Document: 513 U.S. 265115 S.Ct. 834130 L.Ed.2d 753 ALLIED-BRUCE TERMINIX COMPANIES, INC., and Terminix International Company, Petitionersv.G. Michael DOBSON et al. No. 93-1001. Supreme Court of the United States Argued Oct. 4, 1994. Decided Jan. 18, 1995. Syllabus * The termite prevention contract between petitioner exterminators respondent Gwin, a homeowner, specified that any controversy thereunder would be settled exclusively by arbitration. After respondents Dobson, who had purchased Gwin's home, sued in state court following infestation, petitioners asked for, but were denied, stay to allow for arbitration under § 2 Federal Arbitration Act, which makes enforceable written provision "a evidencing transaction involving commerce." Alabama affirmed on basis statute invalidating predispute agreements, ruling federal Act applies only if, at time parties entered into accepted clause, they "contemplated" substantial interstate activity. Despite some such activities, found these was primarily local not "substantially" interstate. Held: Section 2's commerce language should read broadly extend Act's reach limits Congress' Commerce Clause power. use words "evidencing" "involving" does restrict application thereby State apply its antiarbitration law or policy. Pp. __. (a) legal background demonstrates has basic purpose overcoming judicial hostility agreements both diversity cases courts, where it pre-empts statutes agreements. See, e.g., Southland Corp. v. Keating, 465 1, 15-16, 104 852, 860-61, 79 1. It inappropriate overrule permit statute, since case considered arguments now raised, nothing significant changed subsequently; since, interim, private have likely contracts relying Southland; Congress, before after Southland, enacted legislation extending, retracting, scope (b) statute's language, background, structure establish "involving commerce" are functional equivalent phrase "affecting commerce," normally signals intent exercise power full, see Russell States, 471 858, 859, 105 2455, 2456, 85 829. linguistic permissibility this interpretation is demonstrated dictionary definitions "involve" "affect" mean same thing. Moreover, legislative history, extent informative, indicates an expansive congressional intent, described expansively as coinciding with Clause, see, supra, U.S., 14-15, S.Ct., 860. Finally, broad consistent purpose, while narrower create new, unfamiliar test unnecessarily complicate breed litigation. For reasons, can said expanded along over years, even though Congress passed 1925 might well thought did stretch far turned out so. Mine Workers Coronado Coal Co., 259 344, 410, 42 570, 583, 66 L.Ed. 975; Leather Herkert & Meisel Trunk 265 457, 470, 44 623, 627, 68 1104; Bernhardt Polygraphic Co. America, 350 198, 200-202, 76 273, 275-276, 100 199, distinguished. (c) "evidencing transaction" means "transaction" (that "evidence") must turn out, fact, involved commerce. several "commerce fact" more faithful than "contemplation parties" adopted below other courts. First, latter interpretation, when viewed terms seems anomalous because invites litigation about what was, not, "contemplated," too often validity clause upon happenstance whether insert reference their document mention initial conversation, fits awkwardly rest 2. Second, permits interpretation. Although concededly leaves little work word "evidencing," history suggests other, limiting, task language. Third, force practical argument underlying test, i.e., encroaching powers reserved avoided, diminished Court's holdings displaces contrary law. despite amicus' claim, unclear "objective" version better protect consumers sign form businesses. In event, authorizes invalidate "upon grounds exist equity revocation contract," gives them method protecting against unwanted provisions. (d) do contest case, P. 16. 628 So.2d 354, reversed remanded. BREYER, J., delivered opinion Court, REHNQUIST, C.J., STEVENS, O'CONNOR, KENNEDY, SOUTER, GINSBURG, JJ., joined. filed concurring opinion. SCALIA, dissenting THOMAS, opinion, H. Bartow Farr, III, Washington, DC, petitioners. Allan R. Chason, Bay Minette, AL, respondents. Justice BREYER Court. 1 This concerns Act. That section 9 U.S.C. (emphasis added). Should we broadly, extending power? Or, two underscored words—"involving" —significantly application? We conclude broader reading correct one; reverse judgment contrary. August 1987 Steven respondent, owned house Birmingham, Alabama, bought lifetime "Termite Protection Plan" (Plan) from office Allied-Bruce Companies, franchise Company. Plan, promised "to protect" "against attack subterranean termites," reinspect periodically, provide "further treatment necessary," repair, up $100,000, damage caused new infestations. App. 69. "guarantee[d] fulfillment terms" Plan. Ibid. Plan's provided writing 3 "any claim . arising relating performance breach agreement shall arbitration." Id., 70 4 Spring 1991 Mr. Mrs. wishing sell house. They obtained clean bill health. But, no sooner sold transferred Termite Plan Dobson Dobsons swarming termites. attempted treat repair house, Allied-Bruce's efforts inadequate. therefore Gwins, (along cross-claimed) also court. Terminix, pointing immediately stay, proceed. denied stay. appealed. 5 upheld denial Ala.Code 8-1-41(3) (1993), making written, invalid "unenforceable." 355 (Ala.1993). To conclusion, find conflicting law, contract. made just finding. inapplicable connection slight. court's view, if " 'at [the contract] contemplated activity.' original) (quoting Metro Industrial Painting Terminal Constr. 287 F.2d 382, 387 (CA2) (Lumbard, concurring), cert. 368 817, 82 31, 7 24 (1961)). activities (e.g., Allied-Bruce, like multistate firm shipped material state), 6 Several courts district interpreted requiring connection. Burke County Public Schools Bd. Ed. Shaver Partnership, 303 N.C. 408, 417-420, 279 S.E.2d 816, 822-823 (1981); R.J. Palmer Wichita Band Instrument Kan.App.2d 363, 367, 642 P.2d 127, 130 (1982); Lacheney Profitkey Int'l, Inc., 818 F.Supp. 922, 924 (ED Va.1993). appellate however, differently, reaching Foster Turley, 808 38, 40 (CA10 1986); Robert Lawrence Devonshire Fabrics, 271 402, 406-407 (CA2 1959), dism'd, 364 801, 81 27, 37 (1960); cf. Snyder Smith, 736 409, 417-418 (CA7), 469 1037, 513, 83 403 (1984). granted certiorari resolve conflict, 510 ----, 114 1292, 127 646 (1994); and, said, right one. II Before main issues set forth three items background. 8 overcome courts' refusals enforce arbitrate. See Volt Information Sciences, Inc. Board Trustees Leland Stanford Junior Univ., 489 468, 474, 109 1248, 1253, 103 488 (1989). origins those apparently lie 'ancient times,' English fought 'for extension jurisdiction—all being opposed anything altogether deprive every one jurisdiction.' 211, n. 5, 280, 199 (1956) (Frankfurter, concurring) Asphalt Refining Trinidad Lake Petroleum 222 F. 1006, 1007 (SDNY 1915) Scott Avery, H.L.Cas. 811 (1856) (Campbell, L.J.))). American initially followed practice, perhaps 'stand[ing] antiquity rule' prohibiting enforcement, rather 'upon excellence reason.' 1007). Regardless, 1925, "motivated, first foremost, desire" change rule. Dean Witter Reynolds Byrd, 470 213, 220, 1238, 1242, 84 158 (1985). intended "enforce [arbitration] entered," ibid. (footnote omitted), "place footing contracts,' 1253 Scherk Alberto-Culver 417 506, 511, 94 2449, 2453, 41 270 (1974)). assumed represented Article III "ordain establish" Const., Art. 28, 16, 867, (1984) (O'CONNOR, dissenting) (collecting cases). 1967, held "is based confined incontestable foundations 'control admiralty.' Prima Paint Flood Conklin Mfg. 388 395, 405, 87 1801, 1807, 18 1270 (1967) H.R.Rep. 96, 68th Cong., 1st Sess., (1924)). complicated argument: (1) provisions (about remedies) important outcome-determinative, thus amount "substantive" "procedural" law; (2) Erie Tompkins, 304 64, 71-80, 58 819-823, 1188 (1938), clear substantive cases, Hanna Plumer, 380 460, 465, 1136, 1140-41, 14 (1965); (3) cases. responded agreeing concluding that, nonetheless, applied so intended. wrote: "Congress may prescribe how conduct themselves respect subject matter plainly legislate." Paint, 1806. 10 holding led further question. Did intend courts? pre-empt could rules them, results different reached otherwise similar cases? decided wanted outcomes concluded cannot 860-861. 11 respondents, supported 20 attorneys general, ask us irrespective proper recognized pre-emption issue difficult one, amici raise (even thoroughly briefed time). Nothing years subsequent later eroded Southland's authority; unforeseen problems arisen. authority. Further, 15 (eliminating doctrine bar arbitration); §§ 201-208 (international arbitration). reconsider well-established 12 proceed interpretive questions aware interpreting seeks decide used nonetheless application, carving statutory niche remains free not. 13 2, provides "written maritime settle thereafter valid, irrevocable, enforceable, save contract." question focuses These often-found art "in cover 'only persons within flow commerce.' Building Maintenance Industries, 422 271, 276, 95 2150, 2154, 45 177 (1975), quoting Gulf Oil Copp Paving 419 186, 195, 392, 398, 378 (1974) (defining related "flow" defining include "the generation goods services markets transport distribution consumer"); FTC Bunte Brothers, 312 349, 351, 61 580, 582, 881 (1941). beyond reach? Is "affecting?" commerce"—normally full. 829 look guidance tell uses describe relation. 16 examining structure, indeed "affecting." thing, linguistically speaking, permissible. finds instances sometimes V Oxford Dictionary 466 (1st ed. 1933) (providing examples dating back mid-nineteenth century, "include affect operation"). another, intent. (1924) (the "control reaches actual physical shipment commerce"); 65 Cong.Rec. 1931 "affects subjects admiralty") (remarks Rep. Graham); Joint Hearings S. 1005 H.R. Subcommittees Committees Judiciary, (hereinafter Hearings) (testimony Charles L. Bernheimer, chairman Committee Chamber New York, proposed "relates id., Julius Cohen, drafter Bar Association much bill's reflects part strategy rid "anachronism" "get[ting] foreign admiralty"); "commerce" itself). 17 previously Clause. Perry Thomas, 482 483, 490, 107 2520, 2525-26, 96 426 (1987) "embodies enforcement full Clause"); 860 'involving commerce' requirement constitutionally "necessary qualification" reach, marking permissible outer limit); 407, 1807-08 (Harlan, (endorsing 407 1959) (Congress, enacting FAA, "took pains utilize .")). put footing" contract's terms. 2453. Conversely, (unless unreasonably narrowed commerce) unfamiliar, lying somewhere no-man's land complicating breeding avoid it. 19 recognize contrary: pre-New Deal unusual circumstances expand expansion itself, answer affirmatively—as, reasons above, here. McLain Real Estate Orleans, 444 232, 241, 502, 508-509, 62 441 (1980); Hospital Rex Hospital, 425 738, 743, 1848, 1852, 48 338 (1976). Gwins point containing believe favorable 975 (1922), then again 1104 (1924), say, draw distinction between, hand, "involve intrinsically," directly regulatory power." Workers, 583 added); 627 (same). One driving wedge Yet, construing Furthermore, drafters FAA looked source. And, alone. sum, support respondents' position. 21 Dobsons, reason, (1956). Bernhardt, York resident, employment (containing clause) Polygraphic, corporation. "was perform" he "later became resident Vermont." 274. faced whether, light Erie, hostile 200, 274-75. question, itself "involv[e]" fell outside 274-276. Since Bernhardt's contract, say parties, itself? 22 best response way reasoned said. reason there "no showing performing his duties working 'in' commerce, producing engaging activity affected meaning our decisions." 200-201, 274-275 added) omitted). 23 Thus, commerce"; constitutional At time, discuss implications "interstate" facts point. require narrow "involving." "involving," "affecting," Congress's IV second words. Does "evidences") commerce? more? 25 Many ago, Second Circuit Chief Judge Lumbard meant considerably more. He 26 "The carrying cross lines, Cogent evidence regarding mind it, face, evidences traffic ., come addition, expected performed relevant contemplated." 1961) (second emphasis 27 known test. 28 choice difficult, ("commerce fact") ("contemplation parties"). anomalous. "contemplated." Why risks very kind costs delay through formation) wrote help avoid? Moses Cone Memorial Mercury Corp., 460 29, 927, 944, 74 765 (1983) "calls summary speedy disposition motions petitions clauses"). 29 what, perspective happenstance, namely happened think conversation. all, sales naturally sold, arbitration, why connection? 30 section, example, agree submit "an existing of" earlier. want risk non-enforceability fully connected simply properly "contemplate" (or write about) aspects earlier contract? fact involve avoids anomaly, effects growing 31 concede, (in transaction") perform, transaction. perform work. supporters saw effort make universally enforceable. "get law" "cover" areas Constitution authorized legislate, "interstate admiralty." Hearings, Cohen). urged model Apr. 19, 1920, ch. 275, 1920 N.Y.Laws 803, 804. Hearing 4213 4214 Subcommittee Senate 67th 4th (1923) Bernheimer). Early drafts 4214, Sess. (1922) 1005, (1923); 646, (1924). Members looking phrase, contract" standing alone went so, "transaction creating 32 Lumbard's words, need "be cautious act lest excessively encroach Congressional policy, Constitution, reserve states." 386 concurring). displace 10-16, 858-861; 489-492, 2525-2527. 33 note amicus curiae argues ("reasonable person" oriented) ground needs consumers, others, mind. S.Rep. 536, avoiding expense litigation," will appeal big business alike, corporate interests [and] individuals"). Indeed, arbitration's advantages seem helpful individuals, complaining product, less expensive alternative 97-542, p. (1982) ("The many: usually cheaper faster litigation; simpler procedural evidentiary rules; minimizes disruptive ongoing future dealings among parties; flexible regard scheduling times places hearings discovery devices ."). according (also here), one-third claims amounts $10,000, another third $10,000 $50,000 (with average processing six months). Brief Amicus Curiae 26-27. 34 uncertain, "contemplation" consumers. Sometimes, course, permit, consumer potentially large claims, disavow equally entities provisions, leaving typical small (who seeks, value defective refrigerator television set) without remedy remedy, delays eat eventual recovery. 35 unfair pressure provision. regulate contracts, including clauses, general principles What fair enough all (price, service, credit), clause. policy unlawful, place clauses unequal "footing," 1253. 36 accept insisting contemplate addition nature termite-treating house-repairing (allegedly inadequate) carry came Alabama. 38 Consequently, remanded proceedings 39 ordered. concurring. I construction As comports my understanding A restrictive definition doubtless foster prearbitration frustrate statute. effect formulation troublesome. today many carefully calibrated Mont.Code Ann. 27-5-114(2)(b) (1993) (refusing consideration $5,000 less), requirements aimed ensuring knowing voluntary consent, S.C.Code 15-48-10(a) (Supp.1993) (requiring notice prominently placed page contract). long adhered discussed below, designed But sense differently context. end, rests largely wisdom maintaining uniform standard. continue never strayed afield giving compass. 21-36, 863-871, dissenting); 494-495, 2528, Oxygen 1016, 1260, 668 remand). pre-emptive fundamentally Cipollone Liggett Group, 505 112 2608, 120 (1992); General Electric 496 72, 78-79, 110 2270, 2274-2275, (1990); Schneidewind ANR Pipeline 485 293, 299, 108 1145, 1150, 99 316 (1988); Rice Santa Fe Elevator 331 218, 230, 67 1146, 1152, 91 1447 (1947). '[w]here field pre-empted' includes 'been traditionally occupied States,' supersede laws 'clear manifest.' English, 79, 2275, Jones Rath Packing 430 519, 525, 97 1305, 1309, 51 604 (1977). past decade, abandoned pretense ascertaining building instead, edifice own creation. 493, 2527-2528 (STEVENS, ("It last few effectively rewritten give certainly intend"). doubt enact, instance, most laws. 43 Were slate, adhere view affirm decision. points built reasoning, undoubtedly reliance interim. reflection, am persuaded considerations stare decisis, "have special area interpretation," Patterson McLean Credit Union, 491 164, 172-173, 2363, 2370-2371, 132 (1989), acquiesce today's judgment. Though wrong, proved unworkable, always, alter done." Today's decision caps each logically decisions preceding block laid faulty foundation. "special justification" Southland. Arizona Rumsey, 467 203, 212, 2305, 2310-11, 164 wishes preserve autonomy djQ dissenting. joined judgments rested (1989); (1987). neither party overruled, necessary consider present contrast, central wrongly decided, request overruling been brief signed States. THOMAS' join, (and belatedly O'CONNOR) clearly misconstrued 46 decisis prevents correction mistake. Adhering entails permanent, unauthorized eviction state-court adjudicate class disputes. Abandoning impair degree justifies evil. Primary behavior affected: rule retroactively changed, (perhaps) forum violation determined remedied. forgone, significantly higher remuneration, absent guarantee. Where, moreover, difference, rescission mistake available. A. Corbin, Corbin Contracts 616 (1960 Supp.1992); Restatement (Second) 152 (1979). 47 dissent will, stand ready join four Justices become course lawmaking unlikely existence, Pennsylvania Union Gas 34-35, 2273, 2298-2299, (1989) (SCALIA, part), accumulated increase level already achieved (few terminable 5-year term). respectfully whom SCALIA joins, 49 disagree majority threshold decides. (FAA) dissent. 50 (1984), "appl[ies] courts," 12, "withdr[aws] states resolution contracting agreed arbitration," 10, 858. wrong. declares contained "valid, 2; "commerce," here, nations"). On context, draws apparent until 1959—nearly FAA—did suggest (1960). No 1960's. REA Express Missouri Pacific 447 S.W.2d 721, 726 (Tex.Civ.App.1969) (stating noting waived hand); Rubewa Products Watson's Quality Turkey Products, 242 A.2d 609, 613 (D.C.1968) waited 1984 conclude, strong extends 858-861. 52 explanation simple: actually FAA's passage governing enforceability generally deal purely matters procedure substance, directed solely mechanisms resolving then-Judge Cardozo explained: "Arbitration whereby differences settled. rights wrongs grow." Berkovitz Arbib Houlberg, 230 N.Y. 261, 270, N.E. 288, 290 (1921) (holding copied, procedural).1 extraordinary attempt Ex parte Gounis, Mo. 428, 437, 263 S.W. 988, 990 (describing "regulate control [state courts'] modes procedure" "general law"). And attempt. Baum Pressman, Enforcement Commercial Agreements Courts, N.Y.U.L.Q.Rev. 459 (1931) (noting "does purport teeth proceedings," arguing done so); Williston G. Thompson, Law 5368 (rev. 1938) ("Inasmuch acts deemed procedural, [FAA] ." omitted)); 25-29, 865-868 "unambiguous" effect). 53 judge reported appears FAA. part, refused inapplicable. California Prune Apricot Growers' Assn. Catz 60 788 (CA9 1932). Their refusal outgrowth Swift Tyson, (16 Pet.) 865 (1842), certain categories "laws" purposes Rules Decision hence binding courts; Swift, unambiguously constituted "laws." Rather, Prune, 790 true laws; principle applicable invoke[d] creates establishes right"). short, prescribed 54 easy understand lawyers classified procedural. An species forum-selection clause: laying down decision, identifies adjudicator concern substance. Cf. Fed.Rules Civ.Proc. 73 (district court, consent refer magistrate resolution), master). contractual deals procedure, enforced relate procedure. 55 context confirms original meaning. Most sections either themselves. provides: 56 "If suit proceeding brought referable pending, satisfied agreement, trial action accordance providing applicant default 57 addresses converse situation, breaches filing lawsuit refusing arbitration: "A aggrieved alleged failure, neglect, arbitrate petition which, jurisdiction title civil admiralty order directing manner agreement. hear failure comply therewith issue, agreement." (Emphasis added.) 59 turns attention covered themselves, treating 7, fees witnesses "shall masters courts"; adds witness neglects summons appear hearing, arbitrators sitting compel attendance person punish contempt securing punishment neglect attend States." Likewise, arbitrator eventually award, (absent directions agreement) award made" confirming award. 9. District vacate modify circumstances, 10-11, enter confirmatory judgment, 9, docketed given ordinary 13. focus contains explicit limitation. text statement really understood "creat[e] honor agreements," 15, 860, rise subject-matter 1331. Yet ensuing expressly taking away jurisdiction, assumption dispute. 3, 8. treats disputes independent jurisdiction. Even forced acknowledge point, conceding federal-question 1331 otherwise." 63 "substance" "procedure" acquired Railroad (1938). 1956 purposes, 203-204, 276-277, 199. development 1925. portions "procedural," extended 64 When O'CONNOR pointed her dissent, 25-30, 865-868, offered real response. If provision, reasoned, transactions "contract[s] [interstate foreign] 14, called single interest doing unless involved. conclusion plausible idea believed created raises uncertainty core federalism. While legislate regulated States" acting Constitution," assume [this power] lightly." Gregory Ashcroft, 501 452, 111 2395, 2400-2401, 115 410 (1991). ambiguous, "absolutely certain" displacement preemptive 464, 2402-2403. enactment lines envisioned displaced enormous body law: wholly unenforceable least specific performance. Note Williams Branning L.R.A. (n.s.) 337 (1914) (detailed listing Far swept aside rules, quite sure B Suppose, aspect correct: requires There still textual suggestion performance—that is, forcing surely irrevocable enforceable" actions damages. eve enactment, executory "valid" perfect obligation" Red Cross Line Atlantic Fruit 264 109, 120-123, 274, 275-277, 582 (1924).2 sure, specifically deal, respectively, potential plaintiffs defendants dispute: holds promise take straight sue them. Had arisen "courts States," relevant. Upon motion, obliged grant pending "evidenc[e] [interstate] 202, 275-276 limited valid). Because arose contend imposes precisely obligation (both state) supports argument, correct, superfluous. brings sharp focus. Citing "public policy" Bozeman Gilbert, Ala. 90 (1840), declared "void." Wells Mobile Realtors, 140, 144 (Ala.1980). separate "[a]n arbitration" obligations "cannot enforced" 8-1-41 (1975). Especially Ashcroft presumption, States—is Alabama's common-law statute; invalid, revocable, unenforceable, inclusion render personal service" specific-enforcement adequate petitioners' motion 69 Rather attempting defend merits, rely chiefly urging mistaken Reply Petitioners 3-6. insufficient (ante, __) legitimate expectations people drafted executed belief strictly clauses. innumerable 1984, arbitrable yet arise proportion contracts. Some absence Still, unacceptably high. Certainly applicability contemplation contracting. theory live promises cheapest number remaining seeking able get apply. access impossible (because jurisdiction), whose parallels Only Mississippi, Nebraska hold refuse particular classes Strickland, Interstate Requirement: What's Left Law?, Hofstra L.Rev. 385, 401-403, 93 (1992). 71 Quoting 2310-2311, acquiesces majority's "because 'special justification' Southland." Ante, 72 approach, necessity "preserv[ing] ibid., sufficient me. suppose abide follow covers. accord precedential weight mere dicta, unnecessary there, valid dispute, indeed, compelled raised complaint. 855; Cal.Code Civ.Proc.Ann. 1281.2, 1281.4 (West 1982). Accordingly, pre-empted declaring "void" claims. 858 (discussing Cal.Corp.Code 31512 1977)). (1987), (as observed prior Merrill Lynch, Pierce, Fenner Ware, 414 117, 133, 383, 392-393, 348 (1973)) subsequently 477, 1254-1255, McDermott Lloyds Underwriters London, 944 1199, 1210 (CA5 1991) ("We opinions necessarily stays compliance 4"). held, stating implying lawsuits syllabus constitutes prepared Reporter Decisions convenience reader. Detroit Lumber 200 321, 337, 282, 287, 499. also, Line, 276 319, 323 1921) ("Arbitration recognition confer right, parties"), aff'd, 218 1924); Cohen Dayton, Law, Va.L.Rev. 265, (1926) ("[W]hether wherein sought. distinguished courts" (referring uncritically prevalent notions affects merely substance"); J. Beale, Conflict Laws 1245-1246 (1935) ("American exception, pertain for[u]m determines Alexandria Canal Swann, (5 How.) 83, 87-88, (1847) (whether parties' panel arbitrators, arbitrators' "not [a question] respective mode determined," governed forum). conflict reasoning respects undermines infra, Part I-B. Without analyzing (like sorts contracts) 122-123, 276-277. holding—that remedies available 124-125, 277-278—was perfectly customary view. nominal damages Aktieselskabet Korn-Og Foderstof Kompagniet Rederiaktiebolaget Atlanten, 250 935, 937 1918), aff'd sub nom. 252 313, 332, 586 (1920); Munson Straits Dover S.S. 787, 790-791 (SDNY), 102 926 1900).

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