Displaying 2 category results for November 2012.x

US Supreme Court: Federal Arbitration Act bars state court from ruling on contract's validity

By Lori Irish Bauman
November 29, 2012

This week the U.S. Supreme Court again affirmed the broad scope of the Federal Arbitration Act, holding that when a contract includes a valid arbitration provision, an arbitrator, and not a court, should decide in the first instance whether the contract is valid under state law.

In Nitro-Lift Technologies, LLC v. Howard, an employer sought to enforce an employee non-competition agreement containing an arbitration clause.  Two employees subject to the agreement asked the Oklahoma state court to hold that it was void under state law.  While the employer argued that the contract's enforceability should be decided by an arbitrator in the first instance, the Oklahoma Supreme Court refused to send the issue to an arbitrator and held that the noncompetition agreement was "void and unenforceable as contrary to Oklahoma's public policy."

On review, the U.S. Supreme Court rebuked the Oklahoma court for displaying the type of "judicial hostility toward arbitration" that is foreclosed by the FAA.  The Oklahoma court ignored longstanding precedent establishing that attacks on the validity of the contract as a whole, as distinct from attacks directed to the validity of the arbitration clause, must be resolved by the arbitrator. 

(Mostly) Business as Usual after Voter Approval of Washington's Marijuana Initiative

By Jeff Peterson
November 14, 2012

On election day, voters in Washington decriminalized the production, processing, sale, and possession of marijuana under state law by approving Initiative Measure No. 502 (I-502). Effective December 6, 2012, Washington law will no longer prohibit the possession of specified amounts of marijuana by people who are 21 years of age or older. Adults in this age category will be permitted to possess not more than one ounce of dried marijuana flowers, 16 ounces of marijuana-infused products in solid form, or 72 ounces of marijuana-infused products in liquid form. Also effective December 6, 2012, the state’s driving-under-the-influence law will set forth a THC concentration limit for drivers who are 21 or over of 5.00 nanograms per milliliter of blood. There will be zero tolerance for drivers under 21.

I-502 does not set an effective date for the legalization of the production, processing, and sale of marijuana. Instead, the state liquor control board has until December 1, 2013 to adopt rules that will govern the market for recreational marijuana. These rules will, among other things, establish licensing requirements, marijuana inventory limits, and advertising restrictions.

Although the state liquor control board has more than a year to issue its rules, it is unclear how the board will go about its task given the fact that federal law, which supersedes state law, is inconsistent with I-502. In response to a similar initiative that passed in Colorado, the United States Attorney’s Office for the District of Colorado issued a statement that noted, “The Department of Justice’s enforcement of the Controlled Substances Act remains unchanged. In enacting the Controlled Substances Act, Congress determined that marijuana is a Schedule I controlled substance.” Under the Controlled Substances Act, Schedule I substances are those that have a high potential for abuse and no currently accepted medical use in treatment in the United States. Possession of a Schedule I substance is a federal crime, and a first conviction is punishable by up to one year in prison and a minimum fine of $1,000.

Most, if not all, prospective marijuana producers, processors, and retailers will likely stay out of the market for recreational marijuana as long as they face potential criminal prosecution by the federal government. This reality means that I-502 may end up having little practical effect on the availability of marijuana in Washington. The Department of Justice is reviewing both I-502 and the Colorado initiative and will presumably issue a report at the conclusion of its review.

Unless and until the federal government changes the classification of marijuana or the enforcement of the Controlled Substances Act, employers in Washington may continue to test applicants and employees for THC and take adverse employment actions based on the results of those tests. The possession of marijuana remains illegal under federal law, and I-502 does not require Washington employers to permit illegal drug use by their employees. That said, employers may consider whether their drug use policies should be amended to prohibit the use of any drug that is illegal under state or federal law.