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Friday, March 26, 2010

United States Supreme Court Grants Certiorari in Ninth Circuit Arbitration Case

On January 15, 2010, the United States Supreme Court granted a writ of certiorari in Rent-A-Center, West, Inc. v. Jackson, 130 S.Ct. 1133, 78 USLW 3271, 78 USLW 3407, 78 USLW 3413. The Court placed the matter on an expedited briefing schedule. I did not blog the Ninth Circuit's underlying decision in Jackson v. Rent-A-Center, West, Inc. 581 F.3d 912 (C.A.9 (Nev.), 2009), which came down in September, just before I broke my leg. Here is a summary from Public Justice, which has filed an amicus brief on behalf of the respondent employee:
Antonio Jackson, an African-American man who worked for Rent-A-Center in Nevada, claims that the company discriminated against him on grounds of race when it repeatedly denied him promotions and promoted non-African-American employees with less experience. When he sued in federal court alleging violations of federal civil rights laws, Rent-A-Center moved to compel arbitration under a contract it had required Jackson to sign as a condition of working for the company. The clause provides that the arbitrator, not a court, has "exclusive authority" to resolve any dispute, including a dispute about whether the arbitration clause itself is valid. Jackson fought enforcement of the clause, arguing that several of its provisions -- including terms requiring him to pay half of the filing fees and arbitration costs and limiting the discovery he could take to prove his case -- were unconscionable under state law. He also argued that the clause was one-sided and unenforceable because it permitted Rent-A-Center, but not its employees, to pursue its own claims in court. The district court granted Rent-A-Center's motion, enforced the clause, and held that any challenges to its validity were for the arbitrator to decide.

The U.S. Court of Appeals for the Ninth Circuit reversed, holding that under U.S. Supreme Court precedent, courts -- not arbitrators -- must determine the threshold question of whether an arbitration clause is valid and enforceable. The court explained that, because "arbitration is a matter of contract," no party can be ordered to arbitrate before a judicial determination that the arbitration clause creates a contractual duty to arbitrate.
I am adding this case to our watch-list of pending appellate cases.

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