On January 15, the United States Supreme Court granted certiorari in Rent-A-Center, West, Inc. v. Jackson, 09-497. The issues involved in Rent-A-Center is whether a federal district court is required to determine whether an arbitration provision is conscionable, even if the parties' agreement contains a provision assigning this issue to an arbitrator. The Ninth Circuit held that a district court must decide the threshold question of arbitrability regardless of the language in the parties' agreement. In doing so, the Ninth Circuit reversed the district court's decision to dismiss the case and compel arbitration based on the parties' agreement to assign conscionability to an arbitrator.
Entities who rely on arbitration provisions, including employers, should carefully follow Rent-A-Center. Michigan employers, in particular, rely heavily on arbitration provisions to assure that disputes between them and their employees are promptly and efficiently resolved. If the Court concludes that conscionability is for a court to decide, and not an arbitrator, that desirable promptness and efficiency will be affected.
Click here for a copy of the Ninth Circuit's decision.
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