PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 10-3655

RAHEEL AHMAD KHAN,

individually and on behalf of others similarly situated

v.

DELL INC.,

Appellant.

On Appeal from the United States District Court

for the District of New Jersey

(D.C. No. 3:09-cv-03703)

District Judge: Honorable Joel A. Pisano

Argued on April 28, 2011

 

Before: SLOVITER, GREENAWAY, JR and ROTH, Circuit

Judges

(Opinion filed January 20, 2012)
2

Kristine M. Brown, Esquire (Argued)

Derin B. Dickerson, Esquire

Alston & Bird, LLP

1201 W. Peachtree Street

One Atlantic Center

Atlanta, Georgia 30309

Craig Carpenito, Esquire

Alston & Bird, LLP

90 Park Avenue

New York, NY 10016-1387

Counsel for Appellant

F. Paul Bland, Jr., Esquire (Argued)

Public Justice

1825 K Street, N.W., Suite 200

Washington, D.C. 20006

Elizabeth Berney, Esquire

Eduard Korsinsky, Esquire

Shannon Hopkins, Esquire

Levi & Korsinsky, LLP

30 Broad Street, 15th Floor

New York, NY 10004

Michael Korsinsky, Esquire

Law Office of Michael Korsinsky

30 Broad Street, 15th Floor

New York, NY 10004

Counsel for Appellees
3

___________

O P I N I O N

___________

 

ROTH, Circuit Judge:

This appeal involves a matter of first impression for 

this Circuit – whether Section 5 of the Federal Arbitration Act 

(FAA) requires the appointment of a substitute arbitrator 

when the arbitrator designated by the parties is unavailable. 

Dell, Inc., appeals from the District of New Jersey‟s denial of 

Dell‟s Motion to Compel Arbitration and Stay Plaintiff‟s 

Claims. Dell contends that the District Court erred in denying 

its motion to compel arbitration based on the District Court‟s 

belief that the arbitration provision was rendered 

unenforceable because it provided for the parties to arbitrate 

exclusively before a forum that was unavailable when Khan 

commenced suit. The District Court also refused to appoint a 

substitute arbitrator, finding that it could not compel the 

parties to submit to an arbitral forum to which they had not 

agreed. 

I. FACTUAL BACKGROUND

Dell designed, manufactured, and distributed the 600m 

computer from 2003 to 2006. Khan purchased a Dell 600m 

computer in September 2004 for approximately $1,200. 

Khan purchased the computer online through Dell‟s website, 

www.Dell.com. To complete the purchase, Khan was 

required to click a box stating “I AGREE to Dell‟s Terms and 

Conditions of Sale.” Just beneath the box was a notice 

stating:
4

The Terms and Conditions of Sale 

contain very important 

information about your rights and 

obligations as well as limitations 

and exclusions that apply to you. 

They contain limitations of 

liability and warranty information. 

They also contain an agreement to 

resolve disputes through 

arbitration, rather than through 

litigation. Please read them 

carefully.

As Dell‟s notice indicated, its Terms and Conditions of Sale

contained an arbitration provision that reads as follows:

13. Binding Arbitration. ANY 

CLAIM, DISPUTE, OR 

CONTROVERSY (WHETHER 

IN CONTRACT, TORT, OR 

OTHERWISE, WHETHER 

PREEXISTING, PRESENT OR 

FUTURE, AND INCLUDING 

STATUTORY, COMMON LAW, 

INTENTIONAL TORT AND 

EQUITABLE CLAIMS) 

BETWEEN CUSTOMER AND 

DELL, its agents, employees, 

principals, successors, assigns, 

affiliates (collectively for 

purposes of this paragraph, 

“Dell”) arising from or relating to 
5

this Agreement, its interpretation, 

or the breach, termination or 

validity thereof, the relationships 

which result from this Agreement 

(including, to the full extent 

permitted by applicable law, 

relationships with third parties 

who are not signatories to this 

Agreement), Dell‟s advertising, or 

any related purchase SHALL BE 

RESOLVED EXCLUSIVELY 

AND FINALLY BY BINDING 

ARBITRATION 

ADMINISTERED BY THE 

NATIONAL ARBITRATION 

FORUM (NAF) under its Code of 

Procedure then in effect (available 

via the Internet at http://www.arbforum.com, or via telephone at 1-

800-474-2371). The arbitration 

will be limited solely to the 

dispute or controversy between 

customer and Dell. NEITHER 

CUSTOMER NOR DELL 

SHALL BE ENTITLED TO JOIN 

OR CONSOLIDATE CLAIMS 

BY OR AGAINST OTHER 

CUSTOMERS, OR ARBITRATE 

ANY CLAIM AS A 

REPRESENTATIVE OR CLASS 

ACTION OR IN A PRIVATE 

ATTORNEY GENERAL 

CAPACITY. This transaction 
6

involves interstate commerce, and 

this provision shall be governed 

by the Federal Arbitration Act 9 

U.S.C. sec. 1-16 (FAA). Any 

award of the arbitrators shall be 

final and binding on each of the 

parties . . . . Information may be 

obtained and claims may be filed 

with the NAF at P.O. Box 50191,

Minneapolis, MN 55405.

Rule 1 of the NAF‟s “Code and Procedure,” referred to 

in paragraph 13 above, provided that “[t]his Code shall be 

administered only by the National Arbitration Forum or by 

any entity or individual providing administrative services by 

agreement with the National Arbitration Forum.” Also, as we 

can see in paragraph 13, the arbitration provision did not 

designate a replacement forum in the event that NAF was 

unavailable for any reason. But, as we see, the Terms and 

Conditions did incorporate the Federal Arbitration Act.

In addition, the Terms and Conditions provided that 

Texas law would govern interpretation of the Agreement and 

of any sales. The Terms and Conditions did not contain a 

severance provision and any alterations to the Terms and 

Conditions required the signature of both parties. 

Khan alleged that his 600m suffered from design 

defects, causing his computer to overheat and thereby destroy 

the computer‟s motherboard. Khan replaced the motherboard 

multiple times. After the third replacement, Dell refused to 

issue another replacement, claiming the warranty had expired. 

The 600m allegedly suffered from other design defects, which 
7

prevented it from being used in a manner consistent with 

Dell‟s marketing. 

On July 24, 2009, Khan filed a putative consumer class 

action on behalf of himself and other similarly situated 

purchasers and lessees of defectively designed 600m 

computers sold from approximately 2003 through 2006. 

Khan asserted seven claims for (1) violations of the New 

Jersey Consumer Fraud Act, (2) breach of express warranty, 

(3) breach of implied warranty of merchantability or fitness 

for particular purpose, (4) fraud, (5) negligent 

misrepresentation, (6) breach of implied covenant of good 

faith and fair dealing, and (7) unjust enrichment. At the time 

the lawsuit was filed, the NAF had been barred from 

conducting consumer arbitrations by Consent Judgment, 

which resolved litigation brought by the Attorney General of

Minnesota.1 The Consent Judgment “barred [the NAF] from 

the business of arbitrating credit card and other consumer 

disputes and [ordered the NAF to] stop accepting any new 

consumer arbitrations or in any manner participate in the 

processing or administering of new consumer arbitrations.” 

This was the result of government investigations revealing

that the NAF engaged in various deceptive practices that 

 

1

See generally “„Arbitration’ or ‘Arbitrary’: The 

Misuse of Mandatory Arbitration to Collect Consumer Debts” 

Before the Subcomm. on Domestic Policy, Oversight and 

Government Reform Comm. 3-5 (2009) (statement of 

Minnesota Attorney General Lori Swanson), 

http://oversight.house.gov/images/stories/Hearings/pdfs/2009

0722Swanson.pdf (recounting Minnesota Attorney General‟s 

findings).
8

disadvantaged consumers. 

According to Khan, such practices included:

(1) representing to consumers 

and the public that it was 

neutral; 

(2) convincing credit card 

companies and other 

creditors to include exclusive 

arbitration forum provisions 

in their contracts and making 

representations to such 

entities that it would favor 

the entities in the 

arbitrations; and

(3) identifying and appointing 

anti-consumer arbitrators 

and withholding referrals to 

arbitrators who decided 

cases against companies.

Khan also alleged that the Minnesota investigations 

found that these practices encouraged some corporations to 

select the NAF as their arbitration forum because of this 

prospect of favorable results. However, although Khan 

suggested that Dell must have chosen the NAF based on its 

corporate-friendly disposition, the record does not show that 

Dell was aware of these practices at the time that it selected 

the NAF as the arbitral forum governing Khan‟s purchase or 

that Dell selected the NAF for any improper reason.
9

On October 2, 2009, Dell moved to compel arbitration, 

arguing that the arbitration provision was binding and 

covered all of Khan‟s claims. Khan did not dispute that the 

Terms and Conditions governed the contract. Khan did, 

however, assert that the arbitration provision was 

unenforceable because the NAF, which the arbitration 

provision designated as the arbitral forum, was no longer 

permitted to conduct consumer arbitrations. Khan further 

contended that the NAF‟s designation was integral to the 

arbitration provision. He argued, for that reason, that, because 

the NAF could not perform its function, the arbitration 

provision in the Terms and Conditions should not be enforced

and the parties should proceed to litigation. 

On August 18, 2010, the District Court denied Dell‟s 

motion to compel arbitration and stay claims. See Khan v. 

Dell, Inc., No. 09-3703 (JAP), 2010 WL 3283529 (D.N.J. 

August 18, 2010). After surveying the relevant case law, and 

acknowledging that “the Third Circuit has not spoken on the 

issue,” id. at *3, the District Court found that the clause in the 

Terms and Conditions – “SHALL BE RESOLVED 

EXCLUSIVELY AND FINALLY BY BINDING 

ARBITRATION AND ADMINISTERED BY THE 

NATIONAL ARBITRATION FORUM (NAF) under its 

Code of Procedure then in effect” – demonstrated “the 

parties‟ intent to arbitrate exclusively before a particular 

arbitrator, not simply an intent to arbitrate generally.” Id. at 

*4. The District Court noted that “[s]ome courts have held 

that § 5 [of] the Federal Arbitration Act (“FAA”) provides a 

mechanism for the appointment of an arbitrator when a 

chosen arbitrator is unavailable”, id. at *2, but that the 

designation here of the NAF as the arbitrator was “integral” 

to the arbitration clause. Id. (citing Carideo v. Dell, Inc., No. 
10

C06-1772JLR, 2009 WL 3485933 (W.D. Wash. Oct. 26, 

2009), and Ranzy v. Extra Cash of Texas, Inc., No. H-09-

3334, 2010 WL 936471 (S.D. Tex. March 11, 2010)). The 

court concluded that granting Dell‟s motion to compel and 

appointing a substitute arbitrator would improperly force the 

parties to “submit to an arbitration proceeding to which they 

have not agreed.” Id. at 4.

II. JURISDICTION AND STANDARD OF REVIEW

A district court decides a motion to compel arbitration 

under the same standard it applies to a motion for summary 

judgment. Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., 

Ltd., 636 F.2d 51, 54 & n.9 (3d Cir. 1980). “The party 

opposing arbitration is given the benefit of all reasonable 

doubts and inferences that may arise.” Kaneff v. Delaware 

Title Loans, Inc., 587 F.3d 616, 620 (3d Cir. 2009) (internal 

quotations omitted). We exercise plenary review of questions 

concerning the “validity and enforceability of an agreement to 

arbitrate.” Edwards v. HOVENSA, LLC, 497 F.3d 355, 357 

(3d Cir. 2007). Although we subject underlying factual 

matters to the clearly erroneous standard, id., the “legal 

question whether the [appellee] may be compelled to arbitrate 

[his] claims” is reviewed under the plenary standard. Pritzker 

v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 7 F.3d 1110, 

1113 (3d Cir. 1993). 

III. ANALYSIS

In this appeal, we must determine whether the 

provision in the Terms and Conditions that the NAF be the 

arbitrator is exclusive to the NAF and is an integral part of the 

agreement between Dell and Khan, thus preventing the 
11

appointment of a substitute arbitrator. Because this is a 

question of arbitrability, it is governed by the FAA. Puleo v. 

Chase Bank USA, N.A., 605 F.3d 172, 180 (3d Cir. 2010). 

Congress passed the FAA “in response to widespread judicial 

hostility to arbitration agreements.” AT&T Mobility LLC v. 

Concepcion, __ U.S. __, __, 131 S. Ct. 1740, 1745 (2011).

The FAA reflects a “liberal federal policy favoring 

arbitration.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. 

Corp., 460 U.S. 1, 24 (1983). The Supreme Court has 

unequivocally stated “that questions of arbitrability must be 

addressed with a healthy regard for the federal policy 

favoring arbitration.” Id. However, the FAA respects the 

“fundamental principle that arbitration is a matter of 

contract,” Rent-A-Center, West, Inc. v. Jackson, __ U.S. __, __,

130 S. Ct. 2772, 2776 (2010), and that “arbitration „is a matter 

of consent, not coercion,‟” Stolt-Nielsen S.A. v. AnimalFeeds 

Int’l Corp., __ U.S. __, __, 130 S. Ct. 1758, 1773 (2010)

(quoting Volt Info. Sci., Inc. v. Bd. of Trs. of Leland Stanford 

Junior Univ., 489 U.S. 468, 479 (1989)).

The particular problem presented in this case – the 

unavailability of the NAF – is addressed in section 5 of the 

FAA, which provides a mechanism for substituting an 

arbitrator when the designated arbitrator is unavailable.2 See 

 

2 Section 5 provides:

If in the agreement provision be made for a method of 

naming or appointing an arbitrator or arbitrators or an umpire, 

such method shall be followed; but if no method be provided 

therein, or if a method be provided and any party thereto shall 

fail to avail himself of such method, or if for any other reason 

there shall be a lapse in the naming of an arbitrator, or 

arbitrators or umpire, or in filling a vacancy, then upon the 
12

Brown v. ITT Consumer Fin. Corp., 211 F.3d 1217, 1222 

(11th Cir. 2000) (“Where the chosen forum is unavailable . . . 

or has failed for some reason, § 5 applies and a substitute 

arbitrator may be named.”). In determining the applicability 

of Section 5 of the FAA when an arbitrator is unavailable, 

courts have focused on whether the designation of the 

arbitrator was “integral” to the arbitration provision or was 

merely an ancillary consideration. See, e.g., Reddam v. 

KPMG LLP, 457 F.3d 1054, 1061 (9th Cir. 2006), abrogated 

on other grounds by Atlantic Nat'l Trust LLC v. Mt. Hawley 

Ins. Co., 621 F.3d 931 (9th Cir. 2010); Brown, 211 F.3d at

1222. As the Eleventh Circuit has articulated the standard: 

“[o]nly if the choice of forum is an integral part of the 

agreement to arbitrate, rather than an „ancillary logistical 

concern,‟ will the failure of the chosen forum preclude 

arbitration.” Id. In other words, a court will decline to 

appoint a substitute arbitrator, as provided in the FAA, only if

the parties‟ choice of forum is “so central to the arbitration 

agreement that the unavailability of that arbitrator [brings] the 

agreement to an end.” Reddam, 457 F.3d at 1061. In this 

light, the parties must have unambiguously expressed their 

intent not to arbitrate their disputes in the event that the 

designated arbitral forum is unavailable. 

 

application of either party to the controversy the court shall 

designate and appoint an arbitrator or arbitrators or umpire, as 

the case may require, who shall act under the said agreement 

with the same force and effect as if he or they had been 

specifically named therein; and unless otherwise provided in 

the agreement the arbitration shall be by a single arbitrator.
13

According to Khan, this standard has been met because 

the Terms and Conditions designate the NAF as the exclusive 

arbitral forum, implying that disputes should not be arbitrated 

if the NAF is unavailable. Khan relies on the contract 

language that states that all disputes “SHALL BE 

RESOLVED EXCLUSIVELY AND FINALLY BY 

BINDING ARBITRATION ADMINISTERED BY THE 

NATIONAL ARBITRATION FORUM.” 

In our view, this language is ambiguous: 

“EXCLUSIVELY” could be read to modify “BINDING 

ARBITRATION,” “THE NATIONAL ARBITRATION 

FORUM,” or both. 

Khan, however, points out that the NAF‟s rules are 

incorporated into the contract, and that these rules provide 

that all arbitrations must be conducted by the NAF or an 

entity having an agreement with it. We conclude, however, 

that this requirement is also ambiguous as to what should 

happen in the event that the NAF is unavailable. The NAF‟s 

rules provide that they shall be interpreted in a manner 

consistent with the FAA and that, if any portion of the NAF 

rules are found to be unenforceable, that portion shall be 

severed and the remainder of the rules shall continue to apply. 

Our finding of ambiguity is confirmed by the 

conflicting interpretations of this language adopted by the 

courts that have considered it.

The court in Brown supports Dell‟s position that 

“exclusively” modifies “binding arbitration.” The arbitration 

agreement in Brown was interpreted as demonstrating an 

intent to arbitrate that trumped the designation of a particular
14

arbitrator who was no longer available. In Brown, a former 

ITT employee argued that the arbitration clause between the 

parties – which was virtually identical to the clause here –

was void because the NAF had been dissolved. Id. at 1220, 

1222. The Eleventh Circuit found that the unavailability of 

the NAF did not destroy the arbitration clause because 

Section 5 of the FAA provided a mechanism for appointing a 

replacement arbitrator. Id. at 1222. The court did note the 

“integral” exception but found that there was no evidence 

supporting the employee‟s claim that the forum provision was 

integral to the arbitration clause. Id.

Adler v. Dell, Inc., 2009 WL 4580739 (E.D. Mich. 

Dec. 3, 2009), also supports Dell‟s position. The facts and 

arguments proffered in Adler are identical to those before us. 

After noting the “integral” exception, the Adler court

articulated the presumption in favor of enforceability of 

Section 5 of the FAA as follows: “when the arbitrator named 

in the arbitration agreement cannot or will not arbitrate the 

dispute, the court does not void the arbitration agreement. 

Instead, it appoints a different arbitrator, as provided in the 

Federal Arbitration Act.” Id. at *2. In addition, the Adler

court found the clause “SHALL BE RESOLVED

EXCLUSIVELY AND FINALLY BY BINDING 

ARBITRATION ADMINSTERED BY THE NATIONAL 

ARBITRATION FORUM” was ambiguous on the issue of 

whether the NAF‟s exclusive designation was integral to the 

provision or whether the intent to arbitrate superseded the 

NAF‟s designation. Id. The court concluded that the 

arbitration provision did not meet the standard that an 

arbitration provision will fail only when the designation of an 

arbitrator is “as important a consideration as the agreement 

itself.” Id. at *3.
15

On the other hand, in Carideo v. Dell, Inc., No. C06-

1772JLR, 2009 WL 3485933 (W.D. Wash. Oct. 26, 2009), a 

case factually similar to this one, the plaintiff who had bought 

an allegedly defective Dell computer, brought suit against 

Dell. Dell moved to compel arbitration, pursuant to the

arbitration provision that designated the NAF as the arbitral 

forum. Applying the Ninth Circuit‟s decision in Reddam, the 

court in Carideo held that the parties‟ selection of the NAF 

was integral to the arbitration agreement. Carideo, 2009 WL 

3485933 at *4. Because the court found that the selection of 

the NAF and of its rules was integral to the arbitration 

provision, it concluded that appointing a substitute arbitrator 

would be a wholesale revision of the arbitration agreement. 

Id. at *6. In coming to its conclusion, however, the court 

stated that “[i]n general, the FAA provides that where the 

chosen arbitrator is unavailable, the court may appoint a 

substitute arbitrator.” Id. at *3 (emphasis added). We do not 

agree with the language used by the Carideo court. We note

that Section 5 provides that in the case of an unavailable 

arbitrator, “upon the application of either party to the 

controversy the court shall designate and appoint an 

arbitrator.” 9 U.S.C. § 5 (emphasis added). The difference 

between may and shall significant. We do not find Carideo

persuasive. 

Although courts are divided on the issue, we conclude 

that the “liberal federal policy in favor of arbitration”

counsels us to favor the Brown line of cases. The language 

relied on by Khan is at best ambiguous as to whether the 

parties intended to have their disputes arbitrated in the event 

that NAF was unavailable for any reason. Because of the 

ambiguity, it is not clear whether the designation of NAF is 

ancillary or is as important a consideration as the agreement 
16

to arbitrate itself. See Brown, 211 F.3d at 1222. Therefore, 

we must resolve this ambiguity in favor of arbitration. See 

Seus v. John Nuveen & Co., Inc., 146 F.3d 175, 186 (3d Cir. 

1998), overruled on other grounds by Green Tree Fin. Corp. 

Al. v. Randolph, 531 U.S. 79 (2000).

We note moreover that the arbitration provision in the

Terms and Conditions specifically incorporated the FAA, 9 

U.S.C. §§ 1-16, suggesting that, in the event of the NAF's 

unavailability, the FAA's procedures for addressing such a 

problem should apply. Finally, we note the notice, provided 

to Khan when he accepted the Terms and Conditions, which 

stated that they “contain an agreement to resolve disputes 

through arbitration, rather than through litigation.” 

Khan, however, argues that, even if the NAF‟s 

designation as the arbitral forum was not integral to the 

Terms and Conditions, Section 5 of the FAA nevertheless did

not apply here because NAF‟s unavailability was not a 

“lapse” within the meaning of statute. In support of this 

argument, Kahn cites In re Salomon Inc. S’holders’ 

Derivative Litig., 68 F.3d 554, 560 (2d Cir. 1995), a case in 

which the arbitral forum, the NYSE, had refused to arbitrate. 

Khan argues that the word “lapse” in Section 5 of the FAA 

means “a lapse in the naming of the arbitrator or in the filling 

of a vacancy on a panel of arbitrators or some other 

mechanical breakdown in the arbitrator selection process,” 

not the NYSE‟s refusal to arbitrate the dispute – or the NAF‟s 

unavailability to do so. 

We find In re Salomon unpersuasive. First, we do not 

see why the NAF‟s unavailability is not a “mechanical 

breakdown in the arbitrator selection process.” Apparently,
17

the NAF‟s Consent Judgment with the State of Minnesota 

prevents it from acting as an arbitrator. This unavailability 

appears to us to be a breakdown in the mechanics of the 

appointment process. To take a narrower construction of 

Section 5 would be inconsistent with the “liberal federal 

policy in favor of arbitration” articulated in the FAA.

We conclude therefore that the unavailability of NAF 

to hear the disputes between Khan and Dell constitutes a 

“lapse” within the meaning of Section 5.3

IV. CONCLUSION

The contract‟s language does not indicate the parties‟ 

unambiguous intent not to arbitrate their disputes if NAF is 

unavailable. Section 5 of the FAA requires a court to address 

such unavailability by appointing a substitute arbitrator. The 

District Court‟s contrary conclusion is at odds with the 

fundamental presumption in favor of arbitration. We will 

therefore vacate the judgment of the District Court and 

remand this case for further proceedings consistent with this 

opinion. 

 

3 Because the District Court denied Dell‟s motion to 

compel arbitration, it did not address Khan‟s alternative 

argument that the arbitration provision in the contract is 

unconscionable. We leave it to the District Court to address 

this argument on remand.
1

Raheel Ahmad Khan v. Dell, Inc., No. 10-3655

SLOVITER, Circuit Judge, dissenting.

The majority opinion acknowledges that the Supreme 

Court has stated the “fundamental principle that arbitration is 

a matter of contract,” Rent-A-Center, West, Inc. v. Jackson, 

____ U.S. ____, 130 S. Ct. 2772, 2776 (2010). Indeed it has 

so stated more than once. I dissent because the majority has 

given mere lip service to this “fundamental principle,” and its 

holding as applied in this particular case violates that 

principle. There is no ambiguity in the arbitration agreement. 

The plain text of the arbitration agreement clearly 

states that the selection by Dell of the NAF as arbitrator was 

integral to the agreement, and leads me to conclude that

Section 5 of the FAA is inapplicable and the unavailability of 

the NAF precludes arbitration.

The arbitration clause in Dell’s Terms and Conditions 

of Sale states:

13. Binding Arbitration. ANY CLAIM, DISPUTE, 

OR CONTROVERSY (WHETHER IN

CONTRACT, TORT, OR OTHERWISE, 

WHETHER PREEXISTING, PRESENT OR 

FUTURE, AND INCLUDING STATUTORY, 

COMMON LAW, INTENTIONAL TORT AND 

EQUITABLE CLAIMS) BETWEEN CUSTOMER 

AND DELL, its agents, employees, principals, 

successors, assigns, affiliates, (collectively for 

purposes of this paragraph, “Dell”) arising from or 

relating to this Agreement, its interpretation, or the 

breach, termination or validity thereof, the 

relationships which resulted from this Agreement 

(including, to the full extent permitted by applicable 

law, relationship with third parties who are not 

signatories to this Agreement), Dell’s advertising, or 

any related purchase SHALL BE RESOLVED 

EXCLUSIVELY AND FINALLY BY BINDING 

ARBITRATION ADMINISTERED BY THE 

NATIONAL ARBITRATION FORUM (NAF) under 
2

its Code of Procedure then in effect (available via the 

Internet at http://www.arb-forum.com, or via 

telephone at 1-800-474-2371). The arbitration shall 

be limited solely to the dispute or controversy 

between customer and Dell. NEITHER 

CUSTOMER NOR DELL SHALL CONSOLIDATE 

CLAIMS BY OR AGAINST OTHER 

CUSTOMERS, OR ARBITRATE ANY CLAIM AS 

A REPRESENTATIVE OR CLASS ACTION OR 

IN A PRIVATE ATTORNEY GENERAL 

CAPACITY. This transaction involves interstate 

commerce, and this provision shall be governed by 

the Federal Arbitration Act, 9 U.S.C. sec. 1-16 

(FAA). Any award of the arbitrator shall be final 

and binding on both of the parties . . . . Information 

may be obtained and claims may be filed with the 

NAF at P.O. Box 50191, Minneapolis, MN 55404.

App. at A67.

The majority reasons that this language is 

“ambiguous” because “‘EXCLUSIVELY’ could be read to 

modify ‘BINDING ARBITRATION,’ ‘THE NATIONAL 

ARBITRATION FORUM,’ or both,” see Majority Opinion 

supra page 13, and that the “liberal federal policy in favor of 

arbitration” thus compels the court to resolve this 

“ambiguity” in favor of arbitration. See Majority Opinion 

supra page 15. However, “the FAA’s proarbitration policy 

does not operate without regard to the wishes of the 

contracting parties.” Mastrobuono v. Shearson Lehman 

Hutton, Inc., 514 U.S. 52, 57 (1995). The majority’s

conclusion focuses solely on the language used rather than 

giving appropriate weight to the additional clues that 

demonstrate the parties’ clear intent. 

The phrase “EXCLUSIVELY AND FINALLY BY 

BINDING ARBITRATION ADMINISTRATED BY THE 

NATIONAL ARBITRATION FORUM” is written in all 

capital letters yet surrounded by clauses written in lower case 

letters. This aesthetic prominence indicates the parties’ intent 

for the entire phrase to be read together and emphasized as an 

essential part of the agreement. Moreover, as noted by the 

District Court, “[t]he NAF is expressly named, the NAF’s 
3

rules are to apply, . . . no provision is made for an alternate 

arbitrator [, and the] language used is mandatory, not 

permissive.” App. at A12. The agreement also states that 

“[i]nformation may be obtained and claims may be filed with 

the NAF at P.O. Box 50191, Minneapolis, MN 55404,” again 

illustrating the central role that NAF was intended to play in 

arbitrations pursuant to this agreement. 

Given “the consensual nature of private dispute 

resolution,” courts must respect the principle that “parties are 

generally free to structure their arbitration agreements as they 

see fit.” Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 130 S. 

Ct. 1758, 1774 (2010) (internal quotation marks and citation 

omitted). Here, the parties agreed only to binding arbitration 

administered by the NAF. Full analysis of the plain text of 

the agreement as a whole shows that the selection of the NAF 

as arbitrator was an integral part of the agreement to arbitrate. 

Therefore, Section 5 of the FAA is inapplicable and the 

unavailability of the NAF precludes arbitration. I respectfully 

dissent.

There is yet another reason why Dell’s request to 

proceed via arbitration rather than trial should not be granted, 

and that reason applies to this defendant in this case. The 

majority avoids any discussion of the underlying reason why 

arbitration by NAF is unavailable. In an action pending in 

Minnesota, the Minnesota Attorney General made public the 

results of its year-long investigation that showed that NAF, 

far from being the neutral arbitration forum contemplated by 

Congress when it enacted the Federal Arbitration Act,

represented to corporations that it would appoint anticonsumer arbitrators and discontinue referrals to arbitrators 

who decided cases in favor of consumers. See Amicus Curiae 

Br. at 8, 13-15; see also Arbitration or “Arbitrary”: The 

Misuse of Mandatory Arbitration to Collect Consumer Debts: 

Hearing Before the H. Domestic Policy Subcomm. of Comm. 

on Oversight and Gov’t Reform, 111th Cong. (July 22, 2009).

Rather than disputing the allegations, NAF accepted a 

consent judgment that barred it from administering and 

participating in all consumer arbitrations. See id. (testimony 

of Lori Swanson, Minnesota Attorney General, at 3) (“Under 

the Consent Judgment, [NAF] is barred from the business of 
4

arbitrating credit card and other consumer disputes and must 

stop accepting any new consumer arbitrations or in any 

manner participate [sic] in the processing or administering of 

new consumer arbitrations.”); see also App. at A273-76. It 

cannot be insignificant that Dell named NAF as the exclusive 

forum in its arbitration clauses. It followed that the District 

Court refused Dell’s request to designate a substitute 

arbitrator. It was certainly not error for the District Court in 

this case to deny substitution at the behest of Dell. Even 

assuming that in the usual case, substitution of a neutral 

arbitrator would be an acceptable alternative, it is evident that 

this is not an ordinary case and we should affirm the District 

Court’s denial of Dell’s motion.