As I mentioned in my previous post, I did plan on blogging about Jackson v. Rent-a-Center West but was side-tracked by the issuance of the Stolt-Nielsen decision. As many of you know, the question in the Jackson case is whether an agreement between a consumer and a business that sends the question of whether the agreement is arbitrable to the arbitrator is, itself, unconscionable. In Jackson, the language of the arbitration agreement appears to clearly and unmistakably send the question of arbitrability to the arbitrator. So, the question is whether the court decides the unconscionability issue as a threshold or formation question or whether it is a post-formation question for the arbitrator. Tony Mauro reported that it appeared that Justice Breyer was more sympathetic to Jackson’s argument that the court should decide the question of arbitrability while Justices Scalia and Roberts were more sympathetic to Rent-a-center. Reading the transcript did not give me a strong sense of how this case will come out. In light of the Stolt-Nielsen decision, which seemed to place some limits on an arbitrator’s ability to ignore state law, and other recent decisions enforcing clearly stated party intent, I suspect that the Court will rule in Rent-a-center’s favor. Such a decision would be strongly pro-business and would ensure changes to many consumer arbitration agreements to send arbitrability questions to arbitrators.
Wow. I learned some new vocabulary words today.
The oral argument was very hard to read tea leaves out of and revealed all sorts of ways to make distinctions that wouldn’t necessarily resolve all cases.
Given Kennedy’s tendencies and the fact that he is the likely swing voter in most cases, and the fact that removing courts entirely from unconscionability analysis could very well be the push that ends consumer and employment arbitration, I would think that some sort of distinction between different kinds of cases would be likely, although I would be hard pressed to guess which one would be chosen.
I was also somewhat surprised that no one, neither the parties nor the Justices, raised the issue of having the arbitrator opining in such a direct way on his or her own ability to be fair in the context of the document from which the arbitrator derives authority, which is really something quite different from opining on the merits of a dispute between two third parties and goes to the heart of why this situation is more of a concern than others.