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 »
April 11th, 2009
Arbitrability, Authority of Arbitrators, Legislative Developments, United States Supreme Court
Part IIIC: Is the Narrow Construction Sustainable?
Introduction
In Part IIIB (here) we discussed in general terms the “Narrow Construction” of the Arbitration Fairness Act of 2009 (the “Fairness Act”), which would limit the scope of Proposed Section 2(c) to situations where the party resisting arbitration claims that the arbitration agreement requires predispute arbitration of consumer, franchise, employment or statutory civil rights disputes. We also set forth the five premises on which the Narrow Construction is based. This Part IIIC addresses the validity of those premises. [Because this post frequently refers to Proposed Section 2 and its subsections, we have reproduced at the end the pertinent parts of Proposed Section 2.]
The Narrow Construction is fairly complex. A court choosing it would have to determine each of its five premises to be valid. In addition, the validity of Premise 3 is interlinked to that of Premise 5: Premise 3 is easier to accept when viewed without regard to Premise 5 and Premise 5 is harder to accept when viewed in isolation from Premise 3. If a court believes that Premise 3 is reasonable, but has reservations about its validity, when it considers Premise 3 in conjunction with Premise 5, it may conclude that both are invalid. But if it is confident that Premise 3 is valid, that confidence might lead it to conclude that Premise 5 is valid. These are important considerations that a party advocating one construction or the other should take into account in structuring its argument. Continue Reading »
