The Supreme Court of Alabama found the arbitration clause was inapplicable under state law. On appeal, the United States Supreme Court found the transaction involved interstate commerce because of the multistate nature of Terminix coupled with Allied-Bruce's procurement of treatment materials outside Alabama. Despite engaging in arbitration pursuant to the written agreement, Baer filed a petition in state court, seeking damages for breach of contract, negligence, and gross negligence. The case was removed to federal court. On appeal, Baer argued that the Act did not apply to his case because there had been no showing that the transaction involved interstate commerce.
Interstate commerce is involved so long as some part of the transaction has a nexus to it.
Nicholson v. Labor Ready, Inc. , No. 975 F. Supp. at 1278. Because Terminix operated in 48 states and used chemicals manufactured and stored in other states, its dispute with Baer was covered by the Act. 975 F. Supp. at 1278. Biomat issued shares of its stock to citizens of various states, and Biomat sells its product throughout the country.