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UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 94-30562
_____________________
RON FOLSE,
Plaintiff-Appellee,
VERSUS
RICHARD WOLF MEDICAL INSTRUMENTS CORP., ET AL.,
Defendants,
RICHARD WOLF MEDICAL INSTRUMENTS CORP.,
Defendant-Appellant.
____________________________________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
_____________________________________________________
(June 16, 1995)
Before GARWOOD, JOLLY, and BARKSDALE, Circuit Judges.
RHESA HAWKINS BARKSDALE, Circuit Judge:
At issue is the district court's denial of the motion of
Richard Wolf Medical Instruments Corp. to compel a return to
arbitration and to stay Ron Folse's action concerning the same
dispute. We REVERSE AND REMAND.

I.
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In January 1988, Folse entered into a sales representative
agreement with Wolf. The agreement required any dispute arising
from the employment to be resolved through arbitration.1
Following Folse's resignation in September 1991, a dispute
arose over the failures of Wolf to pay sales commissions due Folse,
and of Folse to return inventory (sample medical instruments) to
Wolf. Accordingly, in July 1992, Wolf demanded arbitration; the
parties proceeded to a hearing before Arbitrator Jack Hansen on
February 16, 1993.
Although the arbitrator expected to make a ruling within 30
days from the hearing, the first "conditional" ruling did not issue
until September 1993, more than six months after the hearing.
Under that ruling, Folse was to return portions of Wolf's
inventory, and Wolf was to provide documentation from which Folse
could substantiate his commissions.
Six months later, neither party had complied.2 On February 6,
1994, the arbitrator issued his second conditional ruling, noting
1
The arbitration clause stated:
Any controversy or claim arising out of or relating
to this Agreement, or the breach thereof, shall be
settled by arbitration in accordance with the
Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the
award rendered by the Arbitrator(s) may be entered
in any Court having jurisdiction thereof. The
arbitration is to be held in Chicago, Illinois.
2
It appears that Wolf did not produce the requested
documentation, claiming it did not possess it. And although Folse
was willing to ship portions of the inventory to Wolf, he refused
to provide written confirmation of an agreed date on which the
parties could inspect the inventory.
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the parties had acted unreasonably, urging compliance with the
first ruling, and threatening the parties with forfeiture of their
claims. On April 25, 1994, for unexplained reasons, Hansen was
removed as the arbitrator by the American Arbitration Association.
The parties were asked to select a new arbitrator from a list
provided by the AAA. Wolf, however, wrote the AAA requesting that
arbitration be held in abeyance for six months so that the parties
could attempt to settle the matter. The AAA forwarded this request
to Folse for comment; Folse responded by filing this action.
Folse's complaint claimed breach of contract and failure of
the arbitration process, and named Wolf, the AAA, and Hansen as
defendants. Wolf moved, pursuant to �� 3 and 4 of the Federal
Arbitration Act (the Act), 9 U.S.C. �� 3, 4, to compel the parties
to return to arbitration, and for a stay of the action. Adopting
as its reasoning Folse's brief in opposition to Wolf's motion, the
district court denied the motion.
II.
We review freely the district court's refusal to compel the
parties to return to arbitration, and to stay Folse's action.
Snap-On Tools Corp. v. Mason, 18 F.3d 1261, 1264 (5th Cir. 1994)
(compel arbitration); In re Complaint of Hornbeck Offshore (1984)
Corp., 981 F.2d 752, 754 (5th Cir. 1993) (stay proceedings).
Wolf moved, pursuant to � 4 of the Act, 9 U.S.C. � 4, to
compel arbitration (in this instance, return to arbitration). A
district court's first task in evaluating such a motion is to
determine "whether the parties agreed to arbitrate [the] dispute".
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Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S.
614, 626 (1985); Catholic Diocese v. A.G. Edwards & Sons, Inc., 919
F.2d 1054, 1056 (5th Cir. 1990). When the parties have so agreed,
they "should be held to [their agreement]", unless some "legal
constraint[] external to the parties' agreement foreclos[es] the
arbitration of those [disputes]" (as when "Congress itself has
evinced an intention to preclude a waiver of judicial remedies for
the statutory rights at issue"). Mitsubishi Motors, 473 U.S. at
628. Folse does not deny that this dispute is covered by the
arbitration agreement, nor does he contend that some external legal
constraint should foreclose arbitration. Rather, he contends, and
the district court agreed, that the arbitration process has simply
failed, and that he should not be made to endure it any longer.3
Folse relies on � 10 of the Act, 9 U.S.C. � 10, which states,
in part:
In either of the following cases the United States
court in and for the district wherein the award was
made may make an order vacating the award upon the
application of any party to the arbitration --
. . .
(c) Where the arbitrators were guilty of misconduct
in refusing to postpone the hearing, upon
sufficient cause shown, or in refusing to hear
3
Folse also cites authority for the proposition that Hansen and
the AAA, by their failure to produce a timely result, have lost
their immunity and are subject to this action. E.g. E.C. Ernst,
Inc. v. Manhattan Const. Co., 551 F.2d 1026, 1033 (5th Cir.), op.
modified, 559 F.2d 268 (5th Cir. 1977), cert. denied, 434 U.S. 1067
(1978). We need not address this point. Hansen and the AAA have
not asserted immunity or, to our knowledge, even responded to
Folse's complaint. Moreover, Folse's complaint requests no relief
against Hansen or the AAA, other than the claim that jurisdiction
no longer lies with them.
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evidence pertinent and material to the controversy;
or any other misbehavior by which the rights of any
party have been prejudiced.
(d) Where the arbitrators exceeded their powers, or
so imperfectly executed them that a mutual, final,
and definite award upon the subject matter
submitted was not made.
(e) Where an award is vacated and the time within
which the agreement required the award to be made
has not expired the court may, in its discretion,
direct a rehearing by the arbitrators.
(Emphasis added.) Folse contends that the arbitrator's conduct
matches any one of the above bases for vacatur. We, however, need
not reach these contentions in order to conclude that � 10 provides
no basis for the district court's refusal to compel arbitration.
By its own terms, � 10 authorizes court action only after a
final award is made by the arbitrator. Michaels v. Mariforum
Shipping, S.A., 624 F.2d 411, 414 (2d Cir. 1980). Folse concedes
that there has been no final award; and, as noted, he does not
dispute either that the arbitration agreement is valid, or that his
claims fall within it. Therefore, arbitration should have been
compelled. See Smith, Barney, Harris Upham & Co. v. Robinson, 12
F.3d 515, 520-21 (5th Cir. 1994).
We conclude also that the district court erred in refusing to
stay this action pursuant to � 3 of the Act, 9 U.S.C. � 3.
[Section 3] provides for a stay of legal
proceedings whenever the issues in a case are
within the reach of an arbitration agreement. This
provision is mandatory: If the issues in a case are
within the reach of the agreement, the district
court has no discretion under section 3 to deny the
stay.
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In re Complaint of Hornbeck, 981 F.2d at 754 (internal quotations
and citations omitted). Again, the agreement and the arbitrability
of the issues are not disputed.4
Needless to say, the arbitration of this dispute should have
never reached this point in time (over three years since the
arbitration process began) or place (federal court). And, it is
more than unfortunate that the arbitration process, designed to
resolve disputes in a timely and cost-efficient manner, has failed
the expectations of at least one, if not both, of the parties.
Nonetheless, our directive in this case is clear: these facts do
not permit us to intervene until the parties see this arbitration
through to a final award.5
III.
For the foregoing reasons, the judgment is REVERSED and this
matter is REMANDED, with instructions that the parties be returned
to arbitration, and that Folse's action be stayed.
REVERSED AND REMANDED.
4
Folse notes correctly that � 3 requires a stay only when the
applicant for the stay is not in default of the arbitration. He
suggests that Wolf was in default by failing to comply with the
arbitrator's rulings. The district court did not make such a
finding, nor do we.
5
Much of the delay in the arbitration is attributable to the
parties. We do not reach whether some set of circumstances might
justify relief from an arbitration, even when no final award has
issued. We are not here presented with such a scenario.
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