Posted Nov 26, 2012 06:12 pm CST
The U.S. Supreme Court has ruled that a dispute over a noncompete clause must be heard by an arbitrator, as called for in an employment agreement, in an opinion that takes the Oklahoma Supreme Court to task for discounting federal precedent.
The Oklahoma Supreme Court “disregards this court’s precedents” interpreting the Federal Arbitration Act, according to the per curiam decision (PDF) by the U.S. Supreme Court. The Oklahoma court had declared two noncompete agreements null and void rather than sending the issue to arbitration as called for in the employment contract and federal precedent, the Supreme Court wrote.
“State courts rather than federal courts are most frequently called upon to apply the Federal Arbitration Act, including the act’s national policy favoring arbitration,” the Supreme Court said. “It is a matter of great importance, therefore, that state supreme courts adhere to a correct interpretation of the legislation. Here, the Oklahoma Supreme Court failed to do so.”
The Oklahoma Supreme Court had said its decision rested on adequate and independent state grounds, but the U.S. Supreme Court disagreed. When the Oklahoma court cited state law, it necessarily relied on a rejection of the claim that federal law required arbitration, the Supreme Court said.
The Oklahoma Supreme Court had acknowledged the Supreme Court arbitration cases, “but chose to discount these controlling decisions,” the Supreme Court said. “Its conclusion that, despite this court’s jurisprudence, the underlying contract’s validity is purely a matter of state law for state-court determination is all the more reason for this court to assert jurisdiction.”
The case is Nitro-Lift Technologies v. Howard.
Hat tip to SCOTUSblog, which noted the summary ruling.