Facts
- Antonio Jackson sued his former employer, Rent-A-Center, West, Inc., alleging racial discrimination and retaliation under 42 U.S.C. § 1981.
- As a condition of employment, Jackson signed a “Mutual Agreement to Arbitrate Claims” requiring arbitration of employment-related disputes, including discrimination claims.
- The agreement included a delegation clause giving the arbitrator “exclusive authority” to decide disputes about the arbitration agreement’s enforceability, including claims that any part was “void or voidable.”
- Rent-A-Center moved under the Federal Arbitration Act (FAA), 9 U.S.C. §§ 3–4, to stay or dismiss the litigation and compel arbitration.
- Jackson argued the arbitration agreement was unenforceable under Nevada law because it was unconscionable.
Issues
- Under the FAA, when an arbitration agreement contains a delegation clause assigning enforceability questions to the arbitrator, may a court decide an unconscionability challenge to the arbitration agreement as a whole?
- Must a party specifically challenge the delegation clause itself to obtain judicial review of enforceability, rather than arbitral resolution?
Decision
- The Supreme Court reversed the Ninth Circuit and enforced the delegation clause.
- The Court held that a delegation clause is severable from the rest of the arbitration agreement and is itself an “agreement to arbitrate” enforceability questions.
- A court may consider a contract defense (such as unconscionability) only if it is directed specifically at the delegation clause; otherwise, the arbitrator decides the enforceability challenge.
- Because Jackson challenged the arbitration agreement generally and did not specifically contest the delegation provision, the district court properly compelled arbitration and left unconscionability to the arbitrator.
Legal Principles
- The FAA requires enforcement of arbitration agreements according to their terms, subject to generally applicable contract defenses under FAA § 2.
- Severability doctrine applies not only between an arbitration clause and the larger contract, but also between a delegation provision and the remainder of the arbitration agreement.
- “Gateway” questions of arbitrability, including enforceability and unconscionability, may be delegated to an arbitrator through clear and unmistakable language.
- To obtain judicial determination of enforceability, the resisting party must specifically challenge the delegation clause; a general attack on the arbitration agreement is insufficient.
Conclusion
The Court held that when an arbitration agreement clearly delegates enforceability questions to the arbitrator, a court must enforce that delegation unless the party opposing arbitration specifically challenges the delegation clause’s validity; otherwise, unconscionability and similar defenses are for the arbitrator to decide.