Supreme Court Decision Alert - November 26, 2012

Keywords: Federal Arbitration Act, FAA, pre-emption, state law

On November 26, 2012 the Supreme Court issued one decision, described below, of interest to the business community.

Federal Arbitration Act—Preemption of State Law

Nitro-Lift Technologies, L.L.C. v. Howard – No. 11-1377

For the third time in two Terms, the U.S. Supreme Court has summarily reversed a state-court decision that disregarded its precedents construing the Federal Arbitration Act ("FAA"). It is settled law that the FAA is applicable in both state and federal courts, and that under the FAA, an arbitration provision is "severable" from the remainder of the contract containing it. Thus, the U.S. Supreme Court has repeatedly held that "unless the challenge is to the arbitration clause itself, the issue of the contract's validity is considered by the arbitrator in the first instance." E.g., Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 445-446 (2006).