Source: https://caselaw.findlaw.com/us-supreme-court/539/444.html
Timestamp: 2019-04-25 13:17:54+00:00

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Justice Breyer, joined by Justice Scalia, Justice Souter, and Justice Ginsburg, concluded that an arbitrator must determine whether the contracts forbid class arbitration. Pp. 4-9.
(a) Green Tree argues that the contracts are not silent--that they forbid arbitration. If the contracts are not silent, then the state court's holding is flawed on its own terms; that court neither said nor implied that it would have authorized class arbitration had the parties' arbitration agreement forbidden it. Whether Green Tree is right about the contracts presents a disputed issue of contract interpretation. The contracts say that disputes "shall be resolved ... by one arbitrator selected by us [Green Tree] with consent of you [Green Tree's customer]." The class arbitrator was "selected by" Green Tree "with consent of" Green Tree's customers, the named plaintiffs. And insofar as the other class members agreed to proceed in class arbitration, they consented as well. Green Tree did not independently select this arbitrator to arbitrate its dispute with the other class members, but whether the contracts contain such a requirement is not decided by the literal contract terms. Whether "selected by [Green Tree]" means "selected by [Green Tree] to arbitrate this dispute and no other (even identical) dispute with another customer" is the question at issue: Do the contracts forbid class arbitration? Given the broad authority they elsewhere bestow upon the arbitrator, the answer is not completely obvious. The parties agreed to submit to the arbitrator "[a]ll disputes, claims, or controversies arising from or relating to this contract or the relationships which result from this contract." And the dispute about what the arbitration contracts mean is a dispute "relating to this contract" and the resulting "relationships." Hence the parties seem to have agreed that an arbitrator, not a judge, would answer the relevant question, and any doubt about the " 'scope of arbitrable issues' " should be resolved " 'in favor of arbitration.' " Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U. S. 614, 626. The question here does not fall into the limited circumstances where courts assume that the parties intended courts, not arbitrators, to decide a particular arbitration-related matter, as it concerns neither the arbitration clause's validity nor its applicability to the underlying dispute. The relevant question here is what kind of arbitration proceeding the parties agreed to, which does not concern a state statute or judicial procedures, cf. Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U. S. 468, but rather contract interpretation and arbitration procedures. Arbitrators are well situated to answer that question. Pp. 4-7.
(b) With respect to the question whether the contracts forbid class arbitration, the parties have not yet obtained the arbitration decision that their contracts foresee. Regarding Bazzle plaintiffs, the State Supreme Court wrote that the trial court issued an order granting class certification and the arbitrator subsequently administered class arbitration proceedings without the trial court's further involvement. As for Lackey plaintiffs, the arbitrator decided to certify the class after the trial court had determined that the identical contract in the Bazzle case authorized class arbitration procedures, and there is no question that the arbitrator was aware of that decision. On balance, there is at least a strong likelihood that in both proceedings the arbitrator's decision reflected a court's interpretation of the contracts rather than an arbitrator's interpretation. Pp. 7-9.
Justice Stevens concluded that in order to have a controlling judgment of the Court, and because Justice Breyer's opinion expresses a view of the case close to his own, he concurs in the judgment. Pp. 1-2.
Breyer, J., announced the judgment of the Court and delivered an opinion, in which Scalia, Souter, and Ginsburg, JJ., joined. Stevens, J., filed an opinion concurring in the judgment and dissenting in part. Rehnquist, C. J., filed a dissenting opinion, in which O'Connor and Kennedy, JJ., joined. Thomas, J., filed a dissenting opinion.
GREEN TREE FINANCIAL CORP., nka CONSECO FINANCE CORP., PETITIONER v. LYNN W.
This case concerns contracts between a commercial lender and its customers, each of which contains a clause providing for arbitration of all contract-related disputes. The Supreme Court of South Carolina held (1) that the arbitration clauses are silent as to whether arbitration might take the form of class arbitration, and (2) that, in that circumstance, South Carolina law interprets the contracts as permitting class arbitration. 351 S. C. 244, 569 S. E. 2d 349 (2002). We granted certiorari to determine whether this holding is consistent with the Federal Arbitration Act, 9 U. S. C. §1 et seq.
"ARBITRATION--All disputes, claims, or controversies arising from or relating to this contract or the relationships which result from this contract ... shall be resolved by binding arbitration by one arbitrator selected by us with consent of you. This arbitration contract is made pursuant to a transaction in interstate commerce, and shall be governed by the Federal Arbitration Act at 9 U. S. C. section 1. . . . THE PARTIES VOLUNTARILY AND KNOWINGLY WAIVE ANY RIGHT THEY HAVE TO A JURY TRIAL, EITHER PURSUANT TO ARBITRATION UNDER THIS CLAUSE OR PURSUANT TO COURT ACTION BY US (AS PROVIDED HEREIN)... . The parties agree and understand that the arbitrator shall have all powers provided by the law and the contract. These powers shall include all legal and equitable remedies, including, but not limited to, money damages, declaratory relief, and injunctive relief." App. 34 (emphasis added, capitalization in original).
Respondents Daniel Lackey and George and Florine Buggs entered into loan contracts and security agreements for the purchase of mobile homes with Green Tree. These agreements contained arbitration clauses that were, in all relevant respects, identical to the Bazzles' arbitration clause. (Their contracts substitute the word "you" with the word "Buyer[s]" in the italicized phrase.) 351 S. C., at 264, n. 18, 569 S. E. 2d, at 359, n. 18 (emphasis deleted).
At the time of the loan transactions, Green Tree apparently failed to provide these customers with a legally required form that would have told them that they had a right to name their own lawyers and insurance agents and would have provided space for them to write in those names. See S. C. Code Ann. §37-10-102 (West 2002). The two sets of customers before us now as respondents each filed separate actions in South Carolina state courts, complaining that this failure violated South Carolina law and seeking damages.
The South Carolina Supreme Court's determination that the contracts are silent in respect to class arbitration raises a preliminary question. Green Tree argued there, as it argues here, that the contracts are not silent--that they forbid class arbitration. And we must deal with that argument at the outset, for if it is right, then the South Carolina court's holding is flawed on its own terms; that court neither said nor implied that it would have authorized class arbitration had the parties' arbitration agreement forbidden it.
Whether Green Tree is right about the contracts themselves presents a disputed issue of contract interpretation. The Chief Justice believes that Green Tree is right; indeed, that Green Tree is so clearly right that we should ignore the fact that state law, not federal law, normally governs such matters, see post, at 1 (Stevens, J., concurring in judgment and dissenting in part), and reverse the South Carolina Supreme Court outright, see post, at 4-6 (Rehnquist, C. J., dissenting). The Chief Justice points out that the contracts say that disputes "shall be resolved . . . by one arbitrator selected by us [Green Tree] with consent of you [Green Tree's customer]." App. to Pet. for Cert. 110a. See post, at 4-5. And it finds that class arbitration is clearly inconsistent with this requirement. After all, class arbitration involves an arbitration, not simply between Green Tree and a named customer, but also between Green Tree and other (represented) customers, all taking place before the arbitrator chosen to arbitrate the initial, named customer's dispute.
Of course, Green Tree did not independently select this arbitrator to arbitrate its disputes with the other class members. But whether the contracts contain this additional requirement is a question that the literal terms of the contracts do not decide. The contracts simply say (I) "selected by us [Green Tree]." And that is literally what occurred. The contracts do not say (II) "selected by us [Green Tree] to arbitrate this dispute and no other (even identical) dispute with another customer." The question whether (I) in fact implicitly means (II) is the question at issue: Do the contracts forbid class arbitration? Given the broad authority the contracts elsewhere bestow upon the arbitrator, see, e.g., App. to Pet. for Cert. 110a (the contracts grant to the arbitrator "all powers," including certain equitable powers "provided by the law and the contract"), the answer to this question is not completely obvious.
the South Carolina Supreme Court's resolution of this contract-interpretation question. Under the terms of the parties' contracts, the question--whether the agreement forbids class arbitration--is for the arbitrator to decide. The parties agreed to submit to the arbitrator "[a]ll disputes, claims, or controversies arising from or relating to this contract or the relationships which result from this contract." Ibid. (emphasis added). And the dispute about what the arbitration contract in each case means (i.e., whether it forbids the use of class arbitration procedures) is a dispute "relating to this contract" and the resulting "relationships." Hence the parties seem to have agreed that an arbitrator, not a judge, would answer the relevant question. See First Options of Chicago, Inc. v. Kaplan, 514 U. S. 938, 943 (1995) (arbitration is a "matter of contract"). And if there is doubt about that matter--about the " 'scope of arbitrable issues' "--we should resolve that doubt " 'in favor of arbitration.' " Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U. S. 614, 626 (1985).
The question here--whether the contracts forbid class arbitration--does not fall into this narrow exception. It concerns neither the validity of the arbitration clause nor its applicability to the underlying dispute between the parties. Unlike First Options, the question is not whether the parties wanted a judge or an arbitrator to decide whether they agreed to arbitrate a matter. 489 U. S. 468, 474-476 (1989). It concerns contract interpretation and arbitration procedures. Arbitrators are well situated to answer that question. Given these considerations, along with the arbitration contracts' sweeping language concerning the scope of the questions committed to arbitration, this matter of contract interpretation should be for the arbitrator, not the courts, to decide. Cf. Howsam, supra, at 83 (finding for roughly similar reasons that the arbitrator should determine a certain procedural "gateway matter").
With respect to this underlying question--whether the arbitration contracts forbid class arbitration--the parties have not yet obtained the arbitration decision that their contracts foresee. As far as concerns the Bazzle plaintiffs, the South Carolina Supreme Court wrote that the "trial court" issued "an order granting class certification" and the arbitrator subsequently "administered" class arbitration proceedings "without further involvement of the trial court." 351 S. C., at 250-251, 569 S. E. 2d, at 352. Green Tree adds that "the class arbitration was imposed on the parties and the arbitrator by the South Carolina trial court." Brief for Petitioner 30. Respondents now deny that this was so, Brief for Respondents 13, but we can find no convincing record support for that denial.
On the other hand, the Lackey arbitrator decided this question after the South Carolina trial court had determined that the identical contract in the Bazzle case authorized class arbitration procedures. And there is no question that the arbitrator was aware of the Bazzle decision, since the Lackey plaintiffs had argued to the arbitrator that it should impose class arbitration procedures in part because the state trial court in Bazzle had done so. Record on Appeal 516-518. In the court proceedings below (where Green Tree took the opposite position), the Lackey plaintiffs maintained that "to the extent" the arbitrator decided that the contracts permitted class procedures (in the Lackey case or the Bazzle case), "it was a reaffirmation and/or adoption of [the Bazzle c]ourt's prior determination." Record on Appeal 1708, n. 2. See also App. 31-32, n. 2.
On balance, there is at least a strong likelihood in Lackey as well as in Bazzle that the arbitrator's decision reflected a court's interpretation of the contracts rather than an arbitrator's interpretation. That being so, we remand the case so that the arbitrator may decide the question of contract interpretation--thereby enforcing the parties' arbitration agreements according to their terms. 9 U. S. C. §2; Volt, supra, at 478-479.
The parties entered into a contract with an arbitration clause that is governed by the Federal Arbitration Act (FAA), 9 U. S. C. §1 et seq. The Supreme Court of South Carolina held that arbitration under the contract could proceed as a class action even though the contract does not by its terms permit class-action arbitration. The plurality now vacates that judgment and remands the case for the arbitrator to make this determination. I would reverse because this determination is one for the courts, not for the arbitrator, and the holding of the Supreme Court of South Carolina contravenes the terms of the contract and is therefore pre-empted by the FAA.
arbitration by one arbitrator selected by us with consent of you." App. 34.
"[G]iven the principle that a party can be forced to arbitrate only those issues it specifically has agreed to submit to arbitration, one can understand why courts might hesitate to interpret silence or ambiguity on the 'who should decide arbitrability' point as giving the arbitrators that power, for doing so might too often force unwilling parties to arbitrate a matter they reasonably would have thought a judge, not an arbitrator would decide."
Just as fundamental to the agreement of the parties as what is submitted to the arbitrator is to whom it is submitted. Those are the two provisions in the sentence quoted above, and it is difficult to say that one is more important than the other. I have no hesitation in saying that the choice of arbitrator is as important a component of the agreement to arbitrate as is the choice of what is to be submitted to him.
" ' "[P]rocedural" questions which grow out of the dispute and bear on its final disposition' are presumptively not for the judge, but for an arbitrator, to decide. John Wiley [& Sons, Inc. v. Livingston, 376 U. S. 543, 557 (1964)] (holding that an arbitrator should decide whether the first two steps of a grievance procedure were completed, where these steps are prerequisites to arbitration). So, too, the presumption is that the arbitrator should decide 'allegation[s] of waiver, delay, or a like defense to arbitrability.' " Id., at 84.
"States may regulate contracts, including arbitration clauses, under general contract law principles," Allied-Bruce Terminix Cos. v. Dobson, 513 U. S. 265, 281 (1995). "[T]he interpretation of private contracts is ordinarily a question of state law, which this Court does not sit to review." Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U. S. 468, 474 (1989). But "state law may nonetheless be pre-empted to the extent that it actually conflicts with federal law--that is, to the extent that it 'stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.' " Id., at 477 (quoting Hines v. Davidowitz, 312 U. S. 52, 67 (1941)).
The parties do not dispute that this contract falls within the coverage of the FAA. 351 S. C., at 257, 569 S. E. 2d, at 355. The "central purpose" of the FAA is "to ensure that private agreements to arbitrate are enforced according to their terms." Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U. S. 52, 53-54 (1995) (quoting Volt, supra, at 479 (internal quotation marks omitted)). See also Doctor's Associates, Inc. v. Casarotto, 517 U. S. 681, 688 (1996); First Options, supra, at 947. In other words, Congress sought simply to "place such agreements upon the same footing as other contracts." Volt, supra, at 474 (quoting Scherk v. Alberto-Culver Co., 417 U. S. 506, 511 (1974) (internal quotation marks omitted)). This aim "requires that we rigorously enforce agreements to arbitrate," Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U. S. 614, 626 (1985) (quoting Dean Witter Reynolds Inc. v. Byrd, 470 U. S. 213, 221 (1985) (internal quotation marks omitted)), in order to "give effect to the contractual rights and expectations of the parties," Volt, supra, at 479. See also Mitsubishi Motors, supra, at 626 ("[A]s with any other contract, the parties' intentions control").
Under the FAA, "parties are generally free to structure their arbitration agreements as they see fit." Volt, supra, at 479. Here, the parties saw fit to agree that any disputes arising out of the contracts "shall be resolved by binding arbitration by one arbitrator selected by us with consent of you." App. 34. Each contract expressly defines "us" as petitioner, and "you" as the respondent or respondents named in that specific contract. Id., at 33 (" ' We' and 'us' means the Seller above, its successors and assigns"; " 'You' and 'your' means each Buyer above and guarantor, jointly and severally" (emphasis added)). The contract also specifies that it governs all "disputes ... arising from ... this contract or the relationships which result from this contract." Id., at 34 (emphasis added). These provisions, which the plurality simply ignores, see ante, at 5, make quite clear that petitioner must select, and each buyer must agree to, a particular arbitrator for disputes between petitioner and that specific buyer.
While the observation of the Supreme Court of South Carolina that the agreement of the parties was silent as to the availability of class-wide arbitration is literally true, the imposition of class-wide arbitration contravenes the just-quoted provision about the selection of an arbitrator. To be sure, the arbitrator that administered the proceedings was "selected by [petitioner] with consent of" the Bazzles, Lackey, and the Buggses. Id., at 34-36. But petitioner had the contractual right to choose an arbitrator for each dispute with the other 3,734 individual class members, and this right was denied when the same arbitrator was foisted upon petitioner to resolve those claims as well. Petitioner may well have chosen different arbitrators for some or all of these other disputes; indeed, it would have been reasonable for petitioner to do so, in order to avoid concentrating all of the risk of substantial damages awards in the hands of a single arbitrator. As petitioner correctly concedes, Brief for Petitioner 32, 42, the FAA does not prohibit parties from choosing to proceed on a class-wide basis. Here, however, the parties simply did not so choose.
"Arbitration under the Act is a matter of consent, not coercion." Volt, supra, at 479. Here, the Supreme Court of South Carolina imposed a regime that was contrary to the express agreement of the parties as to how the arbitrator would be chosen. It did not enforce the "agreemen[t] to arbitrate ... according to [its] terms." Mastrobuono, supra, at 54 (internal quotation marks omitted). I would therefore reverse the judgment of the Supreme Court of South Carolina.
I continue to believe that the Federal Arbitration Act (FAA), 9 U. S. C. §1 et seq., does not apply to proceedings in state courts. Allied-Bruce Terminix Cos. v. Dobson, 513 U. S. 265, 285-297 (1995) (Thomas, J., dissenting). See also Doctor's Associates, Inc. v. Casarotto, 517 U. S. 681, 689 (1996) (Thomas, J., dissenting). For that reason, the FAA cannot be a ground for pre-empting a state court's interpretation of a private arbitration agreement. Accordingly, I would leave undisturbed the judgment of the Supreme Court of South Carolina.
The parties agreed that South Carolina law would govern their arbitration agreement. The Supreme Court of South Carolina has held as a matter of state law that class-action arbitrations are permissible if not prohibited by the applicable arbitration agreement, and that the agreement between these parties is silent on the issue. 351 S. C. 244, 262-266, 569 S. E. 2d 349, 359-360 (2002). There is nothing in the Federal Arbitration Act that precludes either of these determinations by the Supreme Court of South Carolina. See Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U. S. 468, 475-476 (1989).

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