September 23rd, 2009
Arbitrability, Unconscionability, United States Court of Appeals for the Ninth Circuit
I. Introduction
We have explained in prior posts the First Options/AT&T Technologies rule that arbitrators get to decide arbitrability when the parties clearly and unmistakably so agree. (See, e.g., here and here.) That’s all well and good, but what happens when: (a) two parties sign an arbitration agreement which says, among other things, that the arbitrators shall decide any claim, including any claim concerning the applicability, formation or enforceability of the arbitration agreement; and (b) despite that clear and unmistakable agreement to arbitrate arbitrability, one of the parties challenges the arbitration agreement in court on unconscionability grounds?
That is, for all practical purposes, what happened in Jackson v. Rent-a-Center West, Inc., ___ F.3d ___, slip op. (9th Cir. Sept. 9, 2009) (here). And the United States Court of Appeals for the Ninth Circuit ruled 2-1 that the court gets to decide the question. Continue Reading »
June 24th, 2009
Arbitrability, Authority of Arbitrators, California State Courts, Grounds for Vacatur
Introduction
Under the Federal Arbitration Act and federal labor law, arbitrators can decide arbitrability questions subject only to deferential review, provided the parties “clearly and unmistakably” delegate that power to them. California’s state arbitration law follows this familiar federal rule.
On June 11, 2009 the California Court of Appeal, Fourth District, Division 3, held that the parties to an arbitration agreement did not “clearly and unmistakably” agree to arbitrate arbitrability by incorporating the Commercial Rules of the American Arbitration Association into their contract, because at the time the parties agreed to arbitrate, the rules were silent on whether arbitrators could decide arbitrability questions. See Gilbert Street Developers, LLC v. La Quinta Homes, LLC, ___ Cal. Rptr.3d ___, slip op (Cal. App. 4th Dist. June 11, 2009) (certified for publication) (copy available here). The Court so held even though the parties agreed that the arbitration would be “conducted in accordance with the Rules of the American Arbitration Association existing at the date [of the arbitration]. . . . ,” and by the date of the arbitration the rules had been amended to provide expressly that the arbitrators had the authority to determine their own jurisdiction. See slip op. at 2-3. The Court also held that the operation of a “buyout” clause in the parties’ agreement did not fall within the scope of the parties’ arbitration clause because it involved discretionary matters, which were expressly excluded from arbitration. See slip op. at 15-16. Continue Reading »
