The Oyez Project: Economic Activity Issues - Arbitration Decisions

Bernhardt v. Polygraphic Co.

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Buckeye Check Cashing v. Cardegna

Under the Federal Arbitration Act, may a party avoid arbitration by arguing that the contract in which the arbitration clause is contained is illegal?

No. The 7-1 majority (Justice Samuel Alito not participating) ruled that challenges to the legality of a contract as a whole must be argued before the arbitrator rather than a court. The opinion by Justice Antonin Scalia explained that "unless the challenge is to the arbitration clause itself, the issue of the contract's validity is considered by the arbitrator in the first instance." The Court held that the Florida Supreme Court had been wrong to rely on a distinction between void and merely voidable contracts, because the word "contract" in the Federal Arbitration Act includes contracts later found to be void. Justice Clarence Thomas dissented due to his long-held view that the FAA does not apply in state courts.

Commonwealth Corp. v. Casualty Co.

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Dean Witter Reynolds Inc. v. Byrd

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First Options v. Kaplan

Is the arbitrability of disputes subject to independent review by the courts? Should courts of appeals apply an "abuse of discretion" standard when reviewing district court upholding arbitration awards?

Yes and no. In a unanimous opinion delivered by Justice Stephen G. Breyer, the Court held that the arbitrability of the Kaplan/First Options dispute was subject to independent review by the courts and that, rather than a special abuse of discretion standard, courts of appeals should apply ordinary standards when reviewing district court decisions upholding arbitration awards. "We conclude that, because the Kaplans did not clearly agree to submit the question of arbitrability to arbitration, the Court of Appeals was correct in finding that the arbitrability of the Kaplan/First Options dispute was subject to independent review by the courts," wrote Justice Breyer for the Court.

Green Tree Fin. Corp. v. Randolph

Is an order compelling arbitration a "final decision with respect to an arbitration" within the meaning of the Federal Arbitration Act? Is an arbitration agreement that does not mention arbitration costs and fees unenforceable because it fails to protect a party from potentially expensive arbitration costs?

Yes and no. In a opinion delivered by Chief Justice William H. Rehnquist, the Court held that an order compelling arbitration pursuant to the parties' agreement is a "final decision with respect to an arbitration" within the meaning of the Federal Arbitration Act making it immediately appealable pursuant to the FAA. In a 5-4 split, the Court held that an arbitration agreement that is silent on arbitration costs and fees is not unenforceable. Writing for the majority, Chief Justice Rehnquist wrote that "[a]lthough the existence of large arbitration costs may well preclude a litigant...from effectively vindicating [her statutory rights], the record does not show that Randolph will bear such costs if she goes to arbitration." Justices Ruth Bader Ginsburg, John Paul Stevens, David H. Souter, and Stephen G. Breyer dissented.

Green Tree Financial Corp. v. Bazzle

Does the Federal Arbitration Act permit class-wide arbitration hearings?

Justice Stephen G. Breyer, joined by Justices Antonin Scalia, David H. Souter, and Ruth Bader Ginsburg, delivered an opinion concluding that an arbitrator must determine whether the contracts forbid class arbitration. Justice Breyer reasoned that, because the question of what kind of arbitration proceeding the parties agreed to did not concern a state statute or judicial procedure, was well suited to be answered by an arbitrators, and was situated in sweeping language, the matter of contract interpretation should be for an arbitrator, not the courts, to decide. Justice John Paul Stevens filed an opinion concurring in the judgment and dissenting in part in order to establish a controlling judgment. Chief Justice William H. Rehnquist, joined by Justices Sandra Day O'Connor and Anthony M. Kennedy, dissented.

Howsam v. Dean Witter Reynolds, Inc.

Should a federal district court decide whether to interpret and apply the National Association of Securities Dealers' time-limit rule regarding disputes where six years have elapsed since the event that gives rise to the dispute?

No. In an 8-0 opinion delivered by Justice Stephen G. Breyer, the Court held that the applicability of the NASD time-limit rule is a matter presumptively for the arbitrator. Justice Breyer reasoned that the issue did not raise a substantive question of arbitrability requiring judicial resolution. The NASD's time-limit rule "falls within the class of gateway procedural disputes that do not present what our cases have called 'questions of arbitrability.' And the strong pro-court presumption as to the parties' likely intent does not apply," concluded Justice Breyer. Justice Clarence Thomas concurred in the judgment. Justice Sandra Day O'Connor took no part in the consideration or decision of this case.

Mitsubishi Motors v. Soler Chrysler-Plymouth

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Moseley v. Electronic Facilities

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Prima Paint v. Flood & Conklin

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Shearson/American Express Inc. v. Mcmahon

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Southland Corp. v. Keating

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Thomas v. Union Carbide Agric. Products Co.

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