The U.S. Supreme Court Says it Again: It is for the Arbitrator, Not a Court, to Decide Whether a Contract Containing an Arbitration Clause is Valid

Nitro-Lift Technologies, LLC v. Howard, 133 S.Ct. 500 (2012).  In a line of cases that includes Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967), and Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006), the Supreme Court of the United States has made clear that when a party challenges the validity of an agreement that contains an arbitration clause, as opposed to just the arbitration clause itself, the decision as to whether the agreement is valid is to be decided by an arbitrator, not a court.  In this case, however, the Supreme Court of Oklahoma did not follow that rule.  Instead, purportedly ruling based on “independent state grounds,” that court found null and void the non-competition clauses contained in two employment agreements.  Those non-competition clauses included an arbitration provision.  In a per curiam opinion, the Supreme Court of the United States shot down that ruling.

There were no “independent state grounds” that could have precluded review by the Supreme Court of the United States.  On the contrary, the defendant employer had relied expressly on cases applying the Federal Arbitration Act, 9 U.S.C. §1 et seq (“FAA”).  Moreover, even if Oklahoma state law precluded an arbitration clause in these circumstances, the FAA overrides contrary state law under the Supremacy Clause of the United States Constitution.  “It is this Court’s responsibility to say what a statute means, and once the Court has spoken, it is the duty of other courts to respect that understanding of the governing rule of law.” 

The Supreme Court of the United States has been vigilant in protecting arbitration.  This decision emphasizes that cases such as Buckeye and Prima Paint govern equally as strongly in state courts as in federal courts.