Rent-A-Center West v. Jackson II: Respondent’s Brief

As we noted in an earlier post, Antonio Jackson brought an action again Rent-A-Center (RAC) claiming racial discrimination and retaliatory termination.  RAC sought to compel arbitration and the District Court granted its motion to dismiss.  The Ninth Circuit reversed,  finding that where a party asserts that there was no reasonable assent to an arbitration agreement because that agreement is both substantively and procedurally unconscionable, the question of unconscionability is for the court.

 Last week, we summarized the arguments of Rent-A-Center’s opening brief.  Today, we move on to Mr. Jackson’s brief.  RAC’s brief focused largely on two Supreme Court precedentsthat it believes provide that the question of whether a particular claim isarbitrable is to be decided by the arbitrator where the parties have clearlyand unmistakably so agreed. Jackson instead focuses on the language of the Federal Arbitration Act(FAA), § 2 of which provides that an arbitration agreement will not be enforcedas written where grounds exist in law or equity for the revocation of thecontract at issue. 

Relying on Hall StreetAssocs. v. Mattel, Inc., 552 U.S. 576 (2008), Jackson contends that courtswill not enforce provisions of arbitration agreements that are “at odds” withthe “textual features” of the FAA. According to Jackson, a court must first determine whether an arbitrationagreement complies with § 2 before enforcing it by compelling arbitrationpursuant to § 4.  According toJackson, the two precedents on which RAC relies, First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) and AT&T Technologies, Inc. v. CommunicationsWorkers (“AT&T”), 475 U.S. 643 (1986) stand only for the principle thatthe scope of arbitration agreementsmay, by clear and unmistakable language, be delegated to the arbitrators.  This case, says Jackson, is not aboutinterpreting the scope of the arbitration agreement; the case is about its validity andenforceability.

Section 2 of the FAA provides that an enforceablearbitration clause must be: 1) in a written agreement; 2) relating to atransaction involving interstate commerce; and 3) not subject to invalidationunder state law.  There seems to beno question that courts may invalidate purported arbitration agreements thatthat do not satisfy the first two requirements, so Jackson argues that it makessense that courts also get to decide the third.  Moreover, in PrimaPaint Corp. v. Flood & Conklin Mfg. Co.,388 U.S. 395 (1967), theSupreme Court held that when a state contract law defense is interposed againstan arbitration clause, Section 4 of the FAA requires that a court address thatdefense.  Prima Paint involved a claim of fraud in the inducement, butunconscionability should not be treated differently, argues Jackson. 

If RAC succeeds, Jackson warns, stronger parties tocontracts will routinely insert similar language in their arbitration clauses,eliminating the courts’ role in assuring that arbitration clauses are valid andenforceable.  Indeed, under RAC’sconstruction, Jackson argues, the issue of arbitrability would be for thearbitrator to decide, even if the agreement were signed at gunpoint or if theemployee’s signature were forged, so long as the language of the agreement is“clear and unmistakable.”  It is noanswer, says Jackson, that such facts would inevitably come to light inarbitration, because arbitration is precisely what Jackson is trying toavoid. 

Ultimately, Jackson argues, the rule that RAC seeks toinstall would undermine parties’ confidence in arbitration by weakeningexisting safeguards in place under the FAA that protect the rights andinterests of the weaker parties to arbitration agreements.  Review of the validity andenforceability of arbitration by federal courts enhances the integrity of thearbitration process, says Jackson. Post-arbitration review is too narrow in scope to be sufficient toprotect the interests of employees such as Jackson. 

In a final section, Jackson argues that, because thearbitration agreement in question is both substantively and procedurallyunconscionable, he did not agree to delegate the question of arbitration clause’svalidity to the arbitrators.

[Jeremy Telman]