Document: 517 U.S. 681116 S.Ct. 1652134 L.Ed.2d 902 DOCTOR'S ASSOCIATES, INC., et al.v.CASAROTTO ux.Certiorari to the Supreme Court of Montana. No. 95-559. Argued April 16, 1996 Decided May 20, Syllabus* When a dispute arose between parties standard form franchise agreement for operation Subway sandwich shop in Montana, respondent franchisee sued petitioners, franchisor Doctor's Associates, Inc. (DAI) and its agent, Lombardi, Montana state court. The court stayed lawsuit pending arbitration pursuant clause set out ordinary type on page nine agreement. reversed, holding that was unenforceable because it did not meet state-law requirement "[n]otice contract is subject arbitration" be "typed underlined capital letters first contract." Mont. Code Ann. Section(s) 27-5-114(4). DAI Lombardi unsuccessfully argued 27-5-114(4) preempted by 2 Federal Arbitration Act (FAA), which declares written provisions "valid, irrevocable, enforceable, save upon such grounds as exist at law or equity revocation any In arguing preemption, dominantly relied Southland Corp. v. Keating, 465 U. S. 1, Perry Thomas, 482 483, this established "state . applicable if govern issues concerning validity, revocability, enforceability contracts generally,'' but principle ``takes meaning precisely from fact arbitrate issue." Id., 493, n. 9 (emphasis added). Court, however, thought Volt Information Sciences, Board Trustees Leland Stanford Junior Univ., 489 468, limited 2's preemptive force correspondingly qualified Perry; proper inquiry, said, should focus bare words question: Would application 27-5-114(4)'s notice undermine FAA's goals policies. court's judgment, these policies, preclude agreements altogether. On remand reconsideration light Allied-Bruce Terminix Cos. Dobson, 513 ___, adhered original ruling. Held: Montana's first-page requirement, governs "any contract," specifically solely "subject arbitration," conflicts with FAA therefore displaced federal measure. Generally defenses, fraud, duress unconscionability, may applied invalidate without contravening 2, see, e.g., Allied-Bruce, S., courts under laws only provisions, id., ___. By enacting Congress precluded States singling suspect status, requiring instead placed same footing other contracts. Scherk Alberto-Culver Co., 417 506, 511. directly State's conditions compliance special generally. misread reaching contrary conclusion. rule examined determined efficient order proceedings; affect itself. Applying here, contrast, would clause. Pp. 5-8. ___ 901 P. 2d 596, reversed remanded. Ginsburg, J., delivered opinion Rehnquist, C. Stevens, O'Connor, Scalia, Kennedy, Souter, Breyer, JJ., joined. filed dissenting opinion. Justice Ginsburg Court. 1 This case concerns agreement, Paul Casarotto DAI's development Nick sought stop litigation (FAA Act) 2. law, an unless [the] (1995). question here presented whether compatible Act. We hold 3 * Petitioner national shops. 1988, entered Casarotto, permitted open Great Falls, stated, type: "Any controversy claim arising relating breach thereof shall settled ." App. 75. 4 October 1992, court, alleging tort claims demanded those claims, successfully moved trial stay arbitration. 10-11. 5 reversed. 268 369, 886 931 (1994). That left undisturbed findings fell within scope covered stated against Lombardi. held, rendered agreement's unenforceable. statute provides: 6 "Notice typed contract; displayed thereon, arbitration." 7 Notice appear contract. Nor anything letters. Because statutory had been met, declared parties' "not Mont., 382, 2d, 939. 8 before FAA.1 our decisions (1984), 483 (1987). Southland, we held applies well courts, see 12, "withdr[aws] power states require judicial forum resolution contracting agreed resolve 10. noted pathmarking decision "broad enforceability," 11, provided "grounds Perry, reiterated: "[S]tate legislative origin, A takes issue does comport [the text 2]." 9. read 468 (1989), limiting qualifying Perry. 378-381, 937-939. As comprehended Volt, inquiry contained 27-5-114(4), "undermine policies FAA." 381, 938 (internal quotation marks omitted). Section FAA, altogether; simply prescribed "that are they knowingly." 10 petitioned certiorari. Last Term, granted their petition, vacated judgment remanded further consideration See 515 restated what established: 11 "States regulate contracts, including clauses, general principles `upon contract.' What do decide fair enough enforce all basic terms (price, service, credit), makes policy unlawful, kind place clauses unequal `footing,' Act's language Congress's intent." (slip op., 15-16). 12 remand, inviting permitting briefing oral argument,2 stated: "After careful review, can find nothing [Allied-Bruce] relates case." 598 Elaborating, said found "no suggestion [to uphold 27-5-114(4)] have modified way." ___-___, 598-599. again certiorari, 516 (1996), now reverse. II 13 provides "shall valid, Repeating observation "if generally." Thus, generally 15); Rodriguez de Quijas Shearson/American Express, Inc., 490 477, 483-484 (1989); Express McMahon, 220, 226 14 Courts not, provisions. several times "upon contracts." 511 (1974) thus displaces respect I. Macneil, R. Speidel, T. Stipanowich, & G. Shell, Law 19.1.1, pp. 19:4-19:5 (1995) (under legislation greater information choice making than preempted"). 15 reached conclusion odds rulings. involved incorporated procedural rules, one which, facts case, called related proceeding. applying FAA," 478, very purpose "ensur[e] private enforced according terms," 479. 16 Casarotto; instead, "goals policies" Court's precedent indicates, antithetical threshold limitations "mandate[s] enforcement agreements," 10, "save places class apart singularly limits validity. prescription inconsonant with, by, law. 17 For reasons proceedings inconsistent 18 It so ordered. 19 djq dissenting. 20 given my dissent last term __ (1995), I remain view Act, apply courts. Accordingly, respectfully dissent. syllabus constitutes no part has prepared Reporter Decisions convenience reader. United Detroit Lumber 200 321, 337. provides, relevant part: "A provision evidencing transaction involving commerce settle thereafter transaction, refusal perform whole thereof, Dissenting Gray "cavalier" her colleagues ignore defendants' request "opportunity brief raised present argument." 599-600 At argument, counsel urged broader view, might regarded harmless surplus. Tr. Oral Arg. 29-32. could invalidated general, informed consent principles, suggested. She asked us regard illustration cross-the-board rule: unexpected adhesion must conspicuous. also Brief Respondents 21-24. But announced sweeping rule. assert basis "reasonable expectations" governing term. Cf. Transamerica Ins. Co. Royle, 202 173, 180, 656 820, 824 (1983) (invalidating auto insurance "honor reasonable insured). trains upholds particular statute, setting precise, arbitration-specific limitation. review disposition, other. bears reiteration, "rely uniqueness unconscionable, enable effect legislature cannot."

Category: 9