Arbitration & Mediation

Worth the Paper it's Written On? SCOTUS' Rent-A-Center West Decision

By Victoria Pynchon

Asher Hawkins over at Forbes On the Docket legal blog foresees trouble for class action plaintiffs in the Supreme Court's Latest Arbitration-Friendly Ruling.  As Hawkins explains:

A minor Supreme Court victory this morning in an employment-related arbitration case has left the pro-arbitration camp hopeful that the justices will see things their way in a hotly anticipated consumer-related legal battle the court will hear next term.

This morning's ruling in Rent-A-Center West Inc. v. Jackson saw the court's conservative wing rule in favor of Rent-A-Center's push to have an arbitrator, and not a court, rule on the enforceability of an arbitration agreement between the company and an employee who'd filed an employment discrimination suit. In so holding, the five-justice majority reinstated a ruling from a Nevada federal court judge that had been reversed by the U.S. Court of Appeals for the Ninth Circuit.

Continue reading the Forbes' post here.

Hawkins and Rent-A-Center's attorney Carter Phillips of Sidley Austin may be reading the tea leaves correctly, but the Court's hyper-technical decision-dodging suggests the absence of a plurality on the real issue presented - whether the Court or the arbitrator should be making the decision whether the arbitration agreement is unconscionable or not.

The Supremes avoided deciding the unconscionability question entirely by focusing on an unbelievably picky procedural issue.  The Plaintiff, noted the Court, challenged the enforceability of the entire agreement rather than the "delegation" clause giving the arbitrator the right to decide arbitrability. Citing authority entitling the Court to avoid addressing the enforceability of a single clause if the party opposing arbitration argues that the entire agreement is unenforceable, the Court did just that.  It didn't decide the issue presented to it - who decides unconscionability.

One assumes the Court would not have granted cert if it was going to waste everyone's time and effort by penning a decision whose only precedent is this - we can avoid deciding the central issue in a case if the Appellant hasn't raised the problem in the right way. 

Really!  This is either the kind of nit-picking that gives American justice a bad name or suggests that the Court is presently unable to gather enough "yea" or "nay" votes to decide the thing.  Whether that's good news for conservative court watchers or not will be revealed when the Court hears - and hopefully decides - AT&T Mobility Inc. v. Concepcion which "raises the question whether state courts can strike down arbitration agreements that don't let disgruntled consumers join together in class action lawsuits."

Until that time, everyone on both sides of the issue should be holding their breath.

Full post as published by Settle It Now Negotiation Blog on June 21, 2010 (boomark / email).