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U.S. Supreme Court

Supreme Court Says Arbitrator Must Resolve Claim that Employment Agreement Is Unconscionable

Posted Jun 21, 2010 9:54 AM CDT
By Debra Cassens Weiss

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The U.S. Supreme Court has ruled that an employee who claims his entire arbitration agreement with his company is unconscionable must have that dispute resolved by the arbitrator.

The 5-4 opinion (PDF) holds that the Federal Arbitration Act requires the claim of Rent-a-Center employee Roberto Jackson to be heard by an arbitrator.

SCOTUSblog quickly summed up the opinion this way in its live blog of opinions: “S. Ct. hearts arbitration.” The Pacific Legal Foundation’s Liberty Blog described the holding this way: “The U.S. Supreme Court today held that a contract in which two parties agree to arbitrate their disputes must be enforced, despite the sometimes clever attempts by lower court judges (especially in California) to undermine these agreements.”

Plaintiff Antonio Jackson was a Rent-a-Center account manager who claims he was not promoted because he is African-American. His arbitration agreement, signed as a condition of employment, had specified that it governed discrimination claims. It also said the arbitrator has exclusive authority to resolve disputes over enforceability of the contract.

Justice Antonin Scalia's majority opinion relied on the 1976 decision Prima Paint Corp. v. Flood & Concklin Manufacturing Co, a case about the severability of arbitration clauses. The result would have been different, Scalia said, if Jackson had challenged the “delegation clause"—the specific line in the agreement assigning enforceability challenges to the arbitrator.

The dissent by Justice John Paul Stevens complains that the majority relies on “a likely erroneous decision," taking the court down “a different path, one neither briefed by the parties nor relied upon by the Court of Appeals.”

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