Federal Arbitration Act

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Steven Pyett, Thomas O’Connell, and Michael Phillips (the "employees") claim that their employer, Temco Service Industries, Inc., and the company, 14 Penn Plaza, LLC, that owns the building in which they worked, discriminated against them on the basis of their age, in violation of the Age Discrimination in Employment Act of 1967 ("ADEA"). The employees are members of Service Employees International Union, Local 32BJ, which negotiated a collective bargaining agreement ("CBA") with the Realty Advisory Board on Labor Relations, Inc. ("RAB"), of which Temco and 14 Penn Plaza are members. The CBA stated that the sole and exclusive remedy for all employment discrimination claims, including those brought under the ADEA, is the union’s grievance and arbitration procedure. The issue in this case is whether a union has the power to bargain away its members’ rights to litigate employment discrimination claims. The employees argue that the answer should be no, while the employers argue the opposite. The outcome of this case will clarify whether a union has the power to waive its members' statutory right to sue their employers in federal court for certain types of discrimination in favor of a mandatory arbitration procedure.

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Italian Colors Restaurant, along with other merchants, sued American Express in a class action lawsuit for alleged antitrust violations for compelling merchants to accept American Express credit cards and pay exorbitant rates. In the agreements those merchants signed with American Express, they agreed to use bilateral arbitration rather than class actions in resolving any disputes. Italian Colors argues that this bilateral arbitration clause would create prohibitive costs for any pursuit of their legal rights. This effectively immunizes American Express from any liability under the Sherman Antitrust Act. Therefore, courts must not enforce the arbitration agreement in this context. American Express contends that courts should adhere to the terms of arbitration agreements unless the terms would violate substantive United States law. From a policy standpoint, Italian Colors claims that arbitration is a poor vehicle to vindicate antitrust claims because the length of time an arbitral proceeding would take would create problems for potential claimants, creating difficulty in pursuing a claim before the statute of limitation expires and removing a disincentive for corporate abuse. American Express notes the myriad benefits of arbitration over litigation, specifically arguing that arbitration is more beneficial to lower income plaintiffs and less subject to abuse by frivolous or vengeful lawsuits.

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Section 3 of the Federal Arbitration Act ("FAA") allows parties who have agreed to arbitrate to move for a stay of trial proceedings until they have had a chance to attempt arbitration. In addition, Section 16 of the FAA allows an immediate appeal of judgments denying stay under such circumstances. At issue in this case is whether these sections of the FAA extend to non-signing parties affected by an arbitration agreement. Petitioner Arthur Andersen advised Respondent Wayne Carlisle on a business transaction. As a result of this transaction, Carlisle eventually signed a contract, to which Andersen was a not party, that contained an arbitration agreement. After a dispute developed, Andersen sought a stay in the litigation proceedings in order to arbitrate with Carlisle, despite the fact that Andersen had not signed the arbitration agreement. After Andersen appealed the initial denial of its request for a stay, the United States Court of Appeals for the Sixth Circuit held that it did not have jurisdiction to hear Andersen's appeal because Sections 3 and 16 of the FAA only apply to signatories of arbitration agreements. The Supreme Court's decision in this case may clarify the scope of the FAA's application to non-signatories, including the availability of appellate review of denials of stays.

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Vincent and Liza Concepcion ("the Concepcions") signed a two-year service contract with AT&T Mobility for wireless phone service and received free cell phones from AT&T as a part of their contract. AT&T charged the Concepcions a sales tax on their phones, and the Concepcions subsequently sued AT&T alleging that the company had fraudulently advertised the phones as free. The District Court for the Southern District of California consolidated the Concepcions' claim with a class action suit pending in the District Court on the same issue. The service contract that the Concepcions signed contained a clause requiring that they arbitrate disputes with AT&T directly, thus prohibiting the Concepcions from participating in class action suits. After AT&T moved to compel arbitration, the District Court denied AT&T's motion, and AT&T appealed to the Ninth Circuit Court of Appeals arguing that the Federal Arbitration Act ("FAA") expressly and impliedly preempted state law requiring the enforcement of the arbitration clause. The Ninth Circuit ruled against AT&T on the grounds that the arbitration provision represented an unconscionable exculpatory clause and could not be enforced. The United States Supreme Court will now determine whether the FAA preempts state law requiring the enforcement of the arbitration clause. This decision may affect consumers' ability to participate in class action suits and the extent to which they may arbitrate small claims.

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This case asks the Supreme Court to determine to what extent proceedings to vacate or enforce an award under the Federal Arbitration Act (“FAA”) belong in federal court. The Supreme Court has previously decided that motions to compel arbitration can be heard in federal court if there is a federal question when the court “looks through” to the underlying claim. Denise Badgerow contends that the Supreme Court’s look-through approach does not apply to post-award proceedings; in her view, a plain reading of the FAA deprives federal district courts of jurisdiction to adjudicate post-award claims. Walters counters that federal district courts have subject-matter jurisdiction in such instances, and that a motion to vacate an arbitration award does not deprive federal courts of subject-matter jurisdiction over underlying controversies. The outcome of this case has serious implications for future parties to arbitration proceedings under the FAA and for the federal district courts’ authority to enforce arbitration awards.

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This case asks the Court to determine whether the Federal Arbitration Act’s (FAA) exemption includes employees who do not work within the transportation industry but conduct work related to transportation. Employee Petitioners argue that the Court should not adopt the Second Circuit's interpretation that industry is dispositive because doing so would be inconsistent with the ruling in Saxon. Additionally, Petitioners argue that Congress specifically phrased the statute to include all workers whose work aided the transportation industry. Employer Respondents, on the other hand, counter that the Court should consider industry as dispositive because this would be consistent with the ruling in Circuit City. Further, Respondents argue that workers who historically fell under similar acts passed by Congress have been those who worked within the transportation industry and—in the case of seamen—had employment contracts that distinguished them as such. This case touches on important questions regarding discrepant treatment of employees and the availability of arbitration as an alternative to judicial action. 

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This case asks the Supreme Court to consider whether an appeal of an order denying a motion to compel arbitration automatically strips the district court of its jurisdiction to continue the litigation on the merits of the case pending the results of the appeal. The Third, Fourth, Seventh, Tenth, Eleventh and D.C. Circuits have all held that district courts are deprived of jurisdiction in this situation, while the Second, Fifth, and Ninth Circuits have held the opposite. Coinbase, Inc. argues that the “Divestiture Rule” applies here—the district court is divested of jurisdiction pending an appeal of a motion to compel arbitration. Abraham Bielski counters that the traditional discretionary test applies, which grants the district court the discretion to grant or deny a stay of the proceedings until the appeal is resolved. This case touches on important questions regarding judicial economy, economic efficiency, and the treatment of arbitration agreements in relation to other contracts.

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The Supreme Court will decide whether an arbitration provision in a Customer Agreement purportedly governed by the Federal Arbitration Act (“FAA”) requires the application of state law preempted by, or independent from, the FAA. See Brief for Petitioner, DIRECTV, Inc. at 1.  DIRECTV argues that the parties intended to arbitrate all disputes, that state law is always subject to the preemptive force of federal law, and that in any  event  the FAA requires courts to resolve ambiguities in favor of arbitration. See id. at 18-19. Imburgia counters that the FAA requires agreements to be interpreted according to their express terms and that courts should interpret the express reference to state law in the agreement as California state contract law, independent from the preemptive force of federal law. See Brief for Respondent, Amy Imburgia et al. at 15. The Court’s decision may affect the enforcement of arbitration agreements in other contexts, as well as impact the way in which state courts interpret arbitration agreements. See Brief of Equal Employment Advisory Council as Amicus Curiae, in Support of Petitioner at 21–25.

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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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