## Facts

- Comprehensive Accounting Corporation franchised accounting businesses to Glenn and Jean Rudell under a written franchise agreement containing an arbitration clause.
- Comprehensive terminated the Rudells’ franchise and commenced arbitration pursuant to the contract.
- The Rudells received notice of the arbitration hearing but refused to participate; Mr. Rudell wrote that he could not afford to travel to Chicago and did not see anything left to arbitrate.
- The arbitration proceeded ex parte and resulted in an award for Comprehensive that included monetary damages and equitable relief.
- Comprehensive petitioned a federal district court to confirm the award under § 9 of the Federal Arbitration Act (FAA), 9 U.S.C. § 9.
- The Rudells opposed confirmation, asserting they lacked actual knowledge of the arbitration clause because they allegedly did not receive a fully executed copy of the contract and might not have been aware of certain contract restrictions.
- The district court confirmed the award; on appeal, the Rudells pursued only the argument that they should have been allowed to prove their lack of actual knowledge of the arbitration clause.

## Issues

1. Whether a party that received notice of arbitration and declined to participate may, after an award is issued, resist judicial confirmation by belatedly disputing the existence or validity of the agreement to arbitrate.
2. Whether claimed lack of actual knowledge of an arbitration clause can be raised for the first time at the award-confirmation stage when the party signed the contract and did not seek judicial relief before arbitration proceeded.

## Decision

- The Seventh Circuit affirmed the order confirming the arbitration award.
- The court held the Rudells’ attempt to challenge the arbitration clause at the enforcement stage was untimely.
- Because the Rudells had notice of the arbitration and an opportunity to contest arbitrability before or during the proceeding, they could not wait until after losing to raise that objection.

## Legal Principles

- Under the FAA, judicial review at the award-confirmation stage is narrowly limited; parties generally may not introduce late challenges to whether an agreement to arbitrate exists when they could have raised the objection earlier.
- Disputes about the existence of an agreement to arbitrate ordinarily must be raised before arbitration proceeds, such as in proceedings to compel or stay arbitration under the FAA.
- A party that signs a contract containing an arbitration clause and receives notice of arbitration, but elects not to participate or seek timely judicial intervention, waives later objections to arbitrability asserted for the first time in opposition to confirmation.
- Contractual assent is evaluated objectively; a signed agreement is strong evidence of assent notwithstanding a later claim of subjective unawareness of a specific term.

## Conclusion

The court affirmed confirmation of the arbitration award because the franchisees, despite receiving notice, chose not to participate in arbitration or timely contest arbitrability and therefore could not later oppose enforcement by claiming they did not know of the arbitration clause.


Comprehensive Acct. Corp. v. Rudell, 760 F.2d 138 (7th Cir. 1985)