Pre-Paid Legal Services, Inc. v Cahill

Pre-paid sued Cahill alleging breach of contract. Cahill obtained a stay to allow arbitration. The arbitration was terminated based on Cahill’s failure to pay fees. The district court lifted the stay on Pre-Paid’s motion. The panel affirmed. It held that it had jurisdiction under the Federal Arbitration Act as there is no meaningful distinction between a request for stay and refusal to keep the stay in place and Cahill actually sought the stay to continue under section 3 of the Act which satisfies all requisites for jurisdiction. On the merits the panel held that the arbitration went according to the terms of the agreement which set termination as a consequence of failure to pay fees and Cahill was in default of the arbitration agreement for failing to pay fees. The panel also held the question of default under Section 3 is a legal matter for the district court to decide and in any event the arbitrators found Cahill in default for failing to pay fees.