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Law School Case Brief

Rent-A-Center, W., Inc. v. Jackson - 561 U.S. 63, 130 S. Ct. 2772 (2010)

Rule:

Parties can agree to arbitrate "gateway" questions of "arbitrability," such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy. This merely reflects the principle that arbitration is a matter of contract. An agreement to arbitrate a gateway issue is simply an additional, antecedent agreement the party seeking arbitration asks the federal court to enforce, and the Federal Arbitration Act, 9 U.S.C.S. §§ 1-16, operates on this additional arbitration agreement just as it does on any other. The additional agreement is valid under 9 U.S.C.S. § 2 save upon such grounds as exist at law or in equity for the revocation of any contract, and federal courts can enforce the agreement by staying federal litigation under 9 U.S.C.S. § 3 and compelling arbitration under 9 U.S.C.S. § 4

Facts:

Respondent Jackson filed an employment-discrimination suit against petitioner Rent-A-Center, his former employer, in the Nevada Federal District Court. Rent-A-Center filed a motion, under the Federal Arbitration Act (FAA), to dismiss or stay the proceedings and to compel arbitration based on the arbitration agreement (Agreement) Jackson signed as a condition of his employment. Jackson opposed the motion on the ground that the Agreement was unenforceable in that it was unconscionable under Nevada law. The district court granted Rent-A-Center's motion. The United States Court of Appeals for the Ninth Circuit reversed in relevant part. It found that the threshold question of unconscionability was a matter for the court rather than the arbitrator.

Issue:

Was the threshold question of unconscionability a matter for the court rather than the arbitrator?

Answer:

No.

Conclusion:

The court of appeals' judgment was reversed. The Supreme Court held that the agreement's delegation of authority to the arbitrator to decide whether the agreement was valid was severable from the rest of the agreement, such that a challenge to the validity of the delegation provision itself was required before a court could intervene. The employee's unconscionability arguments challenged the validity of the arbitration agreement as a whole and did not challenge the delegation provision in particular. Therefore, the delegation provision had to be treated as valid under 9 U.S.C.S. § 2, and any challenge to the validity of the agreement as a whole had to be left for the arbitrator.

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