Arbitration & Mediation

U.S. Supreme Court Takes Another Arbitration Case, This Time on Who Decides Unconscionability

By Christopher B. Hopkins, Esq.

Looks like the U.S. Supreme Court is going to do some weeding in the garden of arbitration cases. Will they clarify issues to the point that they put a lowly blog like us outta business? I doubt it. But we've got an interesting Spring to look forward to.

SCOTUS took up the case of Rent-A-Center West, Inc. v. Jackson, on an expedited briefing schedule (see SCOTUS docket here), which comes out of this September 9, 2009 Ninth Circuit opinion.

Previously we mentioned the Stolt-Nielsen v. AnimalFeeds case which involves the question of what to do when an arbitration clause is silent as to a class action claim.

In Rent-A-Center, the arbitration clause gives the arbitrator the ability to decide "any dispute relating to the interpretation, applicability, enforcement or formation of this Agreement..." The situation involves a discrimination claim in the employment context. The plaintiff-employee claims that the agreement is procedurally and substantively unconscionable and wants the court to decide. The Ninth Circuit agreed.

First stop in the analysis was the fact that Buckeye Check Cashing, Inc. v. Cardegna calls for challenges to the whole contract to go to the arbitrator whereas challenges to the arbitration clause goes to the court. The rationale is that, where parties agree there is a contract, a party still can't be compelled to arbitration without a court determining there is a duty to arbitrate.

This arises from 9 U.S.C. 4, which says that a court can't compel arbitration until the court is satisfied that the making of the arbitration is not at issue.

We talked about these very issues in this post regarding Life Receiveables Trust v. Goshark and (in Florida) Jaylene v. Steuer.

Full post as published by Florida Arbitration Law on February 08, 2010 (boomark / email).