In Nitro-Lift Technologies, L.L.C. v. Howard, the United States Supreme Court chided the Oklahoma Supreme Court for exceeding its authority and failing to follow Supreme Court precedent regarding the Federal Arbitration Act ("FAA").
While employed at petitioner Nitro-Lift, respondent employees signed confidentiality and non-competition agreements bearing arbitration clauses. When the employees left for a competitor, Nitro-Lift pursued claims against them through arbitration. In response, the former employees filed an action in an Oklahoma District Court asking that the court enjoin enforcement of the agreements because of the alleged unenforceability of the non-competes. The court dismissed the complaint in deference to the arbitration provision. On appeal, the Oklahoma Supreme Court reversed, struck down the noncompetes as illegal, and in the process stated that "the existence of an arbitration agreement in an employment contract does not prohibit judicial review of the underlying agreement."
The Supreme Court granted certiorari, and scolded the lower court for its decision, stating that it had disregarded the Court's precedent and was obligated to abide by the FAA, as it is the "supreme Law of the Land." The Court reminded the lower court that although courts may assess the validity and enforceability of an arbitration clause, they may not address the merits of the dispute. It is for the arbitrator, not the court, to decide all other issues.
Here, the Court reiterated the strong public policy under the FAA favoring arbitration and vacated and remanded the decision of the Oklahoma Supreme Court.