When it comes to Supreme Court oral argument, nothing spices up what would otherwise be a fairly dry discussion of a statute like the Federal Arbitration Act like displays of judicial disagreement from the bench
Today the Court heard oral argument in the case of Hall Street Associates v. Mattel, which asks whether an arbitration agreement can specify a standard of review broader than that established under the Federal Arbitration Act. The Court’s decision could significantly impact how lawyers draft arbitration agreements, and how courts treat arbitration agreements they are presented with.
But, perhaps looking for a way to avoid creating such a heavy precedent, Chief Justice John Roberts was more interested in whether the petitioner in the case had another remedy – based on good ol’ contract law.
“If this is not enforceable under the Federal Arbitration Act, which gives you kind of a shortcut . . . I assume you have a normally enforceable contract that the district court can enforce just like it enforces any other contract,” Roberts said to attorney Carter Phillips, who argued on behalf of Hall Street that arbitration contracts can modify the standard of review. “So you don’t need the Federal Arbitration Act, so why should we fly in the face of its plain language to accommodate your interests?” Roberts asked.
Phillips argued that Congress did not intend for the statute to be ignored in favor of the common law fallback, but Roberts pressed on, prompting Justice Antonin Scalia to chime in.
“Excuse me,” Scalia said, clearly not liking the Chief Justice’s point. “I’m just not following this discussion. Does it assume that you can bring an action on the contract and just bypass the provision of the contract which says there will be arbitration? How can you do that? You — you don’t assert you can do that?”
“No,” Phillips said. “We clearly can’t do that.”
“You clearly can’t do that,” Scalia reiterated.
“Right,” Phillips said.
“So somebody has to decide on this arbitration provision,” Scalia said, for good measure.
“Right,” Phillips repeated.
Issue settled, right? Not so fast. . .
More after the jump…
“The arbitration provision, the arbitration agreement is just a contract, right?” Roberts asked, tenaciously.
“To be sure,” Phillips answered, seemingly loath to disagree with any justice, even when they are disagreeing with each other.
“Well, then I don’t understand why it’s not enforceable as a contract,” Roberts said. ” I’m obviously missing something here. If it’s enforceable as a contract, what is the great benefit you get out of prevailing and saying this should be enforced under the Federal Arbitration Act?”
After Phillips explained that the statute was designed to promote efficiency, Scalia spoke again, making it apparent that Phillips was not necessarily an essential part of his discussion with Roberts.
“If we say that you lose under the Federal Arbitration Act, is it open to the State court to say, well, that’s what the Federal Arbitration Act says, but we handle arbitration differently?” Scalia asked.
“Well,” Phillips began. “That’s sort of the core question I think that sort of comes out of Southland and -”
“I think if you lose on the arbitration here, you’ve got to lose on the arbitration before State court,” Scalia said. “I mean you don’t have to admit that.”
Phillips began to answer, though he really didn’t need to.
“Why in the — why is that the case?” Roberts said in response to Scalia. “I mean, this doesn’t purport to occupy the field of arbitration and to preempt State law. It provides that a very direct order: the district court must confirm the arbitration award as a judgment if you fall within the criteria. And all I’m saying is they’ll say, okay, I don’t have to confirm it as a judgment.”
DC Dicta can’t wait to see who writes the decision. . .