Arbitrability and Severability

Question 1

What is severability? (Prima Paint)

Answer 1

If you challenge the whole contract, then the case goes to the arbitrators. Nitro-Lift Techs

Exceptions: FOC says otherwise (First Options) or fraud claim is directed at the DRC (Puleo)

Question 2

Nitro-Lift Techs

Answer 2

Deciding the scope of a non-compete agreement is a question for the arbitrator b/c it’s a question of contract interpretation

Question 3

Green Tree Financial Corp

Answer 3

Gateway issues are for the court. They include whether there is a valid DRC, whether the DRC applies to a certain controversy, does an arb agreement survive a corporate merger, does a labor-management layoff controversy fall within the scope of an arbitration clause etc.

Whether a DRC forbids class arbitration is not a gateway issue.

Question 4

Puleo (3d Cir)

Answer 4

Validity/Unconscionability of a class action waiver is a gateway issue for the court

A challenge to the DRC by challenging its terms = arbitrability

Question 5

First Options

Answer 5

Parties can agree to arbitrate arbitrability (questions about the DRC’s validity); otherwise, the court decides arbitrability.

Question 6

Buckeye Check Cashing

Answer 6

Applies Prima Paint (doctrine of severability) to state courts

Question 7

Rent-A-Center

Answer 7

Applies Contract - DRC relationship (Prima Paint) to DRC - FOC relationship

Underlying agreement is an agreement to arbitrate with a FOC. Challenge to the DRC = arbitrator. Challenge to FOC = court.

Question 8

Werner Schneider (2d Cir)

Answer 8

If there is no clear and unmistakable evidence of intent to arbitrate, then questions of arbitrability are resolved by the court regardless of whether they concern scope or formation.