US SUPREME COURT OVERTURNS NINTH CIRCUIT DECISION INVOLVING AN EMPLOYMENT ARBITRATION PROVISION

By Kent Berk on July 16th, 2010 in BLOG

The ABA reports that in a 5-4 decision, the United States Supreme Court reversed a Ninth Circuit decision that had held when an arbitration provision is challenged by an employee on grounds of unconscionability, the issue is one for the court, not the arbitrator. The Supreme Court majority found that the employee Plaintiff’s challenge was to the contract as a whole as compared to a challenge to the specific provision that delegated the issue of enforceability to the arbitrator. The subject matter of the contract, however, was exclusively arbitration. This is where the majority and dissent crossed-paths. The majority found this to be a distinction without a difference and focused on whether the challenge was to the arbitration provision as a whole as compared to the specific provision that delegated the issue of enforceability to the arbitrator. The determination whether the provision was unconscionable was ordered to arbitration. If upheld by the arbitrator, the employee Plaintiff’s discrimination claim would be subject to arbitration as well. In fact, arguing over whether his claim is decided in court or by arbitration may be this Plaintiff’s only day in court.