Allied-Bruce Terminix Co. v. Dobson - Oral Argument - October 04, 1994

Allied-Bruce Terminix Co. v. Dobson

Media for Allied-Bruce Terminix Co. v. Dobson

Audio Transcription for Opinion Announcement - January 18, 1995 in Allied-Bruce Terminix Co. v. Dobson

Audio Transcription for Oral Argument - October 04, 1994 in Allied-Bruce Terminix Co. v. Dobson

William H. Rehnquist:

We'll hear argument first this morning in Number 93-1001, Allied-Bruce Terminix Companies, Inc. v. Michael Dobson.

Mr. Farr.

H. Bartow Farr, III:

Thank you, Mr. Chief Justice, may it please the Court:

The Alabama law applied by the courts below declaring all predispute arbitration agreements to be unenforceable as a matter of public policy, embodies precisely the sort of hostility to arbitration that prompted Congress to enact a Federal arbitration act in the first place.

Nevertheless, the Alabama courts held that the Federal law did not apply to this case, saying that the reach of the act is limited to transactions in which the parties contemplated substantial interstate activity.

We think this reading of Federal law is too narrow, for several reasons.

First, the best reading of the language and history of the act indicates that Congress meant to exercise its Commerce power fully, except as it is specifically provided in the definitions and the exceptions contained in section 1 of the act, and second, the benefits to commerce that Congress sought to obtain through enforcement of arbitration agreements... greater certainty in dealings, lower litigation costs, fewer litigation delays, and ultimately the lower cost of goods and services... apply to all transactions within the scope of the Commerce power, not just to some of them.

Sandra Day O'Connor:

Mr. Farr, I suppose... now, this act was adopted in what year?

H. Bartow Farr, III:

1925, Justice O'Connor.

Sandra Day O'Connor:

Right, and as of that time, I suppose we didn't have as broad a view of Commerce power as we have today?

H. Bartow Farr, III:

Well, Your Honor, the best evidence I think that we have of that in 1925 is first of all Congress' own view as reflected briefly in the House report, which indicated that the Commerce power extended to all contracts relating to interstate commerce.

Sandra Day O'Connor:

Well, you would acknowledge, though, that we had a narrower view of the Commerce Clause power in 1925 than we have today?

H. Bartow Farr, III:

Just O'Connor, I think it was not uniformly as broad as it is today.

I would certainly admit that.

However, if one looks, for example, at the brief that was submitted on behalf of the ABA to Congress in 1924, actually, I believe, that refers to a very broad definition of the Commerce power, indicating that it reached not just matters that in fact involved the crossing of State lines, but purely intrastate matters that had an effect on interstate commerce.

Sandra Day O'Connor:

Well, of course, my view, as expressed in the Southland case, is that Congress didn't intend to do more in this Federal Arbitration Act than affect what happens in Federal courts.

This Court has rejected that view.

I still think that was correct, but faced with Southland, do you think that we should properly give some meaning to the words that Congress used involving Commerce, evidencing, the word evidencing... do the use of those words indicate some narrower reach of the statute than you would have us adopt?

There are many laws out there among the States that try to protect consumer contracts from having arbitration clauses, and preserving the rights of people to sue, and your view would sweep all of those aside, and I'm concerned that that wasn't what Congress had in mind.

H. Bartow Farr, III:

Well, Justice O'Connor, let me make two points, if I may.

Of course I would say that the Court ought to give meaning to the words that Congress used, as I hope to explain this morning.

I don't think that those words support a narrow interpretation of the act.

But before, perhaps, I turn to that, I'd like to make clear that the issue regarding the construction of the scope of the act overlaps with but is not the same issue, precisely, as the issue whether the act preempts State law.

The Court has said that the Federal act does not occupy the field, and does not preempt all State law.

For example, I think it is understood now that State laws of general applicability can be applied to arbitration agreements and, indeed, the language of section 2 itself, which provides that they can be provoked on grounds applicable to any contract would suggest that, and the court in the Stanford University case indicated that the parties could in fact incorporate State law.

John Paul Stevens:

Mr. Farr, can I ask... this is a very interesting point that you're making.

If Alabama had a statute similar to, say, I think Georgia has one of these statutes that, there's a dollar limit and they exclude consumer contracts of this kind.

Would you say, then, the Federal act would not apply here, if Alabama had a statute like that, rather than just a 100 percent policy against--

H. Bartow Farr, III:

No, I would say, without knowing exactly the details of the transaction, the act might well apply but would not necessarily preempt whatever the State law is.

John Paul Stevens:

--Where the State law says certain contracts are not subject to arbitration, certain consumer contracts are not, how could it apply without preempting it?