Rent-A-Center, West, Inc. v. Jackson

2010-06-21

Headline: Workplace arbitration delegations enforced: Court upheld that clear clauses sending enforceability questions to arbitrators are valid unless a worker specifically attacks the delegation language, limiting court review.

Holding: Under the FAA, when an arbitration agreement delegates enforceability questions to an arbitrator, courts will enforce that delegation unless a party specifically challenges the delegation clause itself.

Real World Impact:

Makes it harder for workers to get courts to assess arbitration clauses’ enforceability.
Strengthens employers’ ability to rely on delegation language in arbitration contracts.
Sends procedural fights about arbitration validity into arbitrators rather than federal courts.

Topics: workplace arbitration, employment discrimination, arbitration clauses, contract enforceability, court review limits

Summary

Background

Antonio Jackson, a former Rent-A-Center employee, sued his employer in federal court alleging employment discrimination. Jackson had signed a condition-of-employment arbitration agreement that covered discrimination claims and included a clause saying the arbitrator, not a court, would decide disputes about the agreement’s enforceability. Rent-A-Center asked the court to compel arbitration; the District Court ordered arbitration, the Ninth Circuit partially reversed, and the Supreme Court reviewed the question.

Reasoning

The Court addressed who decides whether an arbitration agreement is unenforceable when the agreement itself delegates that question to an arbitrator. Relying on the Federal Arbitration Act, the Court explained arbitration clauses are treated like other contracts and are severable under precedents such as Prima Paint and Buckeye. The Court held that if a party specifically challenges the delegation clause itself, a court must decide that challenge. But when the party attacks the arbitration agreement as a whole, the arbitrator should resolve enforceability. Because Jackson had not specifically challenged the delegation provision in the lower courts and raised that argument too late, the Court enforced the delegation clause and reversed the Ninth Circuit.

Real world impact

Employers who include clear delegation clauses will generally send disputes about enforceability to arbitrators unless an employee specifically attacks the delegation language in court. This ruling narrows opportunities for courts to review arbitration clauses’ validity and shifts more procedural fights into arbitration.

Dissents or concurrances

Justice Stevens dissented, arguing that when a litigant says he never agreed to arbitrate, a court should decide that gateway validity question rather than force the issue before an arbitrator.