Volt Information Sciences, Inc. v. Board of Trustees, Leland Stanford Junior University

PETITIONER: Volt Information Sciences, Inc.
RESPONDENT: Board of Trustees, Leland Stanford Junior University
LOCATION: National Treasury Employees Union

DOCKET NO.: 87-1318
DECIDED BY: Rehnquist Court (1988-1990)
LOWER COURT: State appellate court

CITATION: 489 US 468 (1989)
ARGUED: Nov 30, 1988
DECIDED: Mar 06, 1989

ADVOCATES:
David M. Heilbron - on behalf of the Respondent
James E. Harrington - on behalf of the Petitioner

Facts of the case

Question

Media for Volt Information Sciences, Inc. v. Board of Trustees, Leland Stanford Junior University

Audio Transcription for Oral Argument - November 30, 1988 in Volt Information Sciences, Inc. v. Board of Trustees, Leland Stanford Junior University

William H. Rehnquist:

We'll hear argument next in No. 87-1318, Volt Information Sciences v. The Board of Trustees of Leland Stanford Junior University.

Mr. Harrington, you may proceed whenever you're ready.

James E. Harrington:

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

This case concerns the effect of a contractual choice-of-law clause on federal preemption of a state statute that conflicts with the Federal Arbitration Act.

The case presents several discrete issues that have been raised in brief by the parties.

These issues include:

First, the question of whether the state court of appeal was correct in construing the choice-of-law clause to exclude any application of federal law to this case and thus to shield the state statute against preemption;--

Second, whether the choice-of-law clause should be held invalid and unenforceable as a violation of the federal public policy favoring the arbitration of private disputes in the event that the court of appeal's interpretation of the clause should be accepted;--

And third, the question raised by Stanford's contention that the state statute at issue here would not be preempted by the Federal Arbitration Act even in the event that the contract had contained no choice-of-law clause.

In addition to these three substantive issues, the case presents a... a fourth issue that was raised by the Court itself in its order postponing consideration of the question of its jurisdiction, and that issue, at least as the parties have discerned it from the Court's order, is whether the Court has jurisdiction to reexamine the court of appeal's interpretation of the choice-of-law clause or whether, on the other hand, that interpretation rests upon an adequate and independent state ground that precludes review of that issue by this Court.

Under the rules of the Court, I am of course required to discuss the jurisdictional issue at the outset of my argument, and I will therefore proceed directly to an examination of that issue, leaving the remaining issues I've mentioned for treatment later in the course of the argument if time should still permit.

Turning then to the question of jurisdiction, I would remind the Court initially that we have enumerated in our briefs no less than eight alternative reasons why this Court, indeed, possesses jurisdiction to determine the effect of the choice-of-law clause in this case and why this Court's examination of that issue is not foreclosed by an adequate and independent state ground.

I, of course, won't recapitulate all of these reasons here.

Rather I want to emphasize only two of them that I seem to be particularly important: the first of them, because it would permit the Court to sustain its jurisdiction in this case on a particularly narrow ground, if it should so desire; and the other, because it would allow the Court to provide significant further guidance for the development of the law concerning the general question of the effect of a... of a choice-of-law clause on the scope of federal preemption and the applicability of federal law.

The first and probably the narrowest ground on which the Court might sustain its jurisdiction in this case is provided by the specific wording of the choice-of-law clause itself.

As the Court will recall, the clause provides that the contract shall be governed by

"the law of the place where the project is located. "

Since there was no extrinsic evidence in the record of what the parties meant by that phrase, the only way the phrase can be interpreted and the only way the court of appeal could, could have interpreted it is by deciding... is by determining the literal meaning of those words,

But in order to determine the literal meaning of those words, one has to decide what law is in fact a law of the place where the project is located or, in other words, what law applies at that place.

And in this case, since the question was whether federal law in particular was encompassed within the scope of the phrase,

"law of the place where the project is located. "

one can only interpret the phrase in reference to that issue by deciding whether federal law in particular applies at that place.

William H. Rehnquist:

But that... I don't see how that gets away from the, the idea this is basically a question of fact, what the parties meant as manifested by, by the use of the phrase you, you just said.

James E. Harrington:

Well, it might have been a question of fact, Mr. Chief Justice, if... if there had been any evidence in the record concerning the parties' intent, but I know it's well-settled in California and presumably in the federal courts as well that where there is no extrinsic evidence bearing upon the meaning of the words in a contract, then the meaning of the contract is a question of law that the appellate court has jurisdiction to review de novo.

Well--

James E. Harrington:

But we have, of course, presented in our... excuse me, Justice White.

Byron R. White:

--Why... the real... one of the questions here is what does the word "place" mean.

And why wouldn't... why wouldn't California law apply to, to, to deciding what place means?

And under California law, if there's a contract that says place, it means the State of California.

James E. Harrington:

Well, that's apparently what the court of appeal said, and of course we, we think that the... since California--