McAlee

Sprague & Sprague

Philadelphia, PA 19103

Attorneys for Appellee

OPINION OF THE COURT

SLOVITER, Circuit Judge.

The principal questions before us

on this appeal are the scope of the

exclusion from the Federal Arbitration Act

(“FAA”), 9 U.S.C. §§ 1-16 (2004), for a

“class of workers engaged in foreign or

interstate commerce” and the preemptive

effect, if any, of the statutory exclusion.

I.

Defendant Airborne Express, Inc.

(“Airborne”) appeals from the District

Court’s order dated April 23, 2003

denying Airborne’s motion to compel

arbitration of plaintiff Margaret Palcko’s

claims under Title VII of the Civil Rights

Act of 1964 (“Title VII”), 42 U.S.C. §

2000e (2004), and the Pennsylvania

Human Relations Act, 43 Pa. Cons. Stat.

Ann. §§ 951-963 (2004). Airborne

contends that Palcko is required to

arbitrate her claims pursuant to a

contractual arbitration agreement based on

the FAA and Washington state law. Its

appeal challenges the District Court’s

rulings that Palcko, as a transportation

worker engaged in interstate commerce, is

excluded from the FAA’s coverage, and

that this FAA exemption preempts

enforcement of Palcko’s arbitration
2

agreement with Airborne unde r

Washington state law.

II.

Airborn e is a packag e

transportation and delivery company that

engages in intrastate, interstate, and

international shipping. It began employing

Palcko as a Field Services Supervisor in

Philadelphia in 1998. Palcko’s duties

included supervising between thirty and

thirty-five drivers who delivered packages

from Airborne’s facility near the

Philadelphia International Airport to their

ultimate destinations in the Philadelphia

area, and picked up packages from

customers in the Philadelphia area and

brought them back to Airborne’s facility

for shipment. Palcko monitored and

improved the performance of the drivers

under her supervision to ensure timely and

efficient delivery of packages.

When Palcko was hired, she agreed

to enter into a “Mutual Agreement to

Arbitrate Claims” with Airborne. The

relevant portions of the Agreement, which

covers “all claims,” provides:

Except as provided in this

Agreement, the Federal

Arbitration Act shall govern

t h e interp retat ion ,

enforcement and all

proceedings pursuant to this

Agreement. To the extent

that the Federal Arbitration

Act is inapp licable ,

Washington law pertaining

to agreements to arbitrate

shall apply.

App. at 19.

According to Palcko, once she

began performing her duties at Airborne

she encountered immediate resistance and

hostility from the drivers under her

supervision. She alleges that other

Airborne employees falsely accused her of

sexual misconduct, verbally and physically

intimidated her during work, created a

hostile work environment through sexist

remarks, spread offensive rumors about

her sex life and moral character through

Airborne’s internal communications

system, and generally discriminated

against her because of her gender. Pl.’s

Compl. at 3-7. Palcko contends that

Airborne did not meaningfully investigate

and address these incidents, which she

reported to the company management.

According to Palcko, when her immediate

supervisor, Michael Matey, told her in the

presence of others during a March 5, 2001

meeting that “[m]aybe you don’t belong in

this industry” and “[m]aybe you should

just leave,” she left the meeting and never

returned to her position at Airborne. Pl.’s

Compl. at 7. Airborne denies all Palcko’s

factual allegations of company

wrongdoing. Def.’s Answer at 3-6.

Palcko filed a charge against

Airborne with the Equal Employment

Opportunity Commission on May 31,

2001, seeking administrative remedies for

her allegations under Title VII, 42 U.S.C.

§ 2000e-5. After 180 days elapsed without

a finding by the Commission on Palcko’s

charge against Airborne, she requested a

Dismissal and Notice of Rights from the

Commission. 42 U.S.C. § 2000e-5(f)(1).
3

The Commission issued the Dismissal and

Notice, thereby exhausting Palcko’s

administrative remedies and allowing her

to seek judicial recourse.

Palcko filed a complaint against

Airborne in the District Court for the

Eastern District of Pennsylvania on May

20, 2002 under Title VII and the

Pennsylvania Human Relations Act. After

the parties resolved issues unrelated to this

appeal pertaining to the service of process,

Airborne filed a motion to compel

arbitration of Palcko’s claims under the

parties’ arbitration agreement. The

District Court denied Airborne’s motion

on April 24, 2003, holding that Palcko’s

employment contract is “excluded from the

coverage of the FAA because of the nature

of her work.” App. at 14, 17-18. The

court also found that the exclusionary

effect of the FAA preempts alternative

enforcement of the arbitration contract

under Washington state law, as such

enforcement “would directly conflict with

Congress’s express purpose” of exempting

a certain class of workers “from a federal

law otherwise favoring arbitration.” App.

at 18. Airborne now appeals from the

District Court’s order.

III.

A. The Federal Arbitration Act

1. Jurisdiction

The District Court had subject

matter jurisdiction over Palcko’s Title VII

claim under 28 U.S.C. §§ 1331, 1343. The

FAA, 9 U.S.C. § 16(a), provides for

appellate jurisdiction over Airborne’s

appeal from the District Court’s order

denying its motion to compel arbitration.1

Brayman Constr. Corp. v. Home Ins. Co.,

319 F.3d 622, 624-25 (3d Cir. 2003).

Palcko contends, however, that because

the District Court found Palcko’s

employment contract to be exempt from

the FAA, we have no jurisdiction to

review that court’s denial of Airborne’s

motion to compel arbitration under 9

U.S.C. § 16(a), which is a section of the

FAA. Appellee’s Br. at 1.

 

1

9 U.S.C. § 16(a) states:

(a) An appeal may be taken from–

(1) an order–

(A) refusing a stay of any

action under section 3 of

this title,

(B) denying a petition

under section 4 of this title

to order arbitration to

proceed,

(C) denying an application

under section 206 of this

title to compel arbitration,

(D) confirming or denying

confirmation of an award

or partial award, or

(E) modifying, correcting,

or vacating an award;

(2) an interlocutory order

granting, continuing, or

modifying an injunction

against an arbitration that is

subject to this title; or

(3) a final decision with

respect to an arbitration

that is subject to this title.
4

Palcko’s contention is without

merit. We have held in Sandvik AB v.

Advent International Corporation, 220

F.3d 99 (3d Cir. 2000), that the FAA’s

provision for interlocutory appeals of

orders denying motions to compel

arbitration clearly endows us with

appellate jurisdiction even in instances

when the validity of the underlying

contract to arbitrate is in doubt, as in

Palcko’s case with respect to the

arbitration agreement’s reference to the

FAA. See id. at 100 (stating that the

FAA’s “plain language contemplates

interlocutory appeals from orders” denying

arbitration because of questions related to

the validity of the underlying contract, and

that “other parts of the statute evince clear

Congressional intent that challenges to

refusals to compel arbitration be promptly

reviewed by appellate courts”).

Acceptance of Palcko’s argument

would create the curious situation in which

either all district courts’ orders denying

arbitration based on section 1’s exemption

clause would be beyond appellate review,

which contradicts section 16(a)’s plain

language, or the determination of our

appellate jurisdiction would be contingent

on the outcome of our review of the merits

of the District Court’s finding on the

exemption question, which is precisely

what we are barred from doing in the

absence of appellate jurisdiction. As we

stated in Sandvik, “The more natural

reading [of Section 16(a) is] to treat all

orders declining to compel arbitration as

reviewable.” Id. at 103. No appellate

court has held to the contrary.

Our jurisdiction over the District

Court’s order here, therefore, is clear.

2. Exemption Under Section 1 of

the FAA

Section 1 of the FAA provides:

 . . . [N]othing herein

contained shall apply to

contracts of employment of

seamen, railroad employees,

or any other class of

workers engaged in foreign

or interstate commerce.

9 U.S.C. § 1.

In Circuit City Stores, Inc. v.

Adams, 532 U.S. 105 (2001), the Supreme

Court considered the scope of this

exemption from the FAA. The employer

in that case, Circuit City, sought to compel

arbitration as provided for in its

employment contracts. The Ninth Circuit

held that arbitration was not appropriate

because section 1 of the FAA exempts

from its coverage all employment

contracts. The Supreme Court reversed,

rejecting the Ninth Circuit’s expansive

reading of section 1. The Court noted that

“[m]ost Courts of Appeals conclude the

exclusion provision is limited to

transportation workers, defined, for

instance, as those workers ‘actually

engaged in the movement of goods in

interstate commerce.’” Id. at 112 (citing

Cole v. Burns Int’l Security Servs., 105

F.3d 1465, 1471 (D.C. Cir. 1997)).

Looking to the statutory language, the

Court applied the interpretation maxim of

ejusdem generis and read the words “any
5

other class of workers engaged in . . .

commerce,” as giving “effect to the terms

‘seamen’ and ‘railroad employees.’”

Circuit City, 532 U.S. at 115. The Court

held that the residual phrase “any other

class of workers engaged . . . in interstate

commerce” should “be controlled and

defined by reference to the enumerated

categories of workers which are recited

just before it . . . .” Id. at 115. Reading

section 1 in this narrow manner, the Court

noted, also concurs with Congress’s intent

in enacting the FAA to compel

enforcement of arbitration agreements in

response to then-prevalent judicial hostility

toward such agreements, especially given

the fact that more specific and

comprehensive fede ral arbitra tion

procedures for seamen and railroad

employees were already in existence or on

the verge of passage. See id. at 121 (“It

would be rational for Congress to ensure

that workers in general would be covered

by the provisions of the FAA, while

reserving for itself more specific

legislation for those engaged in

transportation.”) (citation omitted).

To determine whether Palcko’s

employment contract, including the

arbitration agreement, is exempt from the

FAA’s coverage, we must therefore

determine whether Palcko can be

considered to be a “transportation worker”

in a “class of workers . . . engaged in . . .

commerce” within the meaning of the

FAA, as interpreted by Circuit City. The

District Court, citing our decision in

Tenney Engineering, Inc. v. United

Electrical Radio & Machine Workers of

America, 207 F.2d 450, 452 (3d Cir.

1953), reasoned that Palcko qualifies as a

transportation worker because her job

“was so closely related [to the transport of

the goods] as to be in practical effect part

of [the shipping of the goods].” App. at 17

(internal quotations omitted). Airborne

challenges the court’s finding, arguing that

Palcko, as a “management employee” with

no close contact with channels of interstate

commerce and not subject to other existing

statutory employment dispute resolution

schemes, cannot qualify as an exempt

worker under section 1 of the FAA.

Appellant’s Br. at 27-36.

Fifty years ago, this court in Tenney

was required to construe the meaning of

the exception clause in the context of a

labor dispute. The union sought a stay

pending arbitration which was provided in

the collective bargaining agreement. The

parties stipulated that the employer was

engaged in the manufacture of goods for

sale in interstate commerce and that the

employees were engaged in that

manufacture and incidental plant

maintenance. Presaging the Supreme

Court’s holding in Circuit City, we held

that the exception was inapplicable. We

stated that as the language “any other class

of workers engaged in foreign or interstate

commerce” followed seamen and railroad

workers, the rule of ejusdem generis

demands that the phrase includes “only

those other classes of workers who are

likewise engaged directly in commerce,

that is, only those other classes of workers

who are actually engaged in the movement

of interstate or foreign commerce or in
6

work so closely related thereto as to be in

practical effect part of it.” Tenney, 207

F.2d at 452. The Supreme Court’s later

decision in Circuit City essentially

affirmed the Tenney analysis. 532 U.S. at

119.

Adopting the narrow interpretation

of section 1 stated in Tenney and Circuit

City, Airborne argues that Palcko’s work,

as a supervisor, was not only dissimilar to

that of seamen or railroad workers, but

also did not directly involve the interstate

delivery of packages. She therefore cannot

be a “transportation worker” in the sense

envisioned by the Court in Circuit City.

We do not agree. According to Palcko’s

affidavit, she was responsible for

“monitoring and improvin g the

performance of drivers under my

supervision to insure [sic] timely and

efficient delivery of packages.” App. at

67. Such direct supervision of package

shipments makes Palcko’s work “so

closely related [to interstate and foreign

commerce] as to be in practical effect part

of it.” Tenney, 207 F.2d at 452; see

generally Great W. Mortgage Corp. v.

Peacock, 110 F.3d 222, 226-27 (3d Cir.

1997) (declaring that Tenney is still good

law).

Airborne suggests that the

exemption clause should be limited to

those truck drivers who physically move

the packages. If we were to accept that

limitation, we would unnecessarily narrow

the section 1 exemption in a way never

intended by the FAA; had Congress

intended the residual clause of the

exemption to cover only those workers

who physically transported goods across

state lines, it would have phrased the

FAA’s language accordingly.2 We

therefore concur with the District Court’s

finding that Palcko’s employment contract

with Airborne is exempt from the FAA’s

coverage because she is a transportation

worker engaged in interstate and foreign

commerce under section 1 of that statute.

B. The FAA’s Preemptive Effect over

Washington State Law Governing

Arbitration

1. Jurisdiction

Airborne also argues that even if its

arbitration agreement with Palcko is

exempt from the FAA’s coverage, the

 

2 We are not persuaded by

Airborne’s suggestion that the inclusion

of Palcko in the class of workers exempt

from the FAA’s coverage would create a

“slippery slope” problem that would

ultimately lead to the exemption of all

“management employees” in the same

chain of command. Palcko was a direct

supervisor of Airborne’s drivers that

transported packages, and our decision is

based only on her particular relations to

the channels of interstate commerce. In

this regard Palcko’s situation differs

from the employee litigants in Cole, 105

F.3d at 1469, and Kropfelder v. Snap-On

Tools Corp., 859 F. Supp. 952 (D. Md.

1994); neither the railroad security guard

in Cole nor the warehouse manager in

Kropfelder was a transportation worker,

let alone engaged in the transportation of

goods interstate.
7

agreement is nonetheless enforceable

under the alternative ground that the

arbitration agreement is valid under

Washington state law. Before we examine

the merit of Airborne’s argument,

however, we must first ascertain whether

there is a basis for our jurisdiction to

inquire into this state-law claim.

The District Court exercised

supplemental jurisdiction over Palcko’s

Pennsylvania state law cause of action

under 28 U.S.C. § 1367, and issued an

order denying Airborne’s motion to

compel arbitration on both FAA and

Washington state law grounds. While we

may review Airborne’s appeal with respect

to the FAA under 9 U.S.C. § 16(a), that

section does not cover our review of a

non-FAA, state-law arbitration claim in an

otherwise nonappealable interlocutory

order. Our ability to review the

Washington state law issue before us, if

any, must therefore rest on the doctrine of

pendent appellate jurisdiction, which is

discretionary and narrow in nature.

In E.I. Dupont de Nemours and Co.

v. Rhone Poulenc Fiber and Resin

Intermediates, S.A.S., 269 F.3d 187 (3d

Cir. 2001), we explained that “[t]he

doctrine of pendent appellate jurisdiction,

in its broadest formulation, allows an

appellate court in its discretion to exercise

jurisdiction over issues that are not

independently appealable but that are

intertwined with issues over which the

appellate court properly and independently

exercises its jurisdiction.” Id. at 202-03.

Recognizing that the Supreme Court has

endorsed, but also limited, the use of

pendent appellate jurisdiction by Courts of

Appeals, we concluded that “the doctrine

should be used ‘sparingly,’ and only where

there is sufficient overlap in the facts

relevant to both the appealable and

nonappealable issues to warrant plenary

review.” Id. at 203 (emphasis in original).

Here, both the FAA exemption and

Washington state law issues arise from a

single arbitration agreement that provides

alternative grounds for the arbitration of

all claims arising from Palcko’s

employment with Airborne. Moreover,

both Palcko’s Title VII and Pennsylvania

Human Relations Act claims arise from the

same set of facts related to her conditions

as an Airborne employee. Thus, not only

does sufficient overlap of facts exist to

warrant plenary review, but the

Washington state law arbitration issue is

so closely intertwined with the FAA claim

that our taking of pendent appellate

jurisdiction over the former is necessary to

ensure meaningful review of the District

Court’s order in its entirety. We therefore

conclude we may exercise pendent

appellate jurisdiction over the state-law

portion of the District Court’s order.

2. Discussion

The District Court ruled that the

exemption of Palcko’s employment

contract from the FAA’s coverage also

precludes enforcement of the arbitration

agreement under Washington state law.

The court found that “[a]lthough the FAA

contains no express preemptive provision

and its preemptive effect is limited, its

preemptive effect does encompass
8

questions of arbitrability.” App. at 17. It

reasoned that enforcement of the

arbitration agreement between Palcko and

Airborne “in accordance with state laws

favoring arbitration would directly conflict

with Congress’s express purpose,” in

drafting the exemption clause in section 1

of the FAA, of exempting workers

engaged in interstate commerce from

arbitration. App. at 18.

In considering whether the

inclusion of the exemption clause was

intended to preempt state law regarding

enforcement of arbitration agreements, we

must keep in mind that Congress enacted

the FAA “to ensure judicial enforcement

of privately made agreements to arbitrate,”

rather than restrict the force of arbitration

agreements. Dean Witter Reynolds, Inc. v.

Byrd, 470 U.S. 213, 219 (1985). The

Supreme Court has stated that “passage of

the Act was motivated, first and foremost,

by a congressional desire to enforce

agreements into which parties had entered,

and [courts] must not overlook this

principal objective when construing the

statute, or allow the fortuitous impact of

the Act on efficient dispute resolution to

overshadow the underlying motivation.”

Id. at 220 (footnote omitted). In seeking to

fulfill the FAA’s purpose, the Court has

enforced an agreement to arbitrate claims

under the Securities Act of 1933, even

though prior case law stated that the

Securities Act’s language prohibits the

arbitration of such claims. Rodriguez de

Quijas v. Shearson/American Express,

Inc., 490 U.S. 477 (1989) (overruling

Wilko v. Swan, 346 U.S. 427 (1953)); see

also Gilmer v. Interstate/Johnson Lane

Corp., 500 U.S. 20 (1991) (enforcing

arbitration clause in a securities

registration application to cover an Age

Discrimination in Employment Act claim).

In doing so, the Supreme Court has held

that the FAA represents a “liberal federal

policy favoring arbitration agreements.”

Moses H. Cone Mem’l Hospital v.

Mercury Constr. Corp., 460 U.S. 1, 24

(1983). The Court has also stated that

parties to an arbitration agreement,

“[h]aving made the bargain to arbitrate . .

. should be held to it unless Congress itself

has evinced an intention to preclude a

waiver of judicial remedies for the

statutory rights at issue.” Mitsubishi

Motors Corp. v. Soler Chrysler-Plymouth,

Inc., 473 U.S. 614, 628 (1985).

There is no language in the FAA

that explicitly preempts the enforcement of

state arbitration statutes. As the Supreme

Court explained in Volt Information

Sciences, Inc. v. Board of Trustees of

Leland Stanford Junior University, 489

U.S. 468 (1989), “The FAA contains no

express pre-emptive provision, nor does it

reflect a congressional intent to occupy the

entire field of arbitration.” Id. at 477

(citing Bernhardt v. Polygraphic Co., 350

U.S. 198 (1956), which upheld application

of state arbitration law to an arbitration

provision in a contract not covered by the

FAA). The Volt Court, in determining

whether to enforce an arbitration

agreement using a California procedural

rule that has no counterpart in the FAA,

stated that “[t]here is no federal policy

favoring arbitration under a certain set of
9

procedural rules; the federal policy is

simply to ensure the enforceability,

according to their terms, of private

agreements to arbitrate.” Id. at 476. The

Court then ruled that the application of the

California procedural rule to stay

arbitration to the agreement, in accordance

with a choice-of-law provision contained

therein, is appropriate because while “state

law may nonetheless be pre-empted [by

the FAA] to the extent that it actually

conflicts with federal law – that is, to the

extent that it stands as an obstacle to the

accomplishment and execution of the full

purposes and objectives of Congress,” the

application of the state procedural rule, “in

accordance with the terms of the

arbitration agreement itself, would [not]

undermine the goals and policies of the

FAA.” Id. at 477-78 (internal quotations

and citations omitted).

Applying the Supreme Court’s

precedent, we conclude that the District

Court erred in holding that Palcko’s

exemption status under section 1 of the

FAA preempts the enforcement of the

arbitration agreement under Washington

state law. It is telling that the arbitration

agreement itself envisioned the possibility

that Palcko’s employment contract would

be deemed exempt from the FAA’s

coverage under section 1 of the Act. It

provided for that contingency by including

the following: “To the extent that the

Federal Arbitration Act is inapplicable,

Washington law pertaining to agreements

to arbitrate shall apply.” App. at 19. We

see no reason to release the parties from

their own agreement. We stated in

Mason-Dixon Lines, Inc. v. Local Union

No. 560, 443 F.2d 807 (3d Cir. 1971), “In

our view, the effect of Section 1 is merely

to leave the arbitrability of disputes in the

excluded categories as if the [Federal]

Arbitration Act had never been enacted.”

Id. at 809.3 Here, enforcement of the

arbitration agreement between Palcko and

Airborne under Washington state law, as if

the FAA “had never been enacted,” does

not contradict any of the language of the

FAA, but in contrast furthers the general

policy goals of the FAA favoring

arbitration. We will therefore remand so

that the District Court can take the actions

necessary to enforce the arbitration

agreement under Washington state law.

C. Whether Airborne Waived Its Right

to Arbitration

Palcko also argues on appeal that

Airborne has waived its right to arbitration

 

3 Although Mason-Dixon Lines

involved the different issue of staying

judicial proceedings pending arbitration

under an agreement excluded from

section 1 of the FAA, the principle we

put forth in that case regarding the

exclusionary effect of section 1 on other

arbitration issues not related to the FAA

is equally applicable here. The case also

demonstrates that enforcing the

arbitration agreement under Washington

state law does not contradict our finding

above that Palcko’s employment

contract, of which the arbitration

agreement is a part, is exempted from the

FAA’s coverage.
10

by failing to include it in its initial motion

to dismiss on the ground of alleged

defective service of process under Federal

Rule of Civil Procedure 12(b). Palcko’s

argument is unpersuasive. Rule 12 deals

with defenses and objections by pleading

or motion. The relevant portions of Rule

12, for Palcko’s purposes, are as follows:

(b) How Presented. Every

defense, in law or fact, to a

claim for relief in any

pleading, whether a claim,

counterclaim, cross-claim,

or third-party claim, shall be

asserted in the responsive

pleading thereto if one is

required, except that the

following defenses may at

the option of the pleader be

made by motion: (1) lack of

jurisdiction over the subject

matter, (2) lack o f

jurisdiction over the person,

(3) improper venue, (4)

insufficiency of process, (5)

insufficiency of service of

process, (6) failure to state a

claim upon which relief can

be granted, (7) failure to

join a party under Rule 19.

A motion making any of

these defenses shall be made

before pleading if a further

pleading is permitted. No

defense or objection is

waived by being joined with

one or more other defenses

or objections in a responsive

pleading or motion. . . .

(g) Consolidation of

Defenses in Motion. A

party who makes a motion

under this rule may join

with it any other motions

herein provided for and then

available to the party. If a

party makes a motion under

this rule but omits therefrom

any defense or objection

then available to the party

which this rule permits to be

raised by motion, the party

shall not thereafter make a

motion based on the defense

or objection so omitted,

except a motion as provided

in subdivision (h)(2) hereof

on any of the grounds there

stated.

(h) Waiver or Preservation

of Certain Defenses.

(1) A defense of lack

of jurisdiction over the

person, improper venue,

insufficiency of process, or

insufficiency of service of

process is waived (A) if

omitted from a motion in the

circumstances described in

subdivision (g), or (B) if it is

neither made by motion

under this rule nor included

in a responsive pleading or

an amendment thereof

permitted by Rule 15(a) to

be made as a matter of

course.
11

(2) A defense of

failure to state a claim upon

which relief can be granted,

a defense of failure to join a

party indispensable under

Rule 19, and an objection of

failure to state a legal

defense to a claim may be

made in any pleading

permitted or ordered under

Rule 7(a), or by motion for

judgment on the pleadings,

or at the trial on the merits.

Fed. R. Civ. P. 12(b), (g), (h). 

Palcko contends that although

motions to dismiss based on the existence

of an arbitration agreement are most

commonly filed under Rule 12(b)(1) (lack

of subject matter jurisdiction) or Rule

12(b)(6) (failure to state a claim upon

which relief can be granted), that practice

is inappropriate and that motions to

dismiss based on an arbitration agreement

are more appropriately brought under Rule

12(b)(2) (lack of personal jurisdiction) or

Rule 12(b)(3) (improper venue). 4

Appellee’s Br. at 14. Palcko’s novel

categorization of the arbitration agreement

claim is critical to her waiver argument

because motions under Rule 12(b)(1) and

(b)(6) are not waived under Rule 12(h)(1),

but motions under Rule 12(b)(2) and (b)(3)

are.

Existing legal authorities do not

support Palcko’s creative theory. The only

support Palcko has cited is a Pennsylvania

state court decisio n interp reting

Pennsylvania state rules of civil procedure.

Wilk v. Ravin, 46 Pa. D. & C. 4th 347 (Ct.

Com. Pl. Allegheny County 1991);

Appellant’s Reply Br. at 13. Wilk is of

little relevance to interpretation of federal

procedural rules. Our prior decisions

support the traditional practice of treating

a motion to compel arbitration as a motion

to dismiss for failure to state a claim upon

which relief can be granted. See

Nationwide Ins. Co. v. Patterson, 953 F.2d

44, 45 n.1 (3d Cir. 1991) (“Dismissal of a

declaratory judgment action because the

dispute is covered by an arbitration

provision is generally effected under Rule

12(b)(6) covering dismissals for failure to

state a claim upon which relief can be

granted,see, e.g., Aetna Casualty & Surety

Co. v. Hameen, 758 F. Supp. 1049 (E.D.

Pa. 1990), . . . .”).

Allowing a waiver of the right to

arbitration based on Rule 12(h)(1) would

undermine the strong judicial posture

favoring arbitration as discussed above.

Our precedent holds that waiver of

arbitration rights “is not to be lightly

inferred” by federal courts. PaineWebber

Inc. v. Faragalli, 61 F.3d 1063, 1068 (3d

Cir. 1995) (quoting Gavlik Constr. Co. v.

H.F. Campbell Co., 526 F.2d 777, 783 (3d

Cir. 1975)). We have also stated that

“prejudice is the touchstone for

determining whether the right to arbitrate

has been waived.” Hoxworth v. Blinder,

Robinson & Co., Inc., 980 F.2d 912, 925

(3d Cir. 1992); see also Thyssen, Inc. v.

 

4

Improper venue claims fall within

Rule 12(b)(3); Palcko incorrectly cited

Rule 12(b)(4).
12

Calypso Shipping Corp., 310 F.3d 102 (2d

Cir. 2002) (ruling that no waiver exists

even though defendant did not seek

arbitration until more than eighteen

months after the suit was filed and after

plaintiff filed a motion for partial summary

judgment).

Although we found prejudice in

Hoxworth because defendants had

engaged in extensive pretrial practice

(including filing a motion to dismiss for

failure to state a claim) in the more than

eleven months prior to filing a motion to

compel arbitration, Hoxworth, 980 F.2d at

925, nothing in the record suggests that

Palcko has suffered a similar adverse

effect here. Airborne filed its motion to

compel arbitration within thirty-eight days

of learning of the lawsuit and within

roughly twenty-two days of filing its initial

motion to dismiss for insufficiency of

service of process. Appellant’s Reply Br.

at 12 n.2. Airborne had also requested that

Palcko voluntarily agree to arbitration ten

days before filing its motion to compel

arbitration. Appellant’s Reply Br. at 14.

Although the length of the time period

involved alone is not determinative,

Palcko has failed to show what adverse

effects, if any, she has suffered within that

short period of time. Therefore waiver

cannot be inferred from the facts of this

case.

IV.

For the above reasons, we will

reverse the order of the District Court

denying enforcement of the arbitration

agreement under Washington state law and

remand for further proceedings consistent

with this opinion.