Motion to Dismiss and Compel Arbitration: Burden and Defenses

A motion to dismiss and compel arbitration is a request the defending party files early in a lawsuit asking the judge to end the court case and send the dispute to private arbitration instead, based on an arbitration clause the parties already agreed to. These clauses turn up in employment contracts, consumer agreements, and online terms of service, and the Federal Arbitration Act requires courts to enforce them like any other contract term.¹ If the judge grants the motion, the lawsuit pauses and the fight moves to an arbitrator. If the judge denies it, the case continues in court, but the losing side gets an immediate right to appeal.

What the Moving Party Has to Show

The court’s inquiry on this motion is narrow. The judge does not decide who is right about the underlying dispute. Two questions control the outcome.

First, is there a valid arbitration agreement between the parties? The moving party has to show that both sides agreed to arbitrate, whether through a signature, a clicked checkbox, or some other act of acceptance. Arbitration clauses do not need a physical signature to be enforceable. A “clickwrap” agreement, where you check a box or click “I agree” before continuing, is almost always enforced because clicking is an affirmative act. “Browsewrap” terms buried behind a hyperlink you never had to open are a harder sell. For those, courts generally require conspicuous notice and some clear action indicating agreement. Tiny fonts, hidden links, and a plain “Continue” button with no indication of a legal commitment often fail that test.

Second, do the claims in the lawsuit fall within the scope of that agreement?² A narrowly worded clause covering “disputes arising out of this contract” may not reach a separate legal theory like discrimination. A broad clause covering “any and all disputes between the parties” is far more likely to pull everything in. The judge compares the actual claims against the actual language.

Courts start with a strong presumption in favor of arbitration, and the party resisting the motion carries the burden of proving the agreement should not be enforced.

Grounds for Opposing the Motion

The FAA includes an escape hatch. The same provision that makes arbitration clauses enforceable also lets courts invalidate them on any ground that would void a regular contract, such as fraud, duress, or unconscionability.¹ That “savings clause” is the main tool available to someone fighting a motion to compel.

Unconscionability

Unconscionability is the most commonly litigated defense, and it has two components. Procedural unconscionability focuses on how the agreement was formed: a take-it-or-leave-it contract with no room for negotiation, confusing or contradictory language, or terms hidden where a reasonable person wouldn’t find them. Substantive unconscionability focuses on the terms themselves: clauses that let the company sue you in court but force you into arbitration, fee-shifting provisions that make arbitration prohibitively expensive, or unreasonably shortened deadlines for bringing claims. Most courts require some showing of both, though a particularly extreme showing on one side can sometimes make up for a weaker showing on the other.

Waiver Through Litigation Conduct

A party that participates heavily in the lawsuit before invoking arbitration can lose the right to compel it. Filing motions, conducting discovery, and litigating for months before suddenly demanding arbitration is behavior inconsistent with wanting to arbitrate. In 2022, the Supreme Court held that federal courts cannot impose an arbitration-specific waiver standard. The ordinary waiver rules that apply to any contractual right apply here, without any special requirement that the opposing party prove it was prejudiced by the delay. Courts look at how much time passed, how far the litigation progressed, and whether the party’s actions matched a real intent to arbitrate.

Claims Outside the Agreement’s Scope

If your claims arise from something separate from the contract that contains the arbitration provision, you can argue they fall outside its reach. A tort claim for personal injury, for example, might not be covered by an arbitration clause tucked into a software license. The strength of this argument depends entirely on how the clause is worded.

Formation Problems

If no agreement was ever formed, there is nothing to enforce. This is where challenges to clickwrap and especially browsewrap arrangements come in. Showing that you were never actually put on notice of the arbitration terms, or that you never took any action that could reasonably count as acceptance, undercuts the moving party’s first required element.

When the FAA Doesn’t Apply at All

Two categories of disputes sit outside the FAA, which means a motion to compel under it fails before the main analysis even starts.

The FAA explicitly excludes contracts of employment for seamen, railroad employees, and other workers engaged in interstate transportation. The Supreme Court interpreted this exemption broadly in 2019, holding that “contracts of employment” means any work agreement, not just traditional employer-employee relationships. Independent contractors working in transportation, such as truck drivers classified as independent contractors, fall outside the FAA.

Since March 2022, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act lets a person alleging sexual harassment or sexual assault reject a pre-dispute arbitration agreement. The person bringing the claim chooses whether to arbitrate or litigate, regardless of what the contract says. The exemption applies to the whole case, so when a sexual harassment claim is filed alongside claims like wage disputes or retaliation, a court can keep everything in litigation. The statute also sends the question of whether the exemption applies to a judge, even when the arbitration agreement contains a delegation clause pointing enforceability questions to the arbitrator.³

Delegation Clauses Change Who Decides

Some arbitration agreements include a delegation clause, which hands the threshold question of enforceability to the arbitrator rather than the judge. When one exists, the court’s role shrinks. The judge only decides whether the delegation clause itself is valid. If it is, the arbitrator takes over everything else, including whether the broader arbitration agreement is enforceable and whether the claims are within its scope.⁴

Many standard arbitration agreements, especially those incorporating AAA or JAMS rules, effectively include delegation clauses. To keep the enforceability fight in front of the judge, you have to challenge the delegation provision specifically. A general attack on the agreement as a whole will not do it.

What Happens If the Court Grants the Motion

Despite the name, a granted motion does not actually make the lawsuit disappear. The court has to pause the case by issuing a stay rather than dismissing it outright.⁵ The Supreme Court confirmed in 2024 that this is mandatory. When a party requests a stay and the court finds the dispute arbitrable, the judge has no discretion to dismiss instead.⁶

The stay keeps the case on the docket in an inactive state. Once arbitration ends, either party can return to the same judge to confirm the award, challenge it, or deal with anything left over, without filing a new lawsuit.

The parties then start arbitration according to whatever process the agreement specifies. Many agreements name a provider like the American Arbitration Association or JAMS. In that case, you file a demand for arbitration with the organization, submit a copy of the agreement, and pay a filing fee.⁷ If the agreement does not name a provider, the court can appoint an arbitrator under the FAA.²

What Happens If the Court Denies the Motion

A denial means the judge found either that no valid arbitration agreement exists or that the claims don’t fall within its scope. The lawsuit continues through normal litigation, moving to discovery and eventually trial.

A denial is not necessarily the end of the arbitration question. The FAA gives the losing party an immediate right to appeal, even though the case is still at an early stage. You usually cannot appeal a ruling until the case is over, but motions to compel arbitration are an exception, and the party that lost can take an interlocutory appeal right away.⁸

The asymmetry is intentional. If the motion is granted, the party that wanted to litigate generally cannot take an immediate appeal, because the statute blocks interlocutory appeals of orders compelling arbitration or staying proceedings.⁸ The structure tilts toward getting cases into arbitration quickly.

When a party appeals a denial, the trial court proceedings freeze automatically. The Supreme Court ruled in 2023 that the district court must stay the case while the appeal is pending, because without an automatic stay the right to avoid litigation through arbitration could be lost during the months it takes to resolve the appeal.⁹

1
Office of the Law Revision Counsel. 9 USC 2 – Validity, Irrevocability, and Enforcement of Agreements to Arbitrate
2
Office of the Law Revision Counsel. 9 USC 4 – Failure to Arbitrate Under Agreement; Petition to United States Court Having Jurisdiction for Order to Compel Arbitration
3
Office of the Law Revision Counsel. 9 USC 402 – No Validity or Enforceability
4
Legal Information Institute. Rent-A-Center, West, Inc. v. Jackson
5
Office of the Law Revision Counsel. 9 USC 3 – Stay of Proceedings Where Issue Therein Referable to Arbitration
6
Supreme Court of the United States. Smith v. Spizzirri
7
American Arbitration Association. File a Case
8
Office of the Law Revision Counsel. 9 USC 16 – Appeals
9
Supreme Court of the United States. Coinbase, Inc. v. Bielski