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Alternative Dispute Resolution


Confronting Procedural and Collateral Attacks on the Arbitration Process


A Defense Perspective


Andrew Gendron & Shannon E. Beamer


T


hose in favor of arbitration concentrate on its many advantages over more traditional court proceedings, citing arbitration as a less expensive, private, and


more efficient way to resolve disputes. Courts consistently reaffirm the strong public policy in favor of arbitration.See Volt Info. Sys., Inc. v. Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 475 (1989); Southland Corp. v. Keating, 465 U.S. 1, 10 (1984). Tere is a presumption under the Federal Arbitration Act, 9 U.S.C. §§ 1-16 (FAA), that an arbitration provision in a written contract was part of the bargain and that the parties intended arbitration to be the exclusive means of resolving disputes under the contract. See PacifiCare Health Systems, Inc. v. Book, 538 U.S. 401, 407 n.2 (2003) (recognizing the “presumption in favor of arbitration”). Yet there remain persistent attacks on the arbitration process that threaten to diminish its perceived benefits and undermine the public policy supporting arbitration as a viable alternative to court proceedings. One such attack seeks to broaden the scope of attacks to the enforceability of arbitration agreements, while another seeks to allow collateral attacks to an arbitration award. Tis article discusses recent (and anticipated) decisions that should lend clarity on both fronts.


An Understanding of Federal Decisions Under The Federal Arbitration Act Is Essential to Effective Enforcement of Arbitration Agreements.


A line of Supreme Court cases going back at least as far


as Southland Corp. has established the preemptive reach of the FAA, and left precious little room for state-law arbitration regimes. See id. at 8 (FAA preempted California Franchise Investment Law); id. at 16 (national policy favoring arbitration under FAA § 2 “appl[ies] in state as well as federal courts” and "foreclose[s] state legislative attempts to undercut the enforceability of arbitration agreements”); see also, Preston v. Ferrer, 552 U.S. 346, 353 (2008) (“Te FAA’s displacement of conflicting state law is “now well-established” (citing, inter alia, Southland Corp.). Tus, even if an independent basis for federal-court jurisdiction may not exist, 9 U.S.C. § 4, as long as a contract “evidenc[es] a transaction involving commerce,” 9 U.S.C. § 2, the FAA applies. It is therefore critical to an understanding of arbitration practice that one be familiar with cases under the FAA. A recent example in a neighboring jurisdiction helps to


underscore the point. Two recent decisions of the Supreme Court of Appeals of West Virginia recently went farther than that court had ever gone toward recognition of the preemptive sweep of the FAA and recent Supreme Court cases enforcing it. See Ruckdeschel v. Falcon Drilling Co., 693 S.E.2d 815, 821- 22 (W.V. 2010) (citing FAA and federal authority); State ex rel. TD Ameritrade, Inc. v. Kaufman, 692 S.E.2d 293, 296-98 (W.V. 2010) (same). Yet these cases still embrace state-law precedents that conflict with established federal authority on the enforceability of arbitration agreements under the “severability” rule, discussed below. See, e.g., Ruckdeschel, Syl. Pt. 2 (“‘where a party alleges that the arbitration provision was unconscionable or was thrust upon him because he was unwary and taken advantage of, or that the contract was one of adhesion, the question of whether an arbitration provision


Trial Reporter / Fall 2010 37


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