Legal Document

514 U.S. 938115 S.Ct. 1920131 L.Ed.2d 985 FIRST OPTIONS OF CHICAGO, INC., Petitioner,v.Manuel KAPLAN, et ux. and MK Investments, Inc. No. 94-560. Supreme Court of the United States Argued March 22, 1995. Decided May Syllabus* This case arose out disputes centered on a "workout" agreement, embodied in four documents, which governs "working out" debts owed by respondents—Manuel Kaplan, his wife, wholly owned investment company, (MKI)—to petitioner First Options Chicago, Inc., firm that clears stock trades Philadelphia Stock Exchange. When Options' demands for payment went unsatisfied, it sought arbitration exchange panel. MKI, had signed only workout document containing an submitted to arbitration, but Kaplans, who not document, filed objections with panel, denying their disagreement was arbitrable. The arbitrators decided they power rule dispute's merits ruled favor. District confirmed award, Appeals reversed. In finding dispute arbitrable, said courts should independently decide whether panel has jurisdiction over dispute, would apply ordinary standards review when considering Court's denial respondents' motion vacate award. Held: 1. arbitrability Kaplan/First subject independent courts. Pp. __. (a) answer narrow question or have primary parties agreed arbitrate is fairly simple. Just as depends upon see, e.g., Mastrobuono v. Shearson Lehman Hutton, ----, 115 1212, 1216, 131 76, so "who arbitrability" turns submit arbitration. If so, then court defer arbitrator's decision. not, independently. These two answers flow inexorably from fact simply matter contract between parties. (b) Kaplans did agree arbitrability. Courts generally state-law principles governing formation deciding such agreement exists. However, assume unless there "clea[r] unmistakabl[e]" evidence so. See, AT & T Technologies, Communications Workers, 475 643, 649, 106 1415, 1418, 89 648. cannot show clear part Kaplans. Kaplans' arbitrators' indicate want binding authority them. conclusion supported (1) obvious explanation presence before (i.e., Mr. Kaplan's arbitrating matters); (2) Third Circuit law, suggested might argue without losing right review. counterarguments are unpersuasive. 2. appeals reviewing district decisions upholding awards, i.e., accepting findings "clearly erroneous" questions law de novo; those circumstances, special "abuse discretion" standard. It undesirable make more complicated proliferating good reason. More importantly, appeals' attitude toward decision depend respective institutional advantages trial appellate courts, what standard will likely produce particular substantive result. Nothing Arbitration Act supports claim use different conducting certain decisions. 3. factbound erred its ultimate arbitrable beyond scope this P. ____. 19 F.3d 1503 (CA3 1994), affirmed. BREYER, J., delivered opinion unanimous Court. James D. Holzhauer, IL, petitioner. John Roberts, Jr., Hyannis, MA, respondents. Justice BREYER 1 we consider about how matters under federal Act, 9 U.S.C. § seq. (1988 Ed. Supp. V): court's confirming, refusing vacate, 2 * concerns several related between, one side, Exchange, and, other three parties: Manuel Kaplan; Carol (MKI), whose trading account cleared. center around separate MKI incurred result October 1987 market crash. 1989, after entering into lost additional $1.5 million. took control of, liquidated, assets; demanded immediate entire debt; insisted personally pay any deficiency. 3 having (out four) contained clause, accepted however, denied written effect parties' favor Options. asked Federal see 10 Ed., V), requested confirmation, 9. Nonetheless, appeal arbitrable; reversed confirmation award against (1994). 4 We granted certiorari regarding used determination 513 634, 130 539 First, "should dispute." F.3d, at 1509 (emphasis added). us "reviewing arbitrability," "apply novo deferential applied merits") objecting party "submitted issue decision." Pet. Cert. i. Second, stated commercial (and correlative grant confirm it) "de novo." 1509. argues instead See Robbins Day, 954 F.2d 679, 681-682 (CA11 1992). II 5 first question—the arbitrability—is one. To understand just narrow, types present case. disagree liable MKI's debt That makes up dispute. merits. Third, second matter. Does belong primarily (because reviews deferentially) mind independently)? here third question. 6 Although one, practical importance. because normally (say, here, obligation contract). But, where arbitrate, he she, effect, relinquished much right's value. still can ask decision, set aside very unusual circumstances. (award procured corruption, fraud, undue means; arbitrator exceeded powers); Wilko Swan, 346 427, 436-437, 74 182, 187-188, 98 L.Ed. 168 (1953) (parties bound "manifest disregard" law), overruled grounds, Rodriguez Quijas Shearson/American Express, 490 477, 109 1917, 104 526 (1989). Hence, who—court —has critical difference resisting 7 believe "who" standard-of-review question) 76 (1995); Mitsubishi Motors Corp. Soler Chrysler-Plymouth, 473 614, 626, 105 3346, 3353, 87 444 (1985), Did itself arbitration? differ arbitrate. 648 (1986) may arbitrability); Steelworkers Warrior Gulf Navigation Co., 363 574, 583, n. 7, 80 1347, 1353, 1409 (1960) (same). say, give considerable leeway arbitrator, setting her 10. If, hand, namely parties; way resolve disputes—but —that supra, S.Ct., 1418; Mastrobuono, 9, 1216-1217, 9; Allied-Bruce Terminix Cos. Dobson, 834, 837-838, 753 Corp., 625-626, 3353. 8 Options, therefore, must Nevertheless, does help win fair complete requires word And, here. (including arbitrability), (though qualification discuss below) govern contracts. 1219, Volt Information Sciences, Board Trustees Leland Stanford Junior Univ., 489 468, 475-476, 1248, 1253-1254, 103 488 (1989); Perry Thomas, 482 483, 492-493, 107 2520, 2526-2527, 96 426 (1987); G. Wilner, Domke Commercial 4:04, p. 15 (rev. ed. Supp.1993) (hereinafter Domke). relevant state example, require objectively revealed intent Estate Jesmer Rohlev, 241 Ill.App.3d 798, 803, 182 Ill.Dec. 282, 286, 609 N.E.2d 816, 820 (1993) (law State agreement); Burkett Allstate Ins. 368 Pa.Super. 600, 608, 534 A.2d 819, 823-824 (1987) objected arbitrability). Motors, Court, (as said) added important qualification, applicable arbitrability: 1418-1419; Gulf, 7. manner treats silence ambiguity (primarily) differently "whether merits-related within valid agreement"—for respect latter reverses presumption. 3353 (" '[A]ny doubts concerning issues be resolved arbitration' ") (quoting Moses H. Cone Memorial Hospital Mercury Constr. 460 1, 24-25, 927, 941, 765 (1983)); 582-583, 1352-1353. 11 treatment understandable. arises provides some issues. gave least thought given law's permissive policies why insist clarity concluding 12.02, 156 (issues deemed "it clause included" them). On former question—is rather arcane. A often focus significance own powers. Cf. Cox, Reflections Upon Labor Arbitration, 72 Harv.L.Rev. 1482, 1508-1509 (1959), cited U.S., principle forced specifically hesitate interpret point giving power, doing too force unwilling reasonably judge, decide. Ibid. Dean Witter Reynolds Byrd, 470 213, 219-220, 1238, 1241-1242, 84 158 (1985) (Arbitration Act's basic purpose "ensure judicial enforcement privately made agreements arbitrate"). 12 record us, clearly arbitrate) relies filing memorandum jurisdiction. But merely arguing willingness issue, effectively point. contrary, insofar were forcefully naturally think draws support firm, review, Teamsters Western Pennsylvania Motor Carriers Assn., 574 783, 786-788 (1978); 1512, 13. 13 counterarguments: ways get (e.g., trying enjoin participate defending petition brought compel 4); permitting being cause delay waste resolution disputes; (3) therefore presumption contrary. these points, while true, say anything intended point, too, inconclusive, factual circumstances vary greatly permit confident allowing initial (but reviewable) would, general, slow down process. legally erroneous, no strong arbitration-related policy favoring argument After all, objective area quickest possible, wishes, Reynolds, ensure agreements, like contracts, " 'are enforced according terms,' 1214 479, 1256), intentions parties, Allied-Bruce, 837. favors 14 conclude that, correct III turn next refuses confirms, sometimes words describe standard, believes do all Circuits one) Rather, confirming ground proceed novo. 16 One Appeals, Eleventh Circuit, something different. Because says applies specially lenient (even law) aside) awards. F.2d, 681-682. asks hold Circuit's view correct. 17 believe, majority saying ordinary, special, For thing, reasons. takes "the courts," Salve Regina College Russell, 499 225, 231-233, 111 1217, 1221-1222, 113 190 (1991). tells (trial appellate) administrative agencies degree legal interpretations made. Chevron U.S.A. Natural Resources Defense Council, 467 837, 843-844, 2778, 2781-2782, 81 694 (1984). our knowledge, means extra upholds agency. Similarly, most decisions; mean uphold arbitrators. section, allows conduct interlocutory antiarbitration rulings orders enjoining arbitrations), arbitrations). V). portion timing review; weak distinct nothing 18 proper determinations. IV Finally, even if questions, nonetheless 20 judgment 21 ordered. syllabus constitutes been prepared Reporter Decisions convenience reader. Detroit Lumber 200 321, 337, 26 287, 50 499.

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