Bernhardt v. Polygraphic Co. of America, Inc.

Bernhardt (plaintiff) worked under a contract with Polygraphic Co. of America (defendant) that required contract disputes to go to binding arbitration under New York law. When a dispute arose, Bernhardt sued instead in federal court in Vermont (a diversity case, since he was a Vermont resident and the company was a New York corporation). The company asked the court to pause the lawsuit and send the case to arbitration. Under Vermont law, arbitration clauses like this one were unenforceable; the district court applied Vermont law and refused to stay the case. The court of appeals reversed, treating the question as "procedural" and therefore governed by federal law favoring arbitration.