Skip to main content


Sapp v. Indus. Action Servs., LLC, 2023 U.S. App. LEXIS 18428, 2023 WL 4632784 (3d Cir. July 20, 2023) (Ambro, C.J.) Arbitration is an ever-growing trend that many parties prefer and courts routinely enforce. Yet that trend cannot continue so far that arbitration is forced on parties who never agreed to it. That is what happened here. The parties agreed in an asset purchase agreement that certain narrow factual questions about the preparation of two forms of financial statements be sent to an accounting firm—i.e., an expert in preparing financial statements. The accounting firm then had 30 days to audit the statements and send back final drafts. The parties did not label this process. They called it neither arbitration nor expert determination (two common forms of alternative dispute resolution). The accounting firm had limited authority, a narrow scope of duty, a short deadline, and no procedures for conducting discovery or accepting legal arguments. This context calls for an expert determination; thus we part from the District Court’s decision compelling arbitration, vacate its entry of judgment, and remand for further proceedings consistent with this opinion. First, the narrow scope of authority granted to the Accounting Firm points to an expert determination. Second, the Purchase Agreement provides only thirty days for the Accounting Firm to make its decision assuming the parties “use commercially reasonably good faith efforts.” Third, the provision includes no procedural rules that would govern the alleged arbitration. Fourth, § 11.17 of the Purchase Agreement says disputes should “be submitted to non-binding mediation,” and if it fails, “either party may initiate litigation.” We reverse the District Court’s May 29, 2020, order compelling arbitration and vacate its May 26, 2022, order entering judgment for IAS. We thus remand the case for further proceedings consistent with this opinion.