HALL STREET ASSOCIATES, L.L.C. v. MATTEL, INC.

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Case Basics
Docket No. 
Petitioner 
Hall Street Associates, L.L.C.
Respondent 
Mattel, Inc.
Advocates
(on behalf of the Petitioner)
(on behalf of Respondent)
Term:
Facts of the Case 

Toy manufacturer Mattel was sued by its landlord Hall Street Associates in a dispute over a property lease. After the litigation went to federal court both parties agreed to resolve the case by arbitration according to the procedures outlined in the Federal Arbitration Act (FAA). Atypically, the parties' arbitration agreement stipulated that the District Court could override the arbitrator's decision if "the arbitrator's conclusions of law are erroneous." This provision of the agreement granted the federal courts a much broader role in supervising the arbitration than is specifically granted in the FAA. The Act explicitly mentions only a narrow set of circumstances under which courts can override an arbitration award, such as corruption, partiality, or misbehavior on the part of the arbitrator.

The arbitrator heard the parties' arguments and handed down a decision in favor of Mattel. Hall sought review from the District Court, and that court found that the arbitrator's decision contained legally erroneous conclusions. Accordingly, the arbitrator ruled for Hall Street, and the District Court affirmed.

On appeal, the U.S. Court of Appeals for the Ninth Circuit ruled that the original arbitration award favoring Mattel must stand. Even if the arbitrator did make legal errors, it was not the place of the courts to review the soundness of the arbitrator's decision. The Ninth Circuit viewed the FAA's list of circumstances meriting judicial review as an exclusive list. As far as the original arbitration agreement expanded the scope of judicial review of the arbitration, the agreement could not be enforced.

Question 

Can a federal court enforce an arbitration agreement that provides for more expansive judicial review of an arbitration award than the narrow standard of review provided for in the Federal Arbitration Act?

Conclusion 
Decision: 6 votes for Mattel, Inc., 3 vote(s) against
Legal provision: 9 U.S.C. 9

In a 6-3 opinion, the Court affirmed the Ninth Circuit ruling and held that the provisions of the FAA are exclusive and cannot be expanded through contractual agreement. Writing for the majority, Justice David Souter pointed to words such as "must" and "unless" in the FAA as evidence that its provisions were intended to be mandatory and incapable of modification by the parties. Therefore, the Court upheld the arbitrator's award in favor of Mattel.

Justice John Paul Stevens, joined by Justice Anthony Kennedy, filed a dissenting opinion arguing that the FAA's central purpose-ensuring the enforcement of arbitration agreements-made judicial review necessary in this case. Justice Stephen Breyer also filed a separate dissent.

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HALL STREET ASSOCIATES, L.L.C. v. MATTEL, INC.. The Oyez Project at IIT Chicago-Kent College of Law. 10 November 2014. <http://www.oyez.org/cases/2000-2009/2007/2007_06_989>.
HALL STREET ASSOCIATES, L.L.C. v. MATTEL, INC., The Oyez Project at IIT Chicago-Kent College of Law, http://www.oyez.org/cases/2000-2009/2007/2007_06_989 (last visited November 10, 2014).
"HALL STREET ASSOCIATES, L.L.C. v. MATTEL, INC.," The Oyez Project at IIT Chicago-Kent College of Law, accessed November 10, 2014, http://www.oyez.org/cases/2000-2009/2007/2007_06_989.