Determining the Adjudicator of Arbitrability Issues: Rent-A-Center West v. Jackson and Granite Rock v. International Brotherhood of Teamsters

Determining the Adjudicator of Arbitrability Issues: Rent-A-Center West v. Jackson and Granite Rock v. International Brotherhood of Teamsters

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 subscribersunenhanced 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).

 

Excerpt:

 

Determining the Adjudicator of Arbitrability

Generally

 

 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.

 

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[In Rent-A-Center 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.' "

 

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 [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 omitted]

 

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