In this Analysis, N.
Peter Lareau explores generally the rules applicable to determining the
adjudicator of arbitrability issues and then focuses on two June 2010 Supreme
Court cases: Rent-A-Center, W., Inc. v. Jackson, 130 S. Ct. 2772 (U.S. 2010)
[enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law] (holding that the arbitrability issue was
to be decided by the arbitrator) and Granite Rock Co. v. Int'l Bhd. of
Teamsters, 130 S. Ct. 2847 (U.S. 2010) [enhanced version / unenhanced version] (holding that the arbitrability issue was to be decided by the court).
Adjudicator of Arbitrability
The Supreme Court
has stated that:
the question of arbitrability - whether a collective-bargaining agreement
creates a duty for the parties to arbitrate the particular grievance - is
undeniably an issue for judicial determination. Unless the parties clearly and
unmistakably provide otherwise, the question of whether the parties agreed to
arbitrate is to be decided by the court, not the arbitrator.
That statement reflects
the Court's recognition that, if the parties do "provide otherwise,"
issues of substantive arbitrability may, in some cases, be decided by the
arbitrator rather than a court. Whether an arbitrator or a court is to decide a
substantive issue of arbitrability may raise complex and difficult issues. Two
Supreme Court cases that were decided one day apart in June of 1010 - Rent-A-Center
West v. Jackson and Granite Rock Co. v. International Brotherhood of
Teamsters - offer a useful vehicle for examining those issues.
* * *
West v. Jackson] Justice Scalia authored the majority opinion of a divided
Supreme Court, holding that the issue of arbitrability is for the arbitrator in
the first instance. The majority's analysis is divided into three major
sections . . . .
The first section of the
opinion explains that the Federal Arbitration Act ("FAA") controls
the issues before the Court, and treats arbitration as "a matter of
contract[,]" "on an equal footing with other contracts." It provides
that a written provision in a contract "to settle by arbitration a
controversy thereafter arising out of such contract . . . [is] valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract." However, contracts to arbitrate,
"[l]ike other contracts . . . may be invalidated by 'generally applicable
contract defenses, such as fraud, duress, or unconscionability.' "
[In Granite Rock Co. v. International
Brotherhood of Teamsters] The Supreme Court split 7-2 on the arbitrability
issue. The majority opinion, written by Justice Thomas, sets forth the
"well settled" principle that where an issue of arbitrability turns
on whether a contract was ever formed, "the dispute is generally for courts
to decide." That principle did not necessarily control the case before it,
said the Court, because the issue it confronted was a little bit different -
not whether the contract was formed but when it was formed. Moreover, at the
time the district court considered Local 287's demand to send the issue to an
arbitrator, Granite Rock, the party resisting arbitration, conceded both the
formation and the validity of the agreement's arbitration clause. Those
differences, stated the Court required it "to reemphasize the proper framework
for deciding when disputes are arbitrable under our precedents."
The basic premise of
that framework is that a court may order arbitration only after it has
satisfied itself that the parties have agreed to arbitrate the issue in
question. To that end, "the court must resolve any issue that calls into
question the formation or applicability of the specific arbitration clause that
a party seeks to have the court enforce." Those issues typically involve
the scope of the arbitration clause or the enforceability of the clause, and
always include whether the parties ever agreed to the clause. They may also
entail examination of when the agreement to arbitrate was formed. [footnotes
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