Imposing class arbitration on parties who have not agreed to it violates Federal Arbitration Act (5-3)
April 27, 2010 by Ross Runkel at LawMemo
The US Supreme Court has decided Stolt-Nielsen v. AnimalFeeds (US Supreme Ct 04/27/2010)
The parties in this case are parties to an international maritime contract that contains an arbitration clause. The contracts are silent as to whether arbitration is permissible on behalf of a class, and the parties submitted that issue to arbitration. A panel of arbitrators decided that the arbitration clause allowed for class arbitration. The District Court vacated the award on the ground that it was made in "manifest disregard" of the law. The 2nd Circuit reversed.
The US Supreme Court held (5-3) that imposing class arbitration on parties who have not agreed to authorize class arbitration is inconsistent with the Federal Arbitration Act (FAA).
(1) The arbitrators exceeded their powers by imposing their own policy choice instead of identifying and applying a rule of decision derived from the FAA or from maritime or New York law. (2) Imposing class arbitration in this case is inconsistent with the FAA. The Court restated the principles that arbitration "is a matter of consent, not coercion," that "private agreements to arbitrate are enforced according to their terms," and that parties are "generally free to structure their arbitration agreements as they see fit." Based on these principles, "parties may specify WITH WHOM they chose to arbitrate." [Emphasis in original] Because the parties stipulated that there was no agreement on class arbitration, the parties cannot be compelled to submit to class arbitration.
The DISSENT argued that the arbitrators' "partial award" was not ripe for judicial review. On the merits, the dissent would have upheld the arbitrators due to the strict limitation the FAA places on judicial review of arbitral awards.
Rent-A-Center West v. Jackson: Details and briefs
April 19, 2010 by Ross Runkel at LawMemo
On Monday, April 26, the US Supreme Court will hear oral arguments in Rent-A-Center West v. Jackson.
Here is the 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?
Here are the briefs that have been filed:
- Brief for Petitioner Rent-A-Center, West, Inc.
- Brief for Respondent Antonio Jackson
- Reply Brief for Petitioner Rent-A-Center, West, Inc.
- Brief for the Equal Employment Advisory Council in Support of Petitioner
- Brief for the Chamber of Commerce of the United States of America in Support of Petitioner
- Brief for American Federation of Labor and Congress of Industrial Organizations in Support of Respondent
- Brief for Professional Arbitrators and Arbitration Scholars in Support of Respondent
- Brief for Lawyers' Committee for Civil Rights Under Law, Alliance for Justice, Asian American Justice Center, Constitutional Accountability Center, National Partnership for Women & Families, and National Women’s Law Center in Support of Respondent
- Brief for National Association of Consumer Advocates in Support of Respondent
- Brief for American Association for Justice and AARP in Support of Respondent
- Brief for National Consumer Law Center and Consumer Action in Support of Respondent
- Brief for Service Employees International Union, Legal Aid Society - Employment Law Center, National Employment Lawyers Association, National Employment Law Project, Women’s Employment Rights Clinic, and The Employee Rights Advocacy Institute for Law & Policy in Support of Respondent
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