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) (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) (holding that the arbitrability issue was to be
decided by the court). He writes:
Adjudicator of Arbitrability
The Supreme Court has stated
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.
. . . .
[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.'
[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.
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