561 U.S. 63 (2010), 09-497, Rent-A-Center, West, Inc. v. Jackson

Docket Nº:09-497.
Citation:561 U.S. 63, 130 S.Ct. 2772, 177 L.Ed.2d 403, 78 U.S.L.W. 4643
Party Name:RENT-A-CENTER, WEST, INC., Petitioner, v. Antonio JACKSON.
Attorney:Robert F. Friedman, Dallas, TX, for Petitioner. Ian E. Silverberg, Reno, NV, for Respondent. Michael T. Garone, Schwabe, Williamson & Wyatt, P.C., Portland, OR, Ronald D. DeMoss, Andrew Trusevich, Mary Harokopus, Piano, TX, Robert F. Friedman, Edward F. Berbarie, Littler Mendelson, P.C., Dallas, ...
Judge Panel:SCALIA, J., delivered the opinion of the Court, in which ROBERTS, C. J., and KENNEDY, THOMAS, and ALITO, JJ., joined. STEVENS, J., filed a dissenting opinion, in which GINSBURG, BREYER, and SOTOMAYOR, JJ., joined. Justice STEVENS, with whom Justice GINSBURG, Justice BREYER, and Justice SOTOMAYOR ...
Case Date:June 21, 2010
Court:United States Supreme Court
 
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561 U.S. 63 (2010)

130 S.Ct. 2772, 177 L.Ed.2d 403, 78 U.S.L.W. 4643

RENT-A-CENTER, WEST, INC., Petitioner,

v.

Antonio JACKSON.

No. 09-497.

United States Supreme Court

June 21, 2010

Argued April 26, 2010

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

[177 L.Ed.2d 407] [130 S.Ct. 2773] Syllabus [*]

Respondent Jackson filed an employment-discrimination suit against petitioner Rent-A-Center, his former employer, in a Nevada Federal District Court. Rent-A-Center filed a motion, under the Federal Arbitration Act (FAA), to dismiss or stay the proceedings, 9 U.S.C. §3, and to compel arbitration, §4, based on the arbitration agreement (Agreement) Jackson signed as a condition of his employment. Jackson opposed the motion on the ground [130 S.Ct. 2774] that the Agreement was unenforceable in that it was unconscionable under Nevada law. The District Court granted Rent-A-Center's motion. The Ninth Circuit reversed in relevant part.

Held:

Under the FAA, where an agreement to arbitrate includes an agreement that the arbitrator will determine the enforceability of the agreement, if a party challenges specifically the enforceability of that particular agreement, the district court considers the challenge, but if a party challenges the enforceability of the agreement as a whole, the challenge is for the arbitrator. Pp. 2776 - 2781, 177 L.Ed.2d, at 410-415.

(a) Section 2 of the FAA places arbitration agreements on an equal footing with other contracts, Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443, 126 S.Ct. 1204, 163 L.Ed.2d 1038, and requires courts to enforce them according to their terms, Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 478, [177 L.Ed.2d 408] 109 S.Ct. 1248, 103 L.Ed.2d 488, "save upon such grounds as exist under law or in equity for the revocation of any contract," § 2. Here, the Agreement included two relevant arbitration provisions: It provided for arbitration of all disputes arising out of Jackson's employment, including discrimination claims, and it gave the "Arbitrator ... exclusive authority to resolve any dispute relating to the [Agreement's] enforceability ... including ... any claim that all or any part of this Agreement is void or voidable." Rent-A-Center seeks enforcement of the second provision, which delegates to the arbitrator the "gateway" question of enforceability. See, e.g., Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83-85, 123 S.Ct. 588, 154 L.Ed.2d 491. The court must enforce the delegation provision under §§3 and 4 unless it is unenforceable under § 2. Pp. 2776 - 2778, 177 L.Ed.2d, at 410-411.

(b) There are two types of validity challenges under §2: one "challenges specifically the validity of the agreement to arbitrate, " and "[t]he other challenges the contract as a whole, " Buckeye, supra, at 444, 126 S.Ct. 1204, 163 L.Ed.2d 1038. Only the first is relevant to a court's determination of an arbitration agreement's

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enforceability, see, e.g., Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-404, 87 S.Ct. 1801, 18 L.Ed.2d 1270, because under § 2 "an arbitration provision is severable from the remainder of the contract," Buckeye, supra, at 445, 126 S.Ct. 1204, 163 L.Ed.2d 1038. That does not mean that agreements to arbitrate are unassailable. If a party challenges the validity under § 2 of the precise agreement to arbitrate at issue, the federal court must consider the challenge before ordering compliance with the agreement under § 4. That is no less true when the precise agreement to arbitrate is itself part of a larger arbitration agreement. Because here the agreement to arbitrate enforceability (the delegation provision) is severable from the remainder of the Agreement, unless Jackson challenged the delegation provision specifically, it must be treated as valid under §2 and enforced under §§3 and 4. Pp. 2778 - 2779, 177 L.Ed.2d, at 411-413.

(c) The District Court correctly concluded that Jackson challenged only the validity of the contract as a whole. In his brief to this Court he raised a challenge to the delegation provision for the first time, but that is too late and will not be considered. See 14 Penn Plaza LLC v. Pyett, 556 U.S. 247, 273-274, 129 S.Ct. 1456, 173 L.Ed.2d 398. Pp. 2729 - 2781, 177 L.Ed.2d, at 413-415.

581 F.3d 912, reversed.

[130 S.Ct. 2775] Robert F. Friedman, Dallas, TX, for Petitioner.

Ian E. Silverberg, Reno, NV, for Respondent.

Michael T. Garone, Schwabe, Williamson & Wyatt, P.C., Portland, OR, Ronald D. DeMoss, Andrew Trusevich, Mary Harokopus, Piano, TX, Robert F. Friedman, Edward F. Berbarie, Littler Mendelson, P.C., Dallas, TX, Henry D. Lederman, Littler Mendelson, P.C., Walnut Creek, CA, Carter G. Phillips, Sidley Austin LLP, Washington, DC, for Petitioner.

Ian E. Silverberg, Del Hardy, Hardy & Associates, Reno, NV, Scott L. Nelson, Deepak Gupta Public Citizen Litigation Group, Washington, D.C., F. Paul Bland, Jr., Matthew Wessler, Amy Radon, Melanie Hirsch, Public Justice, P.C., Washington, D.C., Arthur H. Bryant, Leslie A. Bailey, Leslie N. Brueckner, Public Justice, P.C., Oakland, CA, for Respondent.

SCALIA, J., delivered the opinion of the Court, in which ROBERTS, C. J., and KENNEDY, THOMAS, and ALITO, JJ., joined. STEVENS, J., filed a dissenting opinion, in which GINSBURG, BREYER, and SOTOMAYOR, JJ., joined.

OPINION

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SCALIA Justice.

We consider whether, under the Federal Arbitration Act (FAA or Act), 9 U.S.C. §§1-16, a district court may decide a claim that an arbitration agreement is unconscionable, where the agreement explicitly assigns that decision to the arbitrator.

I

On February 1, 2007, the respondent here, Antonio Jackson, filed an [177 L.Ed.2d 409] employment-discrimination suit under Rev. Stat. §1977, 42 U.S.C. §1981, against his former employer in the United States District Court for the District of Nevada. The defendant and petitioner here, Rent-A-Center, West, Inc., filed a motion under the FAA to dismiss or stay the proceedings, 9 U.S.C. §3, and to compel arbitration, §4. Rent-A-Center argued that the Mutual Agreement to Arbitrate Claims (Agreement), which Jackson signed on February 24, 2003 as a condition of his employment there, precluded Jackson from pursuing his claims in court. The Agreement provided for arbitration of all "past, present or future" disputes arising out of Jackson's employment with Rent-A-Center, including "claims for discrimination" and

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"claims for violation of any federal . . . law." App. 29–30. It also provided that "[t]he Arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement including, but not limited to any claim that all or any part of this Agreement is void or voidable." Id., at 34.

Jackson opposed the motion on the ground that "the arbitration agreement in question is clearly unenforceable in that it is unconscionable" under Nevada law. Id., at 40. Rent-A-Center responded that Jackson's unconscionability claim was not properly before the court because Jackson had expressly agreed that the arbitrator would have exclusive authority to resolve any dispute about the enforceability of the Agreement. It also disputed the merits of Jackson's unconscionability claims.

The District Court granted Rent-A-Center's motion to dismiss the proceedings and to compel arbitration. The court found that the Agreement "'"clearly and unmistakenly [sic]"'" gives the arbitrator exclusive authority to decide whether the Agreement is enforceable, App. to Pet. for Cert. 4a. (quoting Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002)), and, because Jackson challenged the validity of the Agreement as a whole, the issue was for [130 S.Ct. 2776] the arbitrator, App. to Pet. for Cert. 4a (citing Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 444-445, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006)). The court noted that even if it were to examine the merits of Jackson's unconscionability claims, it would have rejected the claim that the agreement to split arbitration fees was substantively unconscionable under Nevada law. It did not address Jackson's procedural or other substantive unconscionability arguments.

Without oral argument, a divided panel of the Court of Appeals for the Ninth Circuit reversed in part, affirmed in part, and remanded. 581 F.3d 912 (2009). The court reversed on the question of who (the court or arbitrator) had

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the authority to decide whether the Agreement is enforceable. It noted that "Jackson does not dispute that the language of the Agreement clearly assigns the arbitrability determination to the arbitrator, " but held that where "a party challenges an arbitration agreement as unconscionable, and thus asserts that he could not meaningfully assent to the agreement, the threshold question of unconscionability is for the court." Id., at 917. The Ninth Circuit affirmed the District Court's alternative conclusion that the fee-sharing provision was not substantively unconscionable and remanded for consideration [177 L.Ed.2d 410] of Jackson's other unconscionability arguments. Id., at 919-921, and n. 3. Judge Hall dissented on the ground that "the question of the arbitration agreement's validity should have gone to the arbitrator, as the parties 'clearly and unmistakably provide[d]' in their agreement." Id., at 921.

We granted certiorari, 558 U.S. 1142, 130 S.Ct. 1133, 175 L.Ed.2d 941 (2010).

II

A

The FAA reflects the fundamental principle that arbitration is a matter of contract. Section 2, the...

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