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threshold determinations of arbitrability: while a direct challenge to the validity or enforceability of an arbitration provision is for the court, any challenge to the “remainder of the contract” is for the arbitrator. Id., 2010 WL 2471058 at *5. While reaffirming a number of earlier arbitration
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opinions, Rent-a-Center, West nevertheless recognized that the severability rule is not so limited as to apply only where a specific arbitration provision is severable from the remainder of a contract. Where, as in Rent-a-Center, West, the specific provision at issue – a so-called “delegation” provision that gave an arbitrator “exclusive authority to resolve any dispute relating to the... enforceability... of [an arbitration agreement]” – was part of a larger agreement to arbitrate, the severability rule mandates that, in deciding a threshold issue of arbitrability, a trial court may look only at “the precise agreement to arbitrate” that the moving party seeks to enforce; the court may not examine the “remainder of the contract,” whether that be the contract as a whole or some other portion of the arbitration provision itself, because those issues are reserved for the arbitrator’s consideration. Id., 2010 WL 2471058, at *5. Tis mandate holds true even if the challenge is based on an assertion of unconscionability. Id. More specifically, the Court recognized that:
was bargained for and valid is a matter of law for the court to determine by reference to the entire contract, the nature of the contracting parties, and the nature of the undertakings covered by the contract.’”)(emphasis added).
Challenges to an Agreement to Arbitrate and the “Severability” Rule: Rent-a-Center, West, Inc. v. Jackson
Upon a challenge to a motion to compel arbitration under
the FAA, a trial court’s inquiry is limited by the “severability” rule: “[A]s a matter of substantive federal arbitration law, an arbitration provision is severable from the remainder of the contract.” Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 445 (2006). Te Supreme Court “ha[s] repeatedly rejected the view that the question of severability [i]s one of state law…” Rent-a-Center, West, Inc. v. Jackson, __ U.S. __, 2010 WL 2471058 at *7 n.4 (June 21, 2010) (internal citation omitted). Rent-a-Center, West, the Supreme Court’s most
recent arbitration decision, addressed whether a trial court may “decide a claim that an arbitration agreement is unconscionable, where the agreement explicitly assigns that decision to the arbitrator.” Id., 2010 WL 2471058 at *2. In doing so, the Court clarified a trial court’s role in making
38 Trial Reporter / Fall 2010
[t]here are two types of validity challenges under § 2 [of the FAA]: ‘One type challenges specifically the validity of the agreement to arbitrate,’ and ‘[t]he other challenges the contract as a whole, either on a ground that directly affects the entire agreement (e.g., the agreement was fraudulently induced), or on the ground that the illegality of the contract’s provisions render the whole contract invalid... [O]nly the first type of challenge is relevant to a court’s determination whether the arbitration agreement at issue is enforceable… Tat is because § 2 [of the FAA] states that a ‘written provision’ ‘to settle by arbitration a controversy’ is ‘valid, irrevocable, and enforceable’ without mention of the validity of the contract in which it is contained. Tus,a party’s challenge to another provision of the contract, or to the contract as a whole, does not prevent a court from enforcing a specific agreement to arbitrate.
Id. (first emphasis in original) (internal citation omitted). Despite a claim that the alleged fraud that induced the contract as a whole also induced the included arbitration provision at issue, the Court nonetheless required that “the basis of challenge to be directed specifically to the agreement to arbitrate before the court will intervene.” Id. (emphasis added) As Rent-A-Center, West now makes plain, the severability
rule is not just for scenarios in which an arbitration agreement stands separate and apart from the remainder of the contract
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