Opinion ID: 1690005
Heading Depth: 1
Heading Rank: 1

Heading: The Federal Arbitration Act applies to this case because interstate commerce is involved.

Text: Before we address Dyess's claims, we must first determine whether the Federal Arbitration Act could apply. Dyess argues that it does not apply because, he says, his claims do not involve interstate commerce and are not based on a transaction that involved interstate commerce. We disagree; his claims clearly involve or are based on an insurance agreement that involved, interstate commerce. American Hardware is an Indiana corporation and Jack Ingram Motors is an Alabama corporation. In Allied-Bruce Terminix Companies v. Dobson, 513 U.S. 265, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995), the United States Supreme Court analyzed § 2 of the Federal Arbitration Act, 9 U.S.C. § 2, which addresses the commerce requirement. Section 2 provides: A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. The United States Supreme Court broadly interprets the phrase involving commerce. That Court has said, After examining the statute's language, background, and structure, we conclude that the word `involving' is broad and is indeed the functional equivalent of `affecting.' AlliedBruce Terminix, at 273-74. The Supreme Court held that the term involving commerce was intended to reach to the limits of Congress's Commerce Clause power. Id., at 273, 115 S.Ct. at 839. Based on this analysis, we conclude that the policy issued by American Hardware to Jack Ingram Motors involves interstate commerce because the policy was between corporations of different states. Therefore, the Federal Arbitration Act applies, and it preempts any state law to the contrary. See Terminix International Co. Ltd. Partnership v. Jackson, 669 So.2d 893, 895 (Ala.1995). There are commercial transactions in which the involvement of interstate commerce is tangential. However, a transaction between two companies located in separate states is not one of those transactions. Substantive federal law on arbitration controls in any case where there is a conflict between federal law and Alabama law. Id., at 895.