By Steven M. Gutierrez
The United States Supreme Court was divided 5-4 in Rent-A-Center West Inc. v. Jackson, U.S., No. 09-497, 6/21/10, and held that where an arbitration agreement delegates to an arbitrator authority to determine the enforceability of the agreement, a challenge to that delegation provision is to be resolved by a federal district court, but a challenge to the enforceability of the entire agreement must be resolved by the arbitrator. If you have contracts that compel arbitrations subject to the Federal Arbitration Act, this decision spells out just how specific of a challenge one must make to contest the arbitrability of contracts. It is a reminder to be specific in your challenge -- even when it appears that the whole contract was one directed at arbitration of disputes.
In this case, the contract was an employment contract with an agreement to arbitrate any dispute arising out of employment -- including discrimination claims -- but the decision appears to have broad application to all disputes governed by the Federal Arbitration Act. The decision is consistent with existing Federal law, but the decision demonstrates how meticulous a litigant must be in order to challenge arbitration clause enforceability. You can look at this case by following this link: http://www.supremecourt.gov/opinions/09pdf/09-497.pdf
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