Arbitration -- 2010



Rent-A-Center, West, Inc. v. Jackson   (U.S. Supreme Court)

Whether a court must decide whether an arbitration agreement is unconscionable if the parties assigned this question to an arbitrator

An employment contract provided for arbitration of disputes, including any questions involving the "interpretation, applicability, enforceability or formation" of the agreement. The Ninth Circuit ruled that unconscionability of a contract provision relating to arbitrability is for a court to decide, not an arbitrator.

The Supreme Court 6/21/10 further clarified its general policy upholding the Federal Arbitration Act and enforcing agreements to arbitrate. It found that there are two types of challenges to the validity of an agreement to arbitrate: (1) a challenge to the arbitration clause itself and (2) a challenge to the contract as a whole. Challenges to the arbitration clause are resolved in court; challenges to the entire contract are resolved by an arbitrator, where the contract so provides.

 


Environmental -- 2010



General Electric Co. v. Jackson   (D.C. Circuit)

Constitutionality of EPA's Unilateral Administrative Orders

When EPA determines that an environmental cleanup is required at a contaminated site, it has three options: (1) conduct the cleanup itself and file suit to recover the costs, (2) get a court order, or (3) issue a Unilateral Administrative Order (UAO) compelling a potentially responsible party to undertake a specified action. This case involves the constitutionality of UAOs, which are issued without any right to a hearing prior to their issuance.

The NAM filed an amicus brief supporting GE in this case, arguing that such orders constitute immediate and substantial deprivations of property without any opportunity for a pre-deprivation hearing before a neutral decision-maker. The lower court improperly found that the cost to EPA of providing a hearing to be substantial (if all UAOs are challenged), but the court did not consider the cumulative effect of UAOs on business in the balance. We also questioned the court's ruling that constitutional rights are less where the company has not shown that EPA's administrative procedure result in an unacceptable rate of error. We argued that no case requires a company to show that an agency has erred on the merits of a case in order to establish a due process violation. Furthermore, many potential defendants do not have substantial resources to reallocate from job creation, product development or other productive uses in order to vindicate their constitutional rights.

On June 29, 2010, the court affirmed the lower court's ruling, finding that manufacturers have the option of refusing to comply with a UAO, thus forcing the EPA to go to court to enforce the order. It also did not feel that the losses experienced by a company subjected to potentially improper UAOs (stock declines, loss of brand value or increasing costs of financing) were enough to constitute violations of due process.

Specifically, it ruled that a company that refuses to comply with a UAO has several safeguards under the law: a court must find (1) that the UAO was proper, (2) that the company "willfully" failed to comply "without sufficient cause," and (3) that, in the court's discretion, fines and treble damages are appropriate. The company has protections if it reasonably believes the UAO is improper.


Related Documents:
NAM revised brief  (December 30, 2009)
NAM brief  (September 22, 2009)

 


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