Jun 22, 2010

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New SCOTUS Arbitration Opinion: Both Boring & Important

Yesterday, the Supreme Court issued an opinion in Rent-a-Center, West, Inc. v. Jackson, a boring case about a very wonky area of employment law. So let’s talk about it.

The case is basically about arbitration agreements between employers and their employees. But that makes it sound way more sexy than it actually is; the case is really about whether a court can analyze an arbitration agreement where the agreement specifically grants the arbitrator the exclusive right to decide the legitimacy of or otherwise interpret the agreement’s terms.

The Court held that, where a party wants to assert a contract defense1 against an arbitration agreement’s delegation of specific rights to the arbitrator2, the litigant must challenge that specific provision of the arbitration agreement, and not the agreement as a whole. Since Jackson challenged the arbitration agreement as a whole, the issue should have been left to the arbitrator under the terms of the agreement.

Still with me? Good. Now, that boring topic above is really interesting to me, and to many other labor and employment lawyers who get excited about the intricate procedural details of bringing employment claims. But I think we can all agree that it’s not the kind of SCOTUS opinion that makes the front page of the New York Times.

What’s interesting to me is how my fellow L&E blawgers have used the case to make very practical or helpful notes for their potential clients. To wit:

• The opinion is, arguably, very good news for employers who want air-tight arbitration agreements that will keep them out of court. But Jon Hyman at Ohio Employer’s Law Blog reminds employers that being able to do something doesn’t always mean you should. Recent studies have called into question whether mandatory arbitration is really saving businesses any money at all.
• At Jottings by an Employer’s Lawyer, Michael Fox puts the opinion in political perspective, and explains why it may not be such a great thing for employers after all. If his dead-on prediction of Sen. Leahy’s response to the opinion is any indication, this may lead to legislation that swings the pendulum much farther toward the employee than was the case yesterday.

Both these posts are worth reading, whether you’re into meta-analysis of arbitration agreements or not.

1. in this case, unconscionability [↩]
2. in this case, the ability to determine the document’s validity [↩]