US Supreme Court Arbitration Cheat Sheet

The Supreme Court and Arbitration: Key 2024 Rulings Reshape the Landscape

The U.S. Supreme Court's recent focus on arbitration has resulted in several landmark decisions in 2024, impacting the interpretation and enforcement of arbitration agreements across various industries. These cases underscore the Court's commitment to upholding the Federal Arbitration Act (FAA) and ensuring that arbitration remains a viable and efficient alternative to litigation.

1. Coinbase v. Suski, 144 S. Ct. 1186 (2024)

• Facts: A dispute arose from a sweepstakes wherein the official rules conflicted with Coinbase's user agreement. The plaintiff consumers brought a class action, and Coinbase sought dismissal based on the arbitration provision in the user agreement.
• Issue: Whether a court or an arbitrator decides which contract governs when multiple contracts with conflicting dispute resolution clauses exist between the same parties.
• Holding: The Supreme Court held that courts, not arbitrators, must resolve the threshold question of which contract controls.
• Analysis: This decision clarifies that when conflicting contracts exist, courts have the authority to determine which contract's dispute resolution provision applies. This ruling prevents parties from strategically using conflicting clauses to avoid arbitration.

2. Bissonnette v. LaPage Bakeries, 601 U.S. 246 (2024)

• Facts: A delivery driver filed a class action lawsuit against his employer, alleging violations of state wage and hour laws. The employer moved to compel arbitration based on an arbitration agreement.
• Issue: Whether the exemption for transportation workers under Section 1 of the FAA applies to a delivery driver who primarily delivers goods locally.
• Holding: The Supreme Court held that the exemption applies to workers actively engaged in the interstate transportation of goods, even if their work is primarily local.
• Analysis: This ruling broadens the scope of the transportation worker exemption under the FAA, potentially impacting a significant number of workers in the transportation and logistics industries.

3. Estanislao Enterprises, Inc. v. FedEx Ground Corp., 2024 U.S. Dist. LEXIS 118358 (W.D. Pa. July 5, 2024)

• Facts: A FedEx contractor filed a class action lawsuit against FedEx, alleging misclassification as independent contractors. FedEx moved to compel arbitration based on the arbitration clause in their Operating Agreement.
• Issue: Whether the arbitration agreement between FedEx and its contractors is enforceable, considering the plaintiff's claims of unconscionability.
• Holding: The District Court held that the arbitration agreement was enforceable and not unconscionable.
• Analysis: This decision reinforces the principle that arbitration agreements are generally enforceable, even in cases where one party claims the agreement is unfair or one-sided.

4. Smith v. Spizzirri, 144 S. Ct. 680 (2024)

• Facts: An employee filed a lawsuit against her employer, alleging discrimination. The employer moved to compel arbitration based on an arbitration agreement signed by the employee.
• Issue: Whether an arbitration agreement that explicitly delegates questions of arbitrability to the arbitrator is enforceable.
• Holding: The Supreme Court held that such delegation clauses are enforceable under the FAA.
• Analysis: This ruling clarifies that parties can agree to have an arbitrator, rather than a court, decide whether a dispute is subject to arbitration.

Overall Impact:

These cases highlight the Supreme Court's ongoing support for arbitration as a valid and efficient dispute resolution mechanism. The rulings provide clarity on several key issues, including the resolution of conflicting contract provisions, the scope of the transportation worker exemption, the enforceability of arbitration agreements, and the delegation of arbitrability questions to arbitrators. These decisions are likely to shape the landscape of arbitration law and practice for years to come.

Other Supreme Court Cases

1. Morgan v. Sundance, Inc., 142 S. Ct. 1708 (2022)

• Facts: Robyn Morgan, an employee of Sundance, Inc., filed a lawsuit alleging violations of the Fair Labor Standards Act (FLSA). Sundance moved to compel arbitration based on an agreement signed by Morgan. Morgan argued that Sundance waived its right to arbitrate by participating in litigation.
• Issue: Whether a party waives its right to arbitrate by engaging in litigation.
• Holding: The Supreme Court held that there is no special rule for waiver of the right to arbitrate; waiver is determined by applying traditional principles of waiver applicable in other contexts.
• Analysis: This decision emphasizes that federal policy favoring arbitration does not create a heightened standard for waiver. Parties must actively and intentionally waive their right to arbitrate; mere participation in litigation does not automatically constitute waiver.

2. Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906 (2022)

• Facts: Angie Moriana, an employee of Viking River Cruises, filed a lawsuit alleging violations of the California Private Attorneys General Act (PAGA). Viking moved to compel arbitration based on an agreement containing a class action waiver and a severability clause.
• Issue: Whether the FAA preempts a state rule prohibiting the division of PAGA actions into individual and non-individual claims through arbitration agreements with class-action waivers.
• Holding: The Supreme Court held that the FAA preempts the state rule, allowing enforcement of arbitration agreements with class-action waivers even in PAGA actions.
• Analysis: This ruling strengthens the enforceability of arbitration agreements containing class-action waivers, limiting the ability of plaintiffs to bring PAGA representative actions in court. It further underscores the Court's commitment to upholding the FAA and promoting arbitration as an alternative to litigation.

3. Southwest Airlines Co. v. Saxon, 142 S. Ct. 1783 (2022)

• Facts: Latrice Saxon, a ramp supervisor for Southwest Airlines, filed a lawsuit alleging violations of the FLSA. Southwest moved to compel arbitration based on an agreement signed by Saxon. Saxon argued that she was exempt from arbitration under the FAA's Section 1 exemption for transportation workers.
• Issue: Whether the FAA's Section 1 exemption for transportation workers applies to airline ramp supervisors.
• Holding: The Supreme Court held that airline ramp supervisors who load and unload cargo on and off airplanes engage in interstate commerce and are therefore exempt from arbitration under the FAA.
• Analysis: This ruling clarifies the scope of the transportation worker exemption, emphasizing the connection to interstate commerce as the key factor. It provides further protection for certain categories of workers engaged in transportation-related activities.

Overall, these cases illustrate the Supreme Court's continued focus on arbitration and its commitment to upholding the FAA. The decisions provide important guidance on issues like waiver, preemption, and the scope of exemptions, further shaping the landscape of arbitration law and practice in the United States.