In a March 21, 2017, precedential opinion, Aliments Krispy Kernels, Inc. v. Nichols Farms, the Third Circuit noted that more than 20 years earlier, in First Options of Chicago, Inc. v. Kaplan, and since, the U.S. Supreme Court had held that trial courts must determine whether parties had entered into an agreement to arbitrate future disputes by applying ordinary state law contract and agency principles applicable to all contracts. As Aliments noted, this standard was at odds with a 1980 Third Circuit case, Par-Knit Mills, Inv. v. Stockbridge Fabrics Co., which had held that the proponent of an arbitration agreement must prove “an express, unequivocal agreement to that effect.”
In a fairly gentle manner, the 2017 circuit opinion allowed that its 2009 published opinion in Century Indemnity Co. v. Certain Underwriters of Lloyd’s, London, had recognized the difference, and thus put counsel and courts on notice of the demise of the 1980 case language. Nevertheless, it admonished, trial courts had continued to use and quote from the 1980 case as though neither the Supreme Court nor the circuit had spoken. The 2017 opinion continued: Henceforth, trial courts under its supervision should cease citing to the outdated and incorrect standard as set out in the 1980 case.
