Nitro-Lift Techs., L.L.C. v. Howard - 568 U.S. 17, 133 S. Ct. 500 (2012)

Rule:

The Oklahoma Supreme Court must abide by the Federal Arbitration Act (FAA), 9 U.S.C.S. § 1 et seq., which is the "supreme Law of the Land," U.S. Const. art. VI, cl. 2, and by the opinions of the United States Supreme Court interpreting that law. It is the United States Supreme Court’s responsibility to say what a statute means, and once the United States Supreme Court has spoken, it is the duty of other courts to respect that understanding of the governing rule of law. The United States Supreme Court's cases hold that the FAA forecloses precisely this type of "judicial hostility towards arbitration."

Facts:

The former employees entered into a confidentiality and noncompetition agreement with the former employer that contained an arbitration clause. The former employees quit and began working for a competitor. Claiming that the former employees had breached their noncompetition agreements, the former employer served them with a demand for arbitration. The state supreme court resolved the matter by applying Okla. Stat. tit. 15, § 219A (2011), which limited the enforceability of noncompetition agreements. The former employer petitioned for certiorari.

Issue:

Did the state supreme court validly declare that the noncompetition agreements.

Answer:

Yes.

Conclusion:

The United States Supreme Court determined that the state supreme court failed to adhere to a correct interpretation of the Federal Arbitration Act, 9 U.S.C.S. § 1 et seq., by declaring the noncompetition agreements null and void, rather than leaving that determination to the arbitrator in the first instance. The arbitration provision's validity was subject to initial court determination, but the validity of the remainder of the contract was for the arbitrator to decide. It was for the arbitrator to decide in the first instance whether the covenants not to compete were valid as a matter of applicable state law.