## Facts

- Lisa A. Smith agreed to sell her controlling interest in PIMMS Corporation to Argenbright, Inc. for approximately $65 million.
- The contract required disputes to be arbitrated in Chicago under the rules of the American Arbitration Association (AAA) and construed under Minnesota law.
- After the sale, Argenbright asserted Smith had overstated PIMMS’s revenue potential, claimed breach of warranty, and sought $14 million in damages in AAA arbitration.
- The AAA provided a list of 15 potential arbitrators for a large, complex commercial arbitration; 14 were men and 1 was a woman.
- Under AAA list-and-strike procedures, each party could strike unacceptable candidates and rank the remainder.
- Argenbright struck the only woman on the list, whom Smith had ranked first; a three-member, all-male panel was selected.
- Smith sued Argenbright and the AAA in federal court seeking to stop arbitration, alleging breach of contract and denial of equal protection based on the panel’s composition.

## Issues

1. Whether providing a largely male arbitrator list and striking the only woman stated a claim for breach of contract or other actionable violation of the parties’ arbitration agreement.
2. Whether constitutional limits on gender-based peremptory strikes in jury selection apply to party strikes in private AAA arbitration.
3. Whether a party may obtain pre-award judicial intervention to challenge arbitrator selection procedures, rather than proceeding and later seeking relief only on the Federal Arbitration Act’s limited vacatur grounds.
4. Whether Smith stated a viable federal equal protection claim against private parties involved in arbitration.

## Decision

- The Seventh Circuit affirmed dismissal under Federal Rule of Civil Procedure 12(b)(6).
- The court held Smith did not state a breach-of-contract claim because the contract incorporated AAA rules and the AAA followed the contracted-for list-and-strike process.
- The court rejected extending jury-selection doctrines restricting gender-based peremptory challenges to private arbitration.
- The equal protection claim failed because the AAA and Argenbright were not state actors and the alleged conduct was private.
- The court declined to permit a broad pre-award judicial challenge to arbitrator selection based on dissatisfaction with the FAA’s limited post-award review.

## Legal Principles

- When an arbitration agreement incorporates institutional rules, compliance with those rules generally satisfies the parties’ contractual bargain absent a specific contrary contractual term or statutory prohibition.
- Constitutional equal protection constraints require state action; private arbitration administrators and private litigants are ordinarily not subject to equal protection claims for their arbitration conduct.
- Doctrines governing peremptory challenges in jury selection do not automatically apply to arbitrator selection in private arbitration.
- The FAA’s policy favoring arbitration and its limited grounds for vacating awards do not create a general right to pre-award judicial restructuring of arbitral procedures.

## Conclusion

The court upheld dismissal because the parties received the arbitrator-selection process they contracted for under AAA rules, and Smith’s attempt to constitutionalize private arbitrator strikes and obtain pre-award judicial redesign of arbitration was not legally cognizable.


Smith v. Am. Arbitration Ass’n, Inc., 233 F.3d 502 (7th Cir. 2000)