Thank You For Submiting Feedback!
A dispute about what the arbitration contracts mean is a dispute "relating to the contract" and the resulting "relationships." Any doubt about the scope of arbitrable issues should be resolved in favor of arbitration.
The Bazzle respondents and the Lackey and Buggs respondents separately entered into contracts with petitioner Green Tree Financial Corp. that were governed by South Carolina law and included an arbitration clause governed by the Federal Arbitration Act. Each set of respondents filed a state-court action, complaining that Green Tree's failure to provide them with a form that would have told them of their right to name their own lawyers and insurance agents violated South Carolina law, and seeking damages. The Bazzles moved for class certification, and Green Tree sought to stay the court proceedings and compel arbitration. After the court certified a class and compelled arbitration, Green Tree selected, with the Bazzles' consent, an arbitrator who later awarded the class damages and attorney's fees. The trial court confirmed the award, and Green Tree appealed, claiming, among other things, that class arbitration was legally impermissible. Lackey and the Buggses also sought class certification and Green Tree moved to compel arbitration. The trial court denied Green Tree's motion, finding the agreement unenforceable, but the state appeals court reversed. The parties then chose an arbitrator, the same arbitrator who was later chosen to arbitrate the Bazzles' dispute. The arbitrator certified a class and awarded it damages and attorney's fees. The trial court confirmed the award, and Green Tree appealed. The South Carolina Supreme Court consolidated the actions, and held that the contracts were silent in respect to class arbitration and that they consequently authorized class arbitration. Petition for certiorari was granted.
Was the issue of whether or not the agreement forbade class arbitration for the arbitrator to decide?
Four judges of the United States Supreme Court found that the dispute about whether the arbitration contract forbade the use of class arbitration procedures was a dispute relating to the contract and the resulting relationships. Therefore, the question of whether the agreement forbade class arbitration was for the arbitrator to decide. As to the first set of customers, the state trial court issued an order granting class certification. As to the second set of customers, there was at least a strong likelihood that the arbitrator's decision reflected a court's interpretation of the contracts. Therefore, the record suggested that the parties had not received an arbitrator's decision on the question of whether the arbitration contracts forbade class arbitration. The judgment of the state supreme court was vacated.