Source: https://www.law.cornell.edu/supct/html/06-989.ZO.html
Timestamp: 2017-08-21 10:42:02
Document Index: 367282143

Matched Legal Cases: ['§4', '§2', '§9', '§6', '§9', '§10', '§11', '§10', '§14', '§10', '§10', '§10', '§10', '§9', '§9', '§10', '§10', '§11', '§10', '§11', '§9', '§9', '§10', '§11', '§10', '§2374', '§10', '§11']

Congress enacted the FAA to replace judicial indisposition to arbitration with a “national policy favoring [it] and plac[ing] arbitration agreements on equal footing with all other contracts.” Buckeye Check Cashing, Inc. v. Cardegna, 546 U. S. 440, 443 (2006) . As for jurisdiction over controversies touching arbitration, the Act does nothing, being “something of an anomaly in the field of federal-court jurisdiction” in bestowing no federal jurisdiction but rather requiring an independent jurisdictional basis. Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U. S. 1 , n. 32 (1983); see, e.g., 9 U. S. C. §4 (providing for action by a federal district court “which, save for such [arbitration] agreement, would have jurisdiction under title 28”).2 But in cases falling within a court’s jurisdiction, the Act makes contracts to arbitrate “valid, irrevocable, and enforceable,” so long as their subject involves “commerce.” §2. And this is so whether an agreement has a broad reach or goes just to one dispute, and whether enforcement be sought in state court or federal. See ibid.; Southland Corp. v. Keating, 465 U. S. 1, 15–16 (1984) .
The Act also supplies mechanisms for enforcing arbitration awards: a judicial decree confirming an award, an order vacating it, or an order modifying or correcting it. §§9–11. An application for any of these orders will get streamlined treatment as a motion, obviating the separate contract action that would usually be necessary to enforce or tinker with an arbitral award in court.3 §6. Under the terms of §9, a court “must” confirm an arbitration award “unless” it is vacated, modified, or corrected “as prescribed” in §§10 and 11. Section 10 lists grounds for vacating an award, while §11 names those for modifying or correcting one.4
The Courts of Appeals have split over the exclusiveness of these statutory grounds when parties take the FAA shortcut to confirm, vacate, or modify an award, with some saying the recitations are exclusive, and others regarding them as mere threshold provisions open to expansion by agreement.5 As mentioned already, when this litigation started, the Ninth Circuit was on the threshold side of the split, see LaPine, 130 F. 3d, at 889, from which it later departed en banc in favor of the exclusivity view, see Kyocera, 341 F. 3d, at 1000, which it followed in this case, see 113 Fed. Appx., at 273. We now hold that §§10 and 11 respectively provide the FAA’s exclusive grounds for expedited vacatur and modification.
Hall Street makes two main efforts to show that the grounds set out for vacating or modifying an award are not exclusive, taking the position, first, that expandable judicial review authority has been accepted as the law since Wilko v. Swan, 346 U. S. 427 (1953) . This, however, was not what Wilko decided, which was that §14 of the Securities Act of 1933 voided any agreement to arbitrate claims of violations of that Act, see id., at 437–438, a holding since overruled by Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U. S. 477, 484 (1989) . Although it is true that the Court’s discussion includes some language arguably favoring Hall Street’s position, arguable is as far as it goes.
But this is too much for Wilko to bear. Quite apart from its leap from a supposed judicial expansion by interpretation to a private expansion by contract, Hall Street overlooks the fact that the statement it relies on expressly rejects just what Hall Street asks for here, general review for an arbitrator’s legal errors. Then there is the vagueness of Wilko’s phrasing. Maybe the term “manifest disregard” was meant to name a new ground for review, but maybe it merely referred to the §10 grounds collectively, rather than adding to them. See, e.g., Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U. S. 614, 656 (1985) (Stevens, J., dissenting) (“Arbitration awards are only reviewable for manifest disregard of the law, 9 U. S. C. §§10”); I/S Stavborg v. National Metal Converters, Inc., 500 F. 2d 424, 431 (CA2 1974). Or, as some courts have thought, “manifest disregard” may have been shorthand for §10(a)(3) or §10(a)(4), the subsections authorizing vacatur when the arbitrators were “guilty of misconduct” or “exceeded their powers.” See, e.g., Kyocera, supra, at 997. We, when speaking as a Court, have merely taken the Wilko language as we found it, without embellishment, see First Options of Chicago, Inc. v. Kaplan, 514 U. S. 938, 942 (1995) , and now that its meaning is implicated, we see no reason to accord it the significance that Hall Street urges.
Second, Hall Street says that the agreement to review for legal error ought to prevail simply because arbitration is a creature of contract, and the FAA is “motivated, first and foremost, by a congressional desire to enforce agreements into which parties ha[ve] entered.” Dean Witter Reynolds Inc. v. Byrd, 470 U. S. 213, 220 (1985) . But, again, we think the argument comes up short. Hall Street is certainly right that the FAA lets parties tailor some, even many features of arbitration by contract, including the way arbitrators are chosen, what their qualifications should be, which issues are arbitrable, along with procedure and choice of substantive law. But to rest this case on the general policy of treating arbitration agreements as enforceable as such would be to beg the question, which is whether the FAA has textual features at odds with enforcing a contract to expand judicial review following the arbitration.
That aside, expanding the detailed categories would rub too much against the grain of the §9 language, where provision for judicial confirmation carries no hint of flexibility. On application for an order confirming the arbitration award, the court “must grant” the order “unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title.” There is nothing malleable about “must grant,” which unequivocally tells courts to grant confirmation in all cases, except when one of the “prescribed” exceptions applies. This does not sound remotely like a provision meant to tell a court what to do just in case the parties say nothing else.6
“[i]f in the agreement provision be made for a method of naming or appointing an arbitrator… such method shall be followed; but if no method be provided therein, or if a method be provided and any party thereto shall fail to avail himself of such method, … then upon the application of either party to thecontroversy the court shall designate and appoint anarbitrator… .”
Instead of fighting the text, it makes more sense to see the three provisions, §§9–11, as substantiating a national policy favoring arbitration with just the limited review needed to maintain arbitration’s essential virtue of resolving disputes straightaway. Any other reading opens the door to the full-bore legal and evidentiary appeals that can “rende[r] informal arbitration merely a prelude to a more cumbersome and time-consuming judicial review process,” Kyocera, 341 F. 3d, at 998; cf. Ethyl Corp. v. United Steelworkers of America, 768 F. 2d 180, 184 (CA7 1985),and bring arbitration theory to grief in post-arbitration process.
Nor is Dean Witter, 470 U. S. 213 , to the contrary, as Hall Street claims it to be. Dean Witter held that state-law claims subject to an agreement to arbitrate could not be remitted to a district court considering a related, nonarbitrable federal claim; the state-law claims were to go to arbitration immediately. Id., at 217. Despite the opinion’s language “reject[ing] the suggestion that the overriding goal of the [FAA] was to promote the expeditious resolution of claims,” id., at 219, the holding mandated immediate enforcement of an arbitration agreement; the Court was merely trying to explain that the inefficiency and difficulty of conducting simultaneous arbitration and federal-court litigation was not a good enough reason to defer the arbitration, see id., at 217.
When all these arguments based on prior legal authority are done with, Hall Street and Mattel remain at odds over what happens next. Hall Street and its amici say parties will flee from arbitration if expanded review is not open to them. See, e.g., Brief for Petitioner 39; Brief for New England Legal Foundation et al.as Amici Curiae 15. One of Mattel’s amici foresees flight from the courts if it is. See Brief for U. S. Council for Int’l Business as Amicus Curiae 29–30. We do not know who, if anyone, is right, and so cannot say whether the exclusivity reading of the statute is more of a threat to the popularity of arbitrators or to that of courts. But whatever the consequences of our holding, the statutory text gives us no business to expand the statutory grounds.7
** Justice Scalia joins all but footnote 7 of this opinion.
1 On remand, the District Court vacated the arbitration award, because it supposedly rested on an implausible interpretation of the lease and thus exceeded the arbitrator’s powers, in violation of 9 U. S. C. §10. Mattel appealed, and the Ninth Circuit reversed, holding that implausibility is not a valid ground for vacating or correcting an award under §10 or §11. 196 Fed. Appx. 476, 477–478 (2006).
2 Because the FAA is not jurisdictional, there is no merit in the argument that enforcing the arbitration agreement’s judicial review provision would create federal jurisdiction by private contract. The issue is entirely about the scope of judicial review permissible under the FAA.
3 Unlike Justice Stevens, see post, at 2 (dissenting opinion), we understand this expedited review to be what each of the parties understood it was seeking from time to time; neither party’s pleadings were amended to raise an independent state-law contract claim or defense specific to the arbitration agreement.
4 Title 9 U. S. C. §10(a) (2000 ed., Supp. V) provides: “(a) In any of the following cases the United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration— “(1) where the award was procured by corruption, fraud, or undue means; “(2) where there was evident partiality or corruption in the arbitrators, or either of them; “(3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or “(4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.” Title 9 U. S. C. §11 (2000 ed.) provides: “In either of the following cases the United States court in and for the district wherein the award was made may make an order modifying or correcting the award upon the application of any party to the arbitration— “(a) Where there was an evident material miscalculation of figures or an evident material mistake in the description of any person, thing, or property referred to in the award. “(b) Where the arbitrators have awarded upon a matter not submitted to them, unless it is a matter not affecting the merits of the decision upon the matter submitted. “(c) Where the award is imperfect in matter of form not affecting the merits of the controversy. “The order may modify and correct the award, so as to effect the intent thereof and promote justice between the parties.”
5 The Ninth and Tenth Circuits have held that parties may not contract for expanded judicial review. See Kyocera Corp. v. Prudential-Bache Trade Servs., Inc., 341 F. 3d 987, 1000 (CA9 2003); Bowen v. Amoco Pipeline Co., 254 F. 3d 925, 936 (CA10 2001). The First, Third, Fifth, and Sixth Circuits, meanwhile, have held that parties may so contract. See Puerto Rico Tel. Co. v. U. S. Phone Mfg. Corp., 427 F. 3d 21, 31 (CA1 2005); Jacada (Europe), Ltd. v. International Marketing Strategies, Inc., 401 F. 3d 701, 710 (CA6 2005); Roadway Package System, Inc. v. Kayser, 257 F. 3d 287, 288 (CA3 2001); Gateway Technologies, Inc. v. MCI Telecommunications Corp., 64 F. 3d 993, 997 (CA5 1995). The Fourth Circuit has taken the latter side of the split in an unpublished opinion, see Syncor Int’l Corp. v. McLeland, 120 F. 3d 262 (1997), while the Eighth Circuit has expressed agreement with the former side in dicta, see UHC Management Co. v. Computer Sciences Corp., 148 F. 3d 992, 997–998 (1998).
6 Hall Street claims that §9 supports its position, because it allows a court to confirm an award only “[i]f the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration.” Hall Street argues that this language “expresses Congress’s intent that a court must enforce the agreement of the parties as to whether, and under what circumstances, a judgment shall be entered.” Reply Brief for Petitioner 5; see also Brief for Petitioner 22–24. It is a peculiar argument, converting agreement as a necessary condition for judicial enforcement into a sufficient condition for a court to bar enforcement. And the text is otherwise problematical for Hall Street: §9 says that if the parties have agreed to judicial enforcement, the court “must grant” confirmation unless grounds for vacatur or modification exist under §10 or §11. The sentence nowhere predicates the court’s judicial action on the parties’ having agreed to specific standards; if anything, it suggests that, so long as the parties contemplated judicial enforcement, the court must undertake such enforcement under the statutory criteria. In any case, the arbitration agreement here did not specifically predicate entry of judgment on adherence to its judicial-review standard. See App. to Pet. for Cert. 15a. To the extent Hall Street argues otherwise, it contests not the meaning of the FAA but the Ninth Circuit’s severability analysis, upon which it did not seek certiorari.
7 The history of the FAA is consistent with our conclusion. The text of the FAA was based upon that of New York’s arbitration statute. See S. Rep. No. 536, 68th Cong., 1st Sess., 3 (1924) (“The bill … follows the lines of the New York arbitration law enacted in 1920 …”). The New York Arbitration Law incorporated pre-existing provisions of the New York Code of Civil Procedure. See 1920 N. Y. Laws p. 806. Section 2373 of the code said that, upon application by a party for a confirmation order, “the court must grant such an order, unless the award is vacated, modified, or corrected, as prescribed by the next two sections.” 2 N. Y. Ann. Code Civ. Proc. (Stover 6th ed. 1902) (hereinafter Stover). The subsequent sections gave grounds for vacatur and modification or correction virtually identical to the 9 U. S. C. §§10 and 11 grounds. See 2 Stover §§2374, 2375. In a brief submitted to the House and Senate Subcommittees of the Committees on the Judiciary, Julius Henry Cohen, one of the primary drafters of both the 1920 New York Act and the proposed FAA, said, “The grounds for vacating, modifying, or correcting an award are limited. If the award [meets a condition of §10], then and then only the award may be vacated. … If there was [an error under §11], then and then only it may be modified or corrected … .” Arbitration of Interstate Commercial Disputes, Joint Hearings before the Subcommittees of the Committees on the Judiciary on S. 1005 and H. R. 646, 68th Cong., 1st Sess., 34 (1924). The House Report similarly recognized that an “award may … be entered as a judgment, subject to attack by the other party for fraud and corruption and similar undue influence, or for palpable error in form.” H. R. Rep. No. 96, 68th Cong., 1st Sess., 2 (1924). In a contemporaneous campaign for the promulgation of a uniform state arbitration law, Cohen contrasted the New York Act with the Illinois Arbitration and Awards Act of 1917, which required an arbitrator, at the request of either party, to submit any question of law arising during arbitration to judicial determination. See Handbook of the National Conference of Commissioners on Uniform State Laws and Proceedings 97–98 (1924); 1917 Ill. Laws p. 203.