Document: 490 U.S. 477 109 S.Ct. 1917 104 L.Ed.2d 526 Ofelia RODRIGUEZ DE QUIJAS, et al., Petitionersv.SHEARSON/AMERICAN EXPRESS, INC., etc. No. 88-385. Argued March 27, 1989. Decided May 15, Syllabus Petitioners, securities investors, signed a standard customer agreement which included an to settle account disputes through binding arbitration unless the was found unenforceable under fede al or state law. When investments turned sour, petitioners brought suit in District Court against, inter alias, respondent brokerage firm, alleging that their money lost unauthorized and fraudulent transactions violation of, among other things, provisions of Securities Act 1933 Exchange 1934. The ordered all but claims be submitted arbitration, holding those must proceed court action pursuant ruling Wilko v. Swan, 346 427, 74 182, 98 L.Ed. 168, arbitrate is void § 14 Act, prohibits stipulation "to waive compliance with any provision" Act. Appeals reversed, concluding enforceable because this Court's subsequent decisions have reduced "obsolescence." Held: A predispute resolution only judicial forum not required. Pp. 479-486. (a) overruled. It incorrectly decided inconsistent prevailing uniform construction federal statutes governing agreements setting business transactions. See, particularly, Shearson/American Express Inc. McMahon, 482 220, 107 2332, 96 185 declined read 29(a) 1934 identical prohibit enforcement arbitrate, stressed strong language Arbitration declaring policy favoring arbitration. would undesirable for McMahon exist side by inconsistency at odds principle Acts construed harmoniously order discourage litigants from manipulating allegations merely cast one rather than 479-485. (b) customary rule retroactive application—that law announced decision controls case bar—is appropriate here. Although overrule establishes new law, furthers purpose effect without undermining Act; it does produce substantial inequitable results; resort inherently undermine petitioners' substantive rights 485-486 845 F.2d 1296 (CA5 1988) affirmed. KENNEDY, J., delivered opinion Court, REHNQUIST, C.J., WHITE, O'CONNOR, SCALIA, JJ., joined. STEVENS, filed dissenting opinion, BRENNAN, MARSHALL, BLACKMUN, joined, post, p. ----. Denis A. Downey, Brownsville, Tex., petitioners. Theodore Krebsbach, Jeffrey L. Friedman, respondent. Justice KENNEDY Court. 1 question here whether unenforceable, requiring forum. 2 * Petitioners are individuals who invested about $400,000 securities. They broker, clause stating parties agreed controversies "relating [the] accounts" complies specified procedures. these unqualified, Customer's Agreement ¶ 13. eventually sued its broker-agent charge accounts, In complaint they pleaded various violations including u der 12(2) 1933, 15 U.S.C. 77l (2), three sections 3 except raised held latter our clear on point 168 (1953). reaffirmed upon reconsideration also entered default judgment against no longer case. Rodriguez de Quijas Shearson/Lehman Bros., Inc., 1296, 1299 1988). We granted certiorari, 488 954, 389, 102 379 (1988). II 4 case, 1953, required determine future constitutes nullified 77n. considered language, purposes, legislative history concluded 14.* But difficult view competing embodied described as "not easily reconcilable," strongly favors means securing "prompt, economical adequate solution controversies." U.S., 438, S.Ct., 188. 5 has been recognized obviously correct, "the prohibiting waiver 'compliance provision title' could relate remedy provisions." Alberto-Culver Co. Scherk, 484 611, 618, n. 7 (CA7 1973) (Stevens, dissenting), rev'd, 417 506, 94 2449, 41 270 (1974). did way Wilko, however, gave two reasons. First, rejected argument "arbitration form trial used lieu law." 433, 186. instead permit right select forum" favor id., 435, 186, lacks certainty enforce [the buyer's] rights," 432, 185. Second, intended protect buyers securities, often do deal arm's length equal terms sellers, offering them "a wider choice courts venue" enjoyed participants transactions, making particularly valuable feature Id., 6 think reasons justify interpretation relating purchase characterization process pervaded what Judge Jerome Frank called old hostility arbitration." Kulukundis Shipping Amtorg Tradin Corp., 126 978, 985 (CA2 1942). That steadily eroded over years, beginning lower courts. See supra, 616 dissenting) (citing cases). erosion intensified most recent upholding 1934, see Shear- son/American (1987), Racketeer Influenced Corrupt Organizations (RICO) statutes, ibid., antitrust laws, Mitsubishi Motors Corp. Soler Chrysler-Plymouth, 473 614, 105 3346, 87 444 (1985). Dean Witter Reynolds Byrd, 470 213, 221, 1238, 1242, 84 158 (1985) (federal statute "requires we rigorously arbitrate"); Moses H. Cone Memorial Hospital Mercury Construction 460 1, 24, 103 927, 941, 765 (1983) ("[Q]uestions arbitrability addressed healthy regard arbitration"). shift views away adopted shown flat statement Mitsubishi: "By agreeing statutory claim, party forgo afforded statute; submits arbitral, judicial, forum." 628, 3354. To extent rested suspicion method weakening protections would-be complainants, fallen far out step current endorsement resolving disputes. Once outmoded presumption disfavoring proceedings set side, becomes such essential features properly bar provisions. Nor so critical cannot waived rationale place footing sellers. identified different kinds advance objective. Some substantive, placing seller burden proving lack scienter when buyer alleges fraud. 431, 184, citing (2). Others procedural. specific procedural improvements highlighted statute's broad venue courts; existence nationwide service extinction amount-in-controversy requirement had applied fraud suits were diversity jurisdiction cause action; grant concurrent possibility removal. 77v(a). 8 There sound basis construing prohibition waiving "compliance apply first measures facilitate explicit authorization complainants filing removal court. These measures, moreover, present interpreted arbitrate. supra (construing 1934; 78aa); ibid. RICO statutes; 18 1965); laws; 15). 9 Indeed, every respect same compare 77v(a) 78aa, conceivable distinction between former allows federal-state causes provides exclusive jurisdiction. even if thought make difference all, suggest agreements, "in effect, specialized kind forum-selection clause," Scherk Co., 519, 2457, (1974), should prohibited since they, like jurisdiction, serve objective allowing broader disputes, otherwise. And explained why aversion especially light relatively expansion Commission's authority oversee regulate 231-234, 2340-2342. need repeat arguments 10 Finally, declares matter "shall valid, irrevocable, enforceable, save grounds equity revocation contract." 2. Under statute, opposing carries showing Congress separate preclude remedies, remedies conflicts underlying purposes statute. 226-227, 2337-2338. Frankfurter said dissent true case: "There nothing record before us, nor facts can take notice, indicate arbitral system . afford plaintiff he entitled." 439, 189. carried 11 quoted above give relief where presents "well-supported resulted sort overwhelming economic power provide 'for contract.' " Mitsubishi, 627, This avenue harmony Act's concern removing disadvantages labor" dealings 187. adhesive nature, contains factual sufficient support suggestion. III 12 own taken renouncing Wilko. If precedent direct application yet appears rest some line decisions, follow directly controls, leaving prerogative overruling decisions. now conclude normally reluctant overturn done achieve similar Commissioner Estate Church, 335 632, 649-650, 69 322, 330-331, 93 288 (1949), correct seriously erroneous congressional expressed legislation, see, e.g., Boys Markets, Retail Clerks, 398 235, 240-241, 90 1583, 1586-1587, 26 199 (1970) (overruling Sinclair Refining Atkinson, 370 195, 82 1328, 440 (1962)). Both served decision. 13 continue side. Their "constitute interrelated components regulatory scheme securities." Ernst & Hochfelder, 425 185, 206, 1375, 1387, 47 668 (1976). example, subjected while claim permitted go result makes little sense claims, based facts, supposed arise within single scheme. addition, undermines harmonious laws another. For reasons, therefore, argue finally overrules retroactively disagree. general long standing bar. Saint Francis College Al-Khazraji, 481 604, 608, 2022, 2025, 95 582 (1987); United States Schooner Peggy, (1 Cranch) 103, 109, 49 (1801). civil cases, restricted rulings prospective only, circumstances present. Chevron Oil Huson, 404 97, 106-107, 92 349, 355-356, 30 296 (1971). approach, Today's ruling, "substantial results," 107, 355, serious allegation investment contracts reliance Wilko's Our conclusion reinforced assessment Affirmed. 16 whom BLACKMUN join, dissenting. 17 refused (1953), controlling As majority correctly acknowledges, ante, 484, f therefore engaged indefensible brand activism.1 We, course, subject restraint asked upset precedents. earlier gives concrete meaning, elects amend during ensuing 31/2 decades, duty Congress' work product strikingly product.2 final analysis, Justice's vote depends more his her respective lawmaking responsibilities conflicting interests. Judges confidence ability fashion public less hesitant change us inclined wide latitude voters' representatives nonconstitutional matters. Cf. Boyle Technologies 487 500, 108 2510, 101 442 I pointed years ago, 615-620 (dissenting opinion), there valid textual both sides regarding interrelation Acts.3 479-484. None arguments, weight tip balance settled many years. 19 respectfully dissent. carefully limited made "prior controversy." 188; 438-439, 188-189 (JACKSON, concurring). contrast, "courts uniformly submission existing disputes." 233, 2341, (1987). After numerous Courts deviated established enforced clauses 1933. E.g., Reed Bear, Stearns 698 F.Supp. 835 (Kan.1988); Ryan Liss, Tenner Goldberg 683 480 (NJ 1988); Kavouras Visual Products Systems, 680 205 (WD Pa.1988); Aronson Reynolds, 675 1324 (SD Fla.1987); DeKuyper A.G. Edwards Sons, 695 1367 (Conn.1987); Rosenblum Drexel Burnham Lambert 700 874 (ED La.1987); Staiman Merrill Lynch, Pierce, Fenner Smith, 673 1009 (CD Cal.1987). 268, 2359 (STEVENS, concurring part part) ("[A]fter acquires meaning gloss drafted itself. position reflects role, Market, 257-258, 1595-1596, (BLACK, compelling preserve courts' resources, B. Cardozo, Nature Judicial Process 149 (1921)"). Indeed debated precedent-setting overrules. Compare 432-438, 185-189, 439-440, 189-190 (Frankfurter, dissenting). Most recently revisited 225-238, 2336-2344, 243-266, 2346-2358 (BLACKMUN, part).

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