U.S. Supreme Court hands issue of contract enforceability to arbitrators

The U.S. Supreme Court yesterday limited the role of courts in interpreting and enforcing arbitration agreements under the Federal Arbitration Act.  At issue in Rent-A-Center West, Inc. v. Jackson was an arbitration agreement that Jackson signed as a condition of his employment with Rent-A-Center.  When Jackson filed an employment discrimination lawsuit, the employer sought to dismiss based on the agreement.  Jackson argued that the agreement was unconscionable and unenforceable. The agreement specifically provided that the arbitrator would determine the enforceability of the agreement.

In a 5-4 decision, the Supreme Court held that, because Jackson challenged the enforceability of the agreement as a whole, the challenge had to be resolved by an arbitrator.  But if Jackson had challenged just the portion of the agreement stating that the arbitrator would determine the enforceability of the agreement, the issue would properly be resolved by a court.