On February 26, 2018, the Supreme Court of the United States granted certiorari in Oliveira v. New Prime, Inc., 857 F.3d 7 (1st Cir. 2017), cert. granted, 2018 WL 1037577 (U.S. Feb. 26, 2018) (No. 17-340), and added the case to its October-2018 Term. The Court will resolve a circuit split which has developed among the First, Eighth, and Ninth Circuits, in addition to division among lower federal and state courts, regarding gateway questions of arbitrability under the Section 1 definitions and exemptions of the FAA. More specifically, the Court will again address efforts by lower courts to avoid the broad mandate under the FAA in favor of the enforcement of arbitration agreements in the context of an arbitration agreement containing an express class waiver provision.

The FAA applies to “[a] written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration . . . .” 9 U.S.C. §2 (emphasis added). At issue in New Prime (and the circuit split before SCOTUS), is the intersection of the FAA’s definition of commerce which provides for various exceptions including one for “any other class of workers engaged in foreign or interstate commerce”, 9 U.S.C. §1, and the Supreme Court’s directive that “[a]n agreement to arbitrate a gateway issue is simply an additional, antecedent agreement the party seeking arbitration asks the federal court to enforce”. Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 70 (2010). Couched broadly, the question before the Supreme Court is whether a party who wishes to avoid an agreement to arbitrate questions of arbitrability can do so by presenting the dispute as one of statutory interpretation under the FAA. In other words, how broad is the mandate of Rent-A-Center. Such a question may hold similarities to the age old quandary which came first, the chicken or the egg.

Legal questions concerning the enforcement of arbitration agreements and initial questions of arbitrability under the FAA remain points of heated contention. One of the benefits of arbitration is a streamlined process where discovery (and its attendant costs) can be moderated and controlled before a panel of subject matter experts who bring reinsurance, insurance, or other expertise to the dispute at hand. Those efficiencies are much more difficult to realize if courts engage in lengthy proceedings, including discovery and the weighing of evidence, to determine gateway factual questions about arbitrability where the parties contracted to submit questions of arbitrability, i.e. the arbitrator’s jurisdiction among other issues, to the arbitrators.