By Alan B. Morrison, Lerner Family Associate Dean for Public Interest & Public Service, George Washington University Law School
Like a brakeless train careening down a mountain, the Supreme Court delivered another blow to those seeking to avoid having their claims shunted off into arbitration when it held in Rent-a Center v. Jackson (No. 09-497, June 21, 2010) that the company's contract with its employee gave the power to the arbitrator, instead of a court, to decide when the terms of the arbitration were unconscionable. The 5-4 decision is significant in its own right (and wrongly decided as well), but that outcome is hardly surprising given the single-mindedness with which a narrow majority of the Court has pushed the Federal Arbitration Act of 1925 (FAA) into places that its authors could never have foreseen.
The FAA was passed by Congress to overcome decisions that made agreements to arbitrate unenforceable, even between two sophisticated businesses, the only ones that were seeking to use arbitration instead of the courts in those days. In recent years, the Court has embraced arbitration with a passion and upheld arbitration clauses that applied not only to contract claims, but to claims arising under federal laws of all kinds, including those barring discrimination in employment on grounds of race, gender, age, and other protected categories. Moreover, although the FAA contains an exception for contracts involving employees working "in commerce," the Court narrowly construed this exemption so that the employment agreements of workers who, under the prevailing interpretation of the Commerce Clause in 1925, could not constitutionally have been reached then, had their claims forced into arbitration so long as they, or as the Court ruled in a subsequent case, their union, "agreed" to have those claims arbitrated. The Court also rejected attempts by states to preclude arbitrations in certain situations, or impose conditions on their use, beyond those generally applicable all contracts, such as the defense of unconscionability.