Outsourcing Justice

Supreme Court Nominee Gorsuch and Arbitration Law

What does the Gorsuch nomination for the Supreme Court mean for arbitration law?

I know there are many pressing, weightier, more fundamental issues facing our country, and for those of you who know me, you know I’m not a fan of the new president.  However, I like what I see with respect to Gorsuch and arbitration law.  Gorsuch’s past opinions suggest he would be a strong textualist when interpreting the FAA, along the same lines as Justice Thomas.  In Howard v. Ferrellgas Partners, L.P., 748 F.3d 975 (10th Cir. 2014), Gorsuch noted the conflicting evidence regarding the formation of an arbitration agreement, and he specifically quoted the FAA’s requirement of holding a trial on the narrow issue of the making of an agreement.  In my opinion, many judges and attorneys overlook this specific trial language in section 4 of the FAA.  Gorsuch’s opinion regarding the FAA was thoughtful and thorough and grounded in the text of the FAA.  I’ve seen many judges addressing a similar fact pattern where the court simply denies a motion to compel arbitration, without giving any indication that a trial should occur under the text of the statute.  In other words, I’ve seen other judges deny a motion to compel in the face of conflicting evidence, and these other opinions give the flawed impression that the clause is therefore not enforceable at all.   Gorsuch’s opinion in the Ferrellgas case suggests he would be a textualist when interpreting the FAA and strive to give every word in the statute its correct meaning (and if he is true to his originalist/textualist roots, maybe his appointment to the Supreme Court signals a major shift in arbitration law if he can convince his future colleagues to join him and Justice Thomas in overruling Southland and other overly-expansive interpretations of the FAA.)

Also, in this Ferrellgas opinion, Gorsuch described the FAA in terms that suggest he is aware of and may disfavor expansive interpretations of the FAA.  He describes the FAA as a statute with a “heavy-hand,” and he also cautioned in his opinion that arbitration cannot be “foisted on the parties at all costs.”  Maybe I’m reading too much into his language, but with such language, he does not seem to be blindly in love with the FAA and its strong (Supreme Court-manufactured) national policy in favor of arbitration.

In Chelsea Family Pharmacy, PLLC v. Medco Health Sols., Inc., 567 F.3d 1191 (10th Cir. 2009), Gorsuch wrote a concurring opinion that was very critical of a test, developed by the Second Circuit, which has no absolutely no basis in the text of the FAA.  Under Second Circuit law, “broad” arbitration clauses are entitled to a stronger presumption of arbitrability compared to “narrow” clauses.  Gorsuch correctly pointed out that Congress, in drafting the text of the FAA, never adopted such standards.

If Gorsuch is willing to apply such a piercing, textual analysis to the FAA (and convince his new colleagues to do so), the edifice of the Court’s own creation (Justice O’Connor’s description of the FAA) will quickly come crashing down.  Cases like Southland, the Mitsubishi trilogy, Circuit City, Preston, and many others should fall.  I don’t know if Gorsuch will try to rock the boat on arbitration law, but I’ve got my fingers crossed.

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