Supreme Court: If Clearly Delegated the Task, Arbitrator Decides When Arbitration Agreement is Unconscionable


The Supreme Court handed proponents of arbitration another victory today in Rent-A-Center, West, Inc. v. Jackson, a case involving an unconscionability challenge to an arbitration agreement. The Court held, in a 5-4 opinion authored by Justice Scalia, that the unconscionability challenge was for the arbitrator to decide. The Court’s opinion sets the rules for determining, in future cases, the question of who decides such challenges.

At issue in Rent-A-Center was a contention by an employee resisting arbitration of a discrimination claim that the arbitration agreement he signed was unconscionable, and thus invalid. The Court held that, where the parties have clearly agreed to delegate enforceability questions (including unconscionability questions) to the arbitrator, an unconscionability challenge should be decided by the arbitrator—unless the challenge specifically targets the delegation itself as unconscionable. The Court’s decision appears to resolve the conflict between the Ninth Circuit, which held that basic questions of enforceability must be decided by a court, and the Eighth and Eleventh Circuits, which have held that a determination of enforceability may be delegated to the arbitrator. The Court’s ruling makes it more difficult for parties resisting arbitration to have their unconscionability arguments decided by the court, rather than by the arbitrator.

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