arbitration

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At issue in this case is whether employment contracts barring employees from collectively arbitrating disputes with employers are illegal under the National Labor Relations Act (“NLRA”). Employees argue that preventing collective arbitration interferes with the NLRA’s Section 7 protections of “concerted activity” for “mutual aid and protection”. Employers counter that the Federal Arbitration Act governs the arbitration agreements, under which they are enforceable. Employers also contend that enforcing the agreements protects freedom of contract, thus promoting efficiency and protecting judicial resources. Employees respond that collective arbitration allows them to share the costs and risks of litigation, thereby allowing them to pursue claims that, in the aggregate, may reveal abusive practices by employers. One on hand, freedom of contract in the interest of judicial economy may be harmed if the Court does not uphold the validity of the waivers. On the other hand, if the Court does uphold the validity of the waivers, it will may become more difficult for employees to challenge abusive work practices in their workplaces.

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This case asks the Supreme Court to consider whether the New York Convention permits a non-signatory to an international arbitration agreement to compel a signatory to arbitrate. GE Energy Power Conversion France SAS, Corp. argues that non-signatories may compel a signatory to arbitrate by invoking equitable estoppel because it is available for domestic arbitration under Chapter 1 of the Federal Arbitration Act. GE further argues that this is permissible because the Convention contemplates that countries will apply their pro-arbitration domestic laws. Outokumpu Stainless USA, LLC, et al. disagrees, arguing that the Convention’s text and structure impose a baseline writing requirement to show consent to arbitration. The Court’s decision will affect business parties’ calculation of their arbitration liabilities and how carefully they draft the scope of their arbitration agreements.

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Petitioner, Granite Rock, and respondent, Teamsters Local 287, negotiated a new Collective Bargaining Agreement (“CBA”) which included no-strike and arbitration clauses. A dispute arose regarding the validity of the agreement after Local 287 initiated a strike with the support of respondent, International Brotherhood of Teamsters (“IBT”). Granite Rock sued Local 287 and IBT under §301(a) of the Labor-Management Relations Act. The district court found that the agreement including the arbitration clause was valid and, therefore, referred Granite Rock and Local 287 to arbitration. The court, however, dismissed the claim against IBT, holding that §301(a) did not apply. The Ninth Circuit upheld IBT’s dismissal but held that the district court should have also deferred the question of whether a contract was formed to arbitration. The Supreme Court must now decide if a federal court has initial jurisdiction to determine the validity of a contract containing an arbitration clause and whether §301(a) allows plaintiffs to sue others not party to the contract.

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In 2000, Hall Street Associates filed suit seeking declaratory relief and damages from Mattel, Inc. for its failure to indemnify Hall Street for the cost of cleaning up water contamination at a toy manufacturing facility Mattel leased from Hall Street. After litigation began, the parties agreed to arbitrate some of the issues in dispute. They signed an agreement allowing either party to appeal the arbitrator's decision in court if it contained errors of law or unsubstantiated findings of fact. Subsequently, the Ninth Circuit ruled in a separate case that any arbitration provisions giving courts more review power than that granted to them in the Federal Arbitration Act (FAA) were invalid. Since the provisions of the arbitration agreement between Hall Street and Mattel went beyond those in the FAA, the Ninth Circuit invalidated the District Court's decision to review the arbitrator's findings according to the parties' provisions. At issue here is whether the FAA provides the sole grounds for judicial review of arbitration awards. Hall Street maintains that it is consistent with the spirit of the FAA and in the best interests of encouraging arbitration for courts to recognize all grounds for judicial review agreed upon by the parties, whether or not they go beyond those contained in the FAA. Mattel's position is that the best way to preserve the integrity of arbitration proceedings is to limit the review power of courts to the grounds contained in the FAA. Because the Supreme Court's decision in this case will affect the amount of freedom disputing parties have in crafting their arbitration agreements, ultimately it may affect whether parties choose to undergo the arbitration process at all.

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This case asks the Supreme Court to consider whether an arbitration agreement that incorporates the American Arbitration Association’s (“AAA”) rules delegates the question of arbitrability to the arbitrators, in light of an express exclusion clause for injunctive relief, where the plaintiff sought both damages and injunctive relief. The arbitration agreement at issue in this case includes a “carve-out” provision excluding from arbitration any claims seeking injunctive relief. Rule 7(A) of the AAA’s rules states that the arbitrator has the power to rule on the arbitrability of any claim or counterclaim. Petitioner Henry Schein, Inc. argues that the incorporation of the AAA rules “clearly and unmistakably” delegates all questions of arbitrability to the arbitrator, and that, because some issues are delegated to the arbitrator, the presumption of arbitrability should be read to delegate to the arbitrator the question of the application of the exclusion clause. On the other hand, Respondent Archer and White Sales, Inc. contends that the question of arbitrability should remain for the court to decide because of the explicit carve-out exemption. The outcome of this case has heavy implications for the efficiency and fairness of dispute resolution.

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The Supreme Court will decide how courts should treat agreements delegating gateway questions of arbitrability to arbitrators—questions of whether an arbitrator has the authority to hear a case. Henry Schein, Inc. (“Henry Schein”) argues that, to honor such an agreement, the court must allow the arbitrator to decide gateway questions of arbitrability, even if the case clearly belongs in the court.  In support of their argument, Henry Schein contends that under the Federal Arbitration Act (“FAA”), courts must allow arbitrators to decide the merits of claims delegated to arbitrators by contract, even if the merits are not arguable. Archer and White Sales, Inc. (“Archer and White”) counters that if a claim to arbitrability is “wholly groundless,” the court does not have to make the arbitrator evaluate the claim. Archer and White assert that the FAA does not ask courts to compel arbitration when plaintiffs file claims where they clearly belong—in court. From a policy perspective, this case asks the Court to balance the FAA’s strong policy in favor of arbitration with the need to protect the parties to an arbitration clause from arbitration proceedings they did not agree to.

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The Court must consider whether federal law preempts state law regarding arbitration clauses in powers-of-attorneys. Kindred Nursing Centers argues that state law, which requires principals to explicitly authorize an agent to enter into arbitration agreements, violates the Federal Arbitration Act. Contrarily, Janis E. Clark and Beverly Wellner argue that state law governs contract formation and that state law requires powers-of-attorneys to adhere to the expressed intentions of the principal in a contract. The case will determine whether powers-of-attorney must explicitly grant the agent the power to bind the grantor to an arbitration agreement and may impact elder care and estate planning practices across the United States.

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Lamps Plus, Inc. (“Lamps Plus”) and Frank Varela (“Varela”) executed an arbitration agreement which contained a clause waiving Varela’s right to sue his employer or institute any other civil action or proceeding concerning his employment at Lamps Plus. After a data breach caused by an internet phishing incident, Varela sued Lamps Plus alleging negligence, breach of contract, and invasion of privacy. Lamps Plus moved to compel arbitration of Varela’s individual claims, but the district court decided to dismiss Varela’s claims without prejudice and to compel class arbitration of the claims. Lamps Plus appealed, arguing that, as the Federal Arbitration Act (“FAA”) requires a contractual basis showing the parties’ intent to arbitrate class actions, the court could not read in an agreement to class arbitration based on language relating to personal disputes. Further, the company argues that even if the agreement is ambiguous as to that intent, Supreme Court precedent indicates that courts must resolve such ambiguity in favor of arbitration. Varela counters that issues of jurisdiction and standing prevent the Supreme Court from deciding this case and that, even if the Court were to examine the case on the merits, California contract-law interpretive principles used by the lower court were neutral, applied properly, and, thus, permissible. The Supreme Court’s decision has implications for the employment sector and will likely influence the decision of employers to expressly exclude class actions from future arbitration agreements to maintain the efficiency and informality of arbitration.

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This case asks the Supreme Court to interpret the Federal Arbitration Act (“FAA”) to assess whether arbitration clauses in contracts may be waived by entering litigation. The FAA provides standards that courts must apply when enforcing contractual agreements to arbitrate disputes. Robyn Morgan argues that the FAA requires courts to interpret arbitration agreements to be no less and no more enforceable than other contractual provisions. Therefore, Morgan contends that she does not need to show that she was prejudiced in order to establish that her employer, Sundance, Inc. (“Sundance”), waived an agreement to arbitrate. Sundance counters that the FAA merely provides minimum standards for arbitration clauses, and even if it did not, proving waiver in this instance requires a showing of prejudice. The outcome of this case has heavy implications for arbitration proceedings and employment contracts.

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This case gives the Supreme Court an opportunity to determine whether a dispute over the applicability of the Federal Arbitration Act’s (“FAA”) Section 1 exemption is an arbitrable issue pursuant to a valid delegation clause. Additionally, the Court has the opportunity to decide whether the Section 1 exemption for contracts of employment includes, as a matter of law, independent contractor agreements. Section 1 of the FAA carves out an exception from the Act’s applicability for contracts of employment of seamen, railroad employees, and other classes of workers engaged in interstate commerce. New Prime argues that the delegation clause covers threshold disputes such as the applicability of the FAA and that the phrase “contract of employment” does not include independent contractor agreements. Oliveira counters that courts must first determine the applicability of the FAA before requiring arbitration and also that the ordinary meaning of “contracts of employment” at the time the FAA was enacted included independent contractor agreements. The Supreme Court’s decision has implications for the trucking industry and will likely influence whether this industry will continue to resort to arbitration to resolve disputes.

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