Nitro-Lift Technologies, L. L. C. v. Howard
The Supreme Court summarily vacated an Oklahoma Supreme Court ruling that had struck down two employees' noncompete agreements as against state public policy, holding that the state court short-circuited the arbitration process.
The Court reaffirmed that under the Federal Arbitration Act, questions about whether a contract itself is valid must go to the arbitrator first, not a court — and state courts, like federal courts, must follow that rule.
“There is no general-specific exception to the Supremacy Clause, U. S. Const. Art. VI, cl. 2.”
Rejecting the idea that a specific state noncompete law can override the federal arbitration law.
How it got here: An Oklahoma trial court dismissed the employees' suit, finding a valid arbitration clause; the Oklahoma Supreme Court reversed and voided the noncompete agreements; Nitro-Lift sought Supreme Court review.
The Case in Depth
What happened
Nitro-Lift Technologies, an oilfield services company, had confidentiality and noncompetition agreements with two employees, Eddie Lee Howard and Shane Schneider, that included an arbitration clause. After the employees quit and went to work for a competitor, Nitro-Lift demanded arbitration. The employees instead sued in Oklahoma state court to have the noncompete agreements declared void.
The question before the Court
When an employment contract has an arbitration clause, can a state court declare the underlying agreement void, or must an arbitrator decide that first?
The Court's answer
No — the Court ruled that once a contract contains a valid arbitration clause, a state court cannot itself decide whether the rest of the contract, like a noncompete agreement, is valid. Under the Federal Arbitration Act, that job belongs to the arbitrator, unless the challenge is aimed specifically at the arbitration clause itself.
The Oklahoma Supreme Court had declared the noncompete agreements void under state public policy, even though the trial court had already found the arbitration clause valid. The Court said this ignored the FAA's severability rule and amounted to the state court taking over the arbitrator's job, so its decision was vacated and sent back.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Businesses that use arbitration clauses in employment contracts can rely on arbitrators, not state courts, to decide disputes over whether noncompete or other contract terms are enforceable. The ruling also puts state courts and legislatures on notice that state policies limiting certain contracts cannot override the federal arbitration law.
What changes now
The case goes back to the Oklahoma courts, where the dispute over whether the noncompete agreements are enforceable must be decided by an arbitrator rather than by a judge. This is a final ruling on the legal question of who decides that issue, though it does not resolve whether the noncompete agreements are ultimately valid \u2014 that determination is now left to arbitration.
What this does not decide
The Court did not decide whether the noncompete agreements are actually enforceable under Oklahoma law. It only decided that an arbitrator, not a court, must make that determination in the first instance.
How the Court got there
The legal reasoning, step by step
- The Court first confirmed it had jurisdiction: although the Oklahoma Supreme Court claimed its ruling rested on independent state grounds, that state-law reasoning necessarily depended on rejecting Nitro-Lift's federal arbitration-law argument, so the case was properly before the Court.
- The Court explained a core rule of the Federal Arbitration Act's substantive law: when parties agree to arbitrate, a challenge to the validity of the contract as a whole must be decided by the arbitrator first, while only a challenge to the arbitration clause itself goes to a court.
- This works because an arbitration clause is treated as severable from the rest of the contract — a court may decide if that clause itself is valid, but the arbitrator decides whether the remainder of the contract is valid.
- The trial court had already found the arbitration clause valid, so the Oklahoma Supreme Court had no basis to instead rule on the validity of the noncompete provisions itself; doing so put the state court in the arbitrator's role.
- The Court rejected the idea that Oklahoma's specific noncompete statute could override the FAA's general arbitration policy, explaining that the principle that specific laws control over general ones does not create an exception to the Supremacy Clause, which makes federal law binding on state courts.
Doctrinal impact
Cases affected by this decision
Reaffirms Buckeye Check Cashing, Inc. v. Cardegna (546 U. S. 440)
Reaffirmed that arbitration clauses are severable and challenges to the whole contract go to the arbitrator.
Reaffirms Southland Corp. v. Keating (465 U. S. 1)
Reaffirmed that the FAA's substantive law applies in both state and federal courts.
Reaffirms AT&T Mobility LLC v. Concepcion
Reaffirmed that the FAA forecloses judicial hostility toward arbitration.