Rent-A-Center West, Inc. v. Jackson

PETITIONER: Rent-A-Center West, Inc.
RESPONDENT: Antonio Jackson
LOCATION:

DOCKET NO.: 09-497
DECIDED BY: Roberts Court (2009-2010)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 561 US 63 (2010)
GRANTED: Jan 15, 2010
ARGUED: Apr 26, 2010
DECIDED: Jun 21, 2010

ADVOCATES:
Ian E. Silverberg - for the respondent
Robert F. Friedman - for the petitioner

Facts of the case

Antonio Jackson filed a complaint in the Nevada federal district court alleging race discrimination and retaliation. The employer, Rent-A-Center West, Inc., moved to dismiss the proceedings and compel arbitration. The district court granted the motion to dismiss and compelled arbitration.

On appeal, the U.S. Court of Appeals for the Ninth Circuit held in part that the district court was required to determine in the first instance whether the coverage and discovery provisions of the arbitration agreement were unconscionable.

Question

Is the district court required in all cases to determine whether an arbitration agreement subject to the Federal Arbitration Act is unconscionable, even when the parties to the contract have clearly and unmistakably assigned the issue to an arbitrator for decision?

Media for Rent-A-Center West, Inc. v. Jackson

Audio Transcription for Oral Argument - April 26, 2010 in Rent-A-Center West, Inc. v. Jackson

Audio Transcription for Opinion Announcement - June 21, 2010 in Rent-A-Center West, Inc. v. Jackson

John G. Roberts, Jr.:

Justice Scalia has our opinion this morning in case 09-497, the Rent-A-Center West versus Jackson.

Antonin Scalia:

This case is here on writ of certiorari to United States Court of Appeals for the Ninth Circuit.

In 2007, respondent Antonio Jackson filed an employment discrimination suit in federal court against his former employer, petitioner, Rent-A-Center West Incorporated.

Rent-A-Center filed a motion under the Federal Arbitration Act to dismiss or stay the proceedings and to compel arbitration, based on the mutual agreement to arbitrate which Jackson had signed as a condition of his employment.

That agreement provided for arbitration of all past, present or future disputes arising out of Jackson's employment with Rent-A-Center.

The agreement also provided in a separate provision that the arbitrator shall have exclusive authority to resolve disputes about the enforceability of the agreement.

Jackson resisted arbitration.

He claimed that the agreement was unenforceable because it was unconscionable under Nevada law.

Rent-A-center replied that the agreement assigned resolution of the question of unconscionability which is a question of enforceability to the arbitrator.

The district court granted Rent-A-Center's motion and the Ninth Circuit reversed in relevant part.

We granted certiorari and now reverse the Ninth Circuit.

The FAA, Federal Arbitration Act reflects the fundamental principle that arbitration is a matter of contract.

Section 2 of the Act provides that “a written provision in a contract evidencing a transaction involving commerce to settled by arbitration.

A controversy thereafter arising out of such contract shall be valid, irrevocable and unenforceable save upon such grounds as exists at law or in equity for the revocation of any contract.”

Courts must enforce arbitration agreements according to their terms, in another words, except that arbitration agreements like other contracts may be invalidated by generally applicable contract defenses such as fraud, duress or unconscionability.

As I mentioned earlier the arbitration agreement at issue here includes two relevant written provisions to in the words of Section 2 settled by arbitration, a controversy.

The first is the provision stating that disputes relating to Jackson's employment are subject to arbitration and the second is the provision stating that disputes regarding the enforceability of the arbitration agreement itself are subject to arbitration.

The current controversy between the parties whether the agreement is unenforceable because it is unconscionable, is governed by the second provision and it is that provision which Rent-A-Center asks us to enforce.

I will call it the delegation provision because it delegates resolution of the enforceability controversy to the arbitrator.

Enforceability is a so-called gateway question, like the question of whether the agreement was ever in fact entered into, it has to be answered before applying the arbitration agreement.

Our cases have imposed a special requirement upon agreements to arbitrate gateway issues.

Before those gateway issues can be taken away from the courts, there must be “clear and unmistakable evidence” that the parties agreed to arbitrate.

The delegation provision here satisfies that heighten requirement because as both the district court and the Ninth Circuit found, its text clearly and unmistakably provides that the arbitrator will decide questions of enforceability and once that heightened requirement is satisfied, the FAA operates on that additional arbitration agreement just as it does on any other.

It is important for purposes of this case to distinguish between two types of validity challenges under Section 2.

One type challenge is specifically the validity of the agreement to arbitrate.

The other challenge is the whole contract of which the agreement to arbitrate is merely a part.

In the line of cases beginning with the case called Prima Paint Corporation versus Flood & Conklin Manufacturing Company, we held that only the first type of challenge, namely a challenge specifically to the validity of the agreement to arbitrate, can invalidate an agreement to arbitrate.

That is to say an arbitration provision is severable from the remainder of the contract and stands on its own feet.

This case differs from the Prima Paint line of cases because the arbitration provisions sought to be enforced in those cases were contained in contracts unrelated to arbitration, employment contracts for example that had an arbitration provision.

Whereas in this case, the delegation clause is part of an agreement that is itself entirely an arbitration agreement, but that makes no difference.