## Facts

- A securities brokerage account was opened at Robinson-Humphrey in Brenda Susan Chastain’s name, allegedly by her father acting on her behalf.
- Two “customer agreements” for the account contained broad clauses requiring arbitration of disputes connected to the account.
- Chastain did not sign the 1979 agreement, and the actual signer could not be identified.
- Chastain did not sign the 1982 agreement; it was signed only by her father, and she was not listed as a signatory.
- Chastain denied granting her father authority (including via power of attorney) to bind her to any agreement with the brokerage firm and denied ratifying any arbitration agreement.
- Chastain sued the brokerage firm for securities fraud, alleging the account was opened and operated without authorization, was churned, and was used in connection with her father’s indebtedness.

## Issues

1. Under FAA § 4, whether the court or arbitrators must decide if Chastain is bound by an arbitration clause when she denies ever agreeing to arbitrate.
2. Whether a nonsignatory who denies assent and disputes agency or ratification can be compelled to arbitrate based on account agreements signed by another person.

## Decision

- The Eleventh Circuit affirmed the denial of the motion to compel arbitration.
- Because “the making of the arbitration agreement” was in issue, FAA § 4 required a judicial determination of whether Chastain agreed to arbitrate before arbitration could be compelled.
- The separability doctrine did not control because Chastain challenged the existence of any agreement to arbitrate, not merely the validity of a concededly formed contract.
- The asserted theories of apparent authority and ratification raised factual questions for the district court to resolve before any order compelling arbitration could issue.

## Legal Principles

- FAA § 4 permits an order compelling arbitration only when the making of the arbitration agreement is not in issue; if formation is genuinely disputed, the court must decide that threshold question.
- The separability doctrine applies to challenges to the validity of an existing contract containing an arbitration clause, not to disputes over whether any arbitration agreement was ever formed.
- The party seeking to compel arbitration bears the burden of proving the existence of an enforceable arbitration agreement binding the party to be compelled, including through contract, agency, or ratification principles when the party is a nonsignatory.

## Conclusion

When a purported customer denies signing or authorizing arbitration agreements and the proponent concedes the lack of signature, FAA § 4 requires the court to determine whether an agreement to arbitrate was ever made; arbitration cannot be compelled until that formation question is resolved.


Chastain v. Robinson-Humphrey Co., 957 F.2d 851 (11th Cir. 1992)