Labor & Employment Law

Does arbitrator decide whether arbitration agreement is unconscionable?

The US Supreme Court has agreed to hear another employment arbitration case. The issue is whether it is for the court, or an arbitrator, to decide whether agreement to arbitrate is unconscionable.

Jackson sued under 42 USC Section 1981, claiming race discrimination and retaliation. The trial court granted the employer's motion to dismiss and to compel arbitration. The 9th Circuit (2-1) reversed. 

When he was hired, Jackson signed an agreement to arbitrate all future disputes. That agreement provided: 

"The Arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement including, but not limited to any claim that all or any part of this Agreement is void or voidable." 

Jackson argued that the arbitration agreement was unconscionable, and that the issue of unconscionability must be decided by a court rather than an arbitrator. 

The 9th Circuit held that "where, as here, a party challenges an arbitration agreement as unconscionable, and thus asserts that he could not meaningfully assent to the agreement, the threshold question of unconscionability is for the court." 

Case below: Jackson v. Rent-A-Center West (9th Cir 09/09/2009)

Official docket sheet 

Certiorari granted January 15, 2010.

Oral argument:  Not yet scheduled. 

Question presented:   

Is the district court required in all cases to determine claims that an arbitration agreement subject to the Federal Arbitration Act ("FAA") is unconscionable, even when the parties to the contract have clearly and unmistakably assigned this "gateway" issue to the arbitrator for decision?

Certiorari Documents:

• Petition for certiorari
   
  
• Brief in opposition
   
  
• Brief for Amicus Curiae of Pacific Legal Foundation in Support of Petitioner 

• For Petitioner: Robert F. Friedman; Littler Mendelson, P.C.; 2001 Ross Avenue, Suite 1500; Dallas, TX  75201; (214) 880-8100.


• For Respondent: Ian E. Silverberg; Hardy Law Group; 96 Winter Street; Reno, NV  89503; (775)-322-7422.
  

Full post as published by Ross' Employment Law Blog on January 18, 2010 (boomark / email).