*1 CORP., nka GREEN TREE FINANCIAL CONSECO representative BAZZLE et al., FINANCE CORP. in a capacity on behalf similarly situated,
all others a l. et April No. Argued 02-634. 2003 Decided June *2 Breyer, J., announced the judgment of the Court and an opin- delivered ion, in which Scalia, Souter, Ginsburg, JJ., joined. Stevens, J., filed an opinion in the concurring post, dissenting part, p. 454. Rehnquist, J.,C. filed a dissenting opinion, in which O’Connor and Kennedy, JJ., joined, post, p. Thomas, J., 455. filed a dissenting opin- *3 ion, post, p. 460. Phillips
Carter argued G. petitioner. the for cause With him on the briefs were Zidlicky, Paul J. Kaplinsky, Alan S. Mark J. Levin, Brewer, Wilburn Jr., Byrd, Robert C. and Herbert W.Hamiltоn.
Cornelia T. L. argued Pillard respondents. the cause for With her on the Mary brief Leigh were Arnold, Steven W. Hamm, Simpson, P. B. Dong, Randall T. Alex Bradford ander Beard, Charles L. Dibble, and Kelly.* Charles Richard
*Briefs of amici curiae urging reversal were filed for the American Bankers Association et Cohen, by Louis R. al. Christopher R. Lipsett, Eric J. Mogilnicki, and Michael D. Leffel; for the Chamber of Commerce of the United States by Evan M. Tager, Nemetz, Miriam R. W. Jeffrey Sarles, and Conrad; Robin S. for the National of Council Chain Restau- III; Robert rants P. Floyd by DirectTV, for Inc., by Christopher Landau Oliver; and Dale H. for Equal the Employment Advisory Council by Ann Elizabeth Vann; Reesman and T. Rae for the New England Legal Founda- tion et al. Christopher M. Mason and by Malamut; E. Michael and for the Washington Legal Daniel J. Popeo and Richard A Samp. Foundation Briefs of amici curiae urging affirmance were filed for the AARP by Canan, Stacy J. Schuster, Michael R. Deborah Zuckerman, M. Nina Simon, and Jean Constantine-Davis; for Law Professors David S. Schwartz, Alderman, Richard M. Belton, Robert Golann, Dwight Cather- Fisk, Linzer, ine Peter Jeffrey W. Summers, Stempel, Clyde W. Katherine of the Court the announced Breyer judgment Justice in which Justice delivered an opinion, Scalia, Justice Ginsburg join. and Justice Souter, lender between a commercial case concerns contracts This contains a clause which providing of customers, each its Su contract-related all disputes. for (1) held that Carolina Court South preme take arbitration might as to whether are silent clauses circumstance, that, that arbitration, of class fоrm contracts as permitting law interprets (2002). We E. 2d 349 244, 569 S. S. C. arbitration. is con this whether holding certiorari to determine granted seq. § 1 et 9Act, U. S. C. Arbitration sistent the Federal concerning at the outset with problem We are faced silent, or do in fact Are the silence. contracts’ Fin- Tree Green forbid class arbitration petitioner Carolina Supreme the South Given ancial contends? Corp. resolve question. it is Court’s important holding, it a matter because so, But we cannot do not simply law, also it is matter state but bеcause the parties to decide. the record Because suggests on that ques- decision received an arbitrator’s yet tion of we vacate interpretation, so case and remand the South Carolina be arbitration. resolved may question *4 HH secured In and Burt Bazzle Lynn respondents Tree. home loan from Green improvement petitioner Stone, Tkain; Van Wezel and Gerald J. Committee Lawyers’ for the Mollica, W. T. Paul Seymour, Civil al. Richard Rights by Under Law et R. Arn- Johnson, Redlich, Gary T. Barbara Meiklejohn, Norman Stuart R. wine, Henderson, Elaine Eng, Hayes, Thomas J. Dennis Vincent A C. Lichtman, and Jones, Chachkin, Stroup, Norman J. Robert Judith L. H. Paul F. Jocelyn C. Frye; and for Trial by for Public Justice Lawyers Bland, Jr. Bazzles and Green Tree entered into a contract, governed by law, which included arbitra- following tion clause:
“ARBITRATION —All disputes, claims, or controversies from or arising relating or the relation- ships which result from this contract he shall re- . . . by solved binding by one arbitrator selected by us you. with consent This arbitration contract made pursuant to a trаnsaction in commerce, interstate and shall be governed Federal Arbitration Act at 1_THE 9 U. S. C. section PARTIES VOLUNTAR- ILY AND KNOWINGLY WAIVE ANY RIGHT THEY HAVE TO A JURY TRIAL, EITHER PURSUANT TO ARBITRATION UNDER THIS CLAUSE OR PUR- SUANT TO A COURT (AS ACTION BY US PRO- VIDED HEREIN). . . . The parties and agree under- stand that the arbitrator shall all powers provided law and the contract. These powers shall in- clude all legal equitable remedies, but not including, to, limited money damages, relief, declaratory and in- junctive relief.” App. (emphasis added, capitaliza- tion in original).
Respondents Daniel Lackey George and Florine Buggs entered into loan contraсts and security agreements for the purchase of mobile homes with Green Tree. These agree- ments contained arbitration clauses that were, in all relevant respects, identical to the Bazzles’ (Their arbitration clause. substitute the word “you” with the word “Buy- er[s]” the italicized phrase.) 351 S. C., at 264, n. 18, 569 S. E. 2d, at 359, n. 18 deleted). (emphasis
At the time of the loan transactions, Green Tree appar- ently failed provide these customers with a re- legally quired form that would have told them that had a right to name their own lаwyers insurance agents and would have provided for them space to write in those names. *5 (West §37-10-102 2002). Code Ann. C. The two sets of before us now as customers each respondents filed separate in South actions Carolina state courts, that this complaining violated South law failure and seeking damages. 1997, In the Bazzles asked the April court to their certify claims as class action. Green Tree sought stay court proceedings 5, compel arbitration. On January (1) the court 1998, both certified a clаss action and en- an order tered arbitration. compelling 7. Green Tree App. then selected an arbitrator with the And Bazzles’ consent. arbitrator, as a class arbi- administering proceeding tration, awarded the class eventually $10,935,000 in statutory fees. damages, along The trial court con- attorney’s award, firmed the to Pet. for Cert. 27a-35a, and App. Green Tree to the South appealed Carolina Court of claim- Appeals other that class ing, among things, arbitration was legally impermissiblе. and the
Lackey
had earlier
Buggses
a similar court
begun
in which
too,
class
proceeding
they,
certification.
sought
Green Tree moved to
trial
arbitration.
court
compel
denied the
initially
motion,
the arbitration
finding
unenforceable, but Green
an
Tree pursued
interlocutory ap-
Lackey
peal
State Court of
reversed.
Appeals
Green
Corp.,
Tree Financial
330 S. C.
In December certified class in arbi- tration. 18. The arbitrator App. to hear proceeded matter, ruled class, favor of the ultimately awarded $9,200,000 in addition to attor- statutory damages fees. The trial ney’s court confirmed the award. App. Pet. for Cert. 36a-54a. Green Tree to the South appealed Carolina Court of Appeals other claiming, among things, class arbitration was legally impermissible.
The Supreme South Carolina Court withdrew cases both from Appeals, jurisdiction, аssumed and consoli- dated proceedings. 351 C., at 2d, S. E. at 351. That court then held that the contracts were silent in respect to class they arbitration, consequently that author- ized class arbitration, and that properly arbitration had granted taken that form. We certiorari to consider whether that holding is consistent with the Federal Act. Arbitration
I I The Supreme South Carolina Court’s determination are respect contracts silent in to class arbitration raises a preliminary question. Green argued Treе there, as it ar- gues here, that the contracts are not they silent—that forbid class arbitration. And we must argument deal with that at right, outset, for if it is then the South Carolina court’s holding is flawed on its own terms; that court said neither implied nor that it would have authorized class arbitration parties’ had the forbidden it. Whether Green right Tree is about the contracts them- presents selves disputed issue of interpretation. The Chief believes that Green right; Justice Tree is in- deed, that Green Tree clearly is right so ig- that we should nore the fact that state law, not federal normally gov- law, erns such post, matters, see at concurring J., (Stevens, and dissenting part), and reverse the Court outright, post, see at 458-460 dissenting). (Rehnquist, C. points J., The Chief Justice out that the say disputes “shall be resolved... by one arbitrator [Green Tree] selected us with consent of you [Green Tree’s customer].” App. to Pet. for Cert. 110a. post, at 458. And it.finds that class arbitration clearly inconsistent with requirement. this all, After class arbitra- tion an involves simply arbitration, not between Green Tree аnd a named customer, but also between Green Tree and (represented) other taking place customers, all before the chosen to named initial, arbitrate customer’s dispute. believe, however, do not language
We the contracts’ as The clear is as believes. class arbi- Chief Justice by” was “with trator “selected Green Tree consent of” Green (cid:127) plaintiffs. customers, Tree’s the named And insofar as the agreed proceed class members in class arbitration, other consented well. independently course, Green Tree Of did select disputes arbitrator to arbitrate its with the other class mem- *7 But bers. whether the contracts contain this re- additional question quirement is a literal the terms of the contracts (I) simply say do not decide. The contracts “selected us Tree].” [Green literally And that is what occurred. The (II) say [Green Tree] do not contracts “selected us to arbi- (even identical) dispute this trate dispute no other (I) question another implic- customer.” The whether in fact (II) itly question means is the at issue: Do the contracts for- authority bid class arbitration? Given the broad the con- upon tracts g., elsewhere App. bestow arbitrator, see, the e. (the grant to Pet. for Cert. 110a arbitrator to the powers,” including equitable powers “all “provided certain contract”), by the law the question the answer to this completely not obvious.
At the automatically accept time, same we cannot the South Carolina Court’s resolution of this contract- interpretation question. parties’ Under the terms question contracts, agreement forbids —whether par- arbitration —is for the arbitrator to decide. “[ajll agreed ties to disputes, submit to the claims, arising or relating controversies from or this or to contract relationships which result from this Ibid. contract.” added). (emphasis dispute And the what the about arbitra- (i. tion each e., case means it whether forbids use procedures) “relating of class dispute is a to resulting “relationships.” contract” and the Hence
452 pаrties seem agreed to judge, have arbitrator, that an not a would answer the question. Options relevant See First (1995)(arbitration Chicago, Kaplan, 938, Inc. v. 514 943 U. S. contract”). is a “matter of if there And is doubt about that “ ‘scope matter —about the arbitrable issues’ ”—we should resolve that doubt “‘in favor of arbitration.’” Mitsubishi Corp. Chrysler-Plymouth, Motors Inc., Soler 473 U. S. (1985). 614, 626
In certain circumstances, limited courts assume that parties particu arbitrators, intended courts, decide a (in lar “clea[r] arbitration-related matter the absence of unmistakabl[e]” contrary). evidence to the AT& Technolo gies, Inc. v. Workers, Communications 643, 475 U. 649 (1986). These limited typically instances involve matters of “contracting parties kind that likely expected would a court” Reynolds, Inc., decide. Howsam v. Dean Witter They U. S. gateway include certain mat ters, such as whether the have a valid arbitration concededly binding at all or whether a applies type controversy. gener clause to a certain ally supra. Wiley Howsam, Sons, See also John & Inc. v. (1964) (whether Livingston, U. S. an 546-547 ar *8 bitration corporate merger); survives AT&T, a (whether supra, at labor-management layoff 651-652 con clause). troversy scope falls within the of an arbitration question here —whether the contracts forbid class ar- exception. bitration —does not fall into this narrow It con- cerns validity neither the of the arbitration clause nor its applicability underlying dispute parties. to the between the Options, question Unlike First parties is not whether the judge wanted or an arbitrator to decide whether agreed to arbitrate a matter. S., at U. 942-945. Rather question the relevant pro- here is what kind ceeding parties agreed question to. That does not con- cern a judicial state procedures, statute or cf. Volt Informa- Sciences, tion Inc. v. Board Trustees Leland Stanford Univ., 474-476 U. S. It Junior concerns interpretation procedures. and arbitration contract Arbi- question. are well situated to answer that trators Given along considerations, with the arbitration these contracts’ sweeping language scope concerning the questions of the interpreta- committed matter of arbitration, this for arbitrator, tion should be not the courts, to decide. supra, (finding roughly Howsam, at 83 for similar Cf. reasons procedural the arbitrator should determine a certain matter”). “gateway
Ill respect underlying question With the ar- —whether parties bitration contracts forbid class arbitration —the yet obtained the arbitration decision that their contracts plaintiffs, As far foresee. as concerns the Bazzle the South Carolina Court wrote that the “trial court” issued granting “an order class certification” and the arbitrator subsequently proceedings “administered” class arbitration “without further involvement of the trial court.” C., 351 S. 250-251, at 2d, 569 E. at 352. Green Tree adds that “the imposed was on the and the arbitra- tor the trial court.” Brief for Petitioner Respondents deny 30. now so, that this was Brief for Re- spondents convincing 13, but we support can find no record for that denial.
farAs Lackey plaintiffs, concerns the happened what in arbitration is less Lackey clear. On hаnd, the one (the same individual who later arbitrated Baz dispute) zle “7 wrote: determined that a class action should proceed in upon my arbitration based careful review broadly drafted prepared by arbitration clause Tree.” Green added). App. to Pet. (emphasis respond Cert. 84a And suggested ents argument at oral that the deci arbitrator’s sion independently was Arg. made. Tr. of Oral 39.
On the Lackey hand, other arbitrator decided question after the South Carolina trial court had determined
that the identical contract in the case Bazzle authorized class procedures. arbitration question And there is no that the arbitrator was aware of the Bazzle decision, Lackey since the plaintiffs argued had to the arbitrator that impose it should procedures arbitration part in because the state trial court Bazzle had done so. Appeal Record on 516-518. (where In the court proceedings below Green Tree took the opposite position), the Lackey рlaintiffs maintained that “to the extent” the arbitrator decided that the permit (in procedures ted class Lackey case), or case the Bazzle “it awas reaffirmation adoption [the and/or c]ourt’s Bazzle prior determination.” Appeal on Record 1708, n. 2. See App. also 31-32, n. 2.
On balance, there is at strong least a Lackey likelihood in as well as in Bazzle that the arbitrator’s decision reflected a interpretation court’s of the contracts rather than an arbitra- interpretation. tor’s being That so, we remand the case so that the may question decide the of contract inter- pretation thereby parties’ enforcing the agree- arbitration — according ments § to their terms. 9 supra, U. S. C. 2; Volt, at 478-479. judgment
The Supreme the South Carolina Court is va- cated, and the case is remanded for further proceedings.
So ordered. Justice Stevens, in the concurring dis senting part. parties agreed
The
that South govern
law would
their
agreement.
Court of South
Carolina has held as a matter of state law that class-action
permissible
arbitrations are
prohibited by
if not
applica-
ble
agreement,
and that the
between
these
on
silent
the issue. 351 S.
C.
262-266,
455
Carolina.
of South
Court
the Supreme
by
minations
Le-
Trustees
Board
Sciences, Inc.
Volt
of
of
Information
(1989).
468, 475-476
S.U.
Univ., 489
Junior
land Stanford
the
of
agreement
parties’
the interpretation
Arguably
arbitrator,
the
instance by
first
been
in the
made
should
Witter
v. Dean
Reyn-
Howsam
the court. Sеe
than
rather
to con-
decision
the
Because
Inc.,
Accordingly, I to my adhere Were Carolina. Court Supreme be no would however, there case, disposition preferred to avoid order In of the Court. controlling judgment Breyer’s expresses opinion and because outcome, Justice in the I concur own, judgment. case a view of the close my (Rut States, 325 U. v. United See Screws result). J., ledge, concurring O’Con- whom Justice Rehnquist, with
Chief Justice Kennedy dissenting. nor and Justice join, an into The contracts entered Act Arbitration Federal clause by governed of South Court (FAA), § 1 et The Supreme U. seq. S. C. could pro- contracts under Carolina held that arbitration do not ceed as even though a class action The plurality arbitration. their class-action terms permit case for remands now vacates be- reverse I determination. would to make courts, not for cause is one for the this determination of South arbitrator, the holding there- and is of the contracts the terms Carolina contravenes fore the FAA. pre-empted to arbitrate involved here, many like such
agreements, is terse. operative Its language is contained in one sentence: disputes,
“All claims, or controversies arising from or relating to this contract or the relationships which result from this contract... shall be resolved by binding arbi- *11 by tration one arbitrator by selected us with consent of you.” App. 34.
The of decision the on arbitrator agreed matters to be sub- given mitted to him is considerable by deference the courts. Major League Players Baseball Assn. v. Garvey, 532 curiam). U. S. 504, 509-510 (per Court of South Carolina relied on principle this deciding in that the in this case did not abuse his in allowing discretion a class action. 351 S. 244, C. 266-268, 569 S. E. 2d 361- (2002). 362 the But decision of whаt to submit to the arbi- trator is a matter of agreement contractual by parties, interpretation and the of that contract for the court, not for the arbitrator. As we stated in Options First Chi- of cago, Kaplan, (1995): Inc. v. 514 U. 945
“[G]iven principle that a party can be forced to arbi- only trate those issues specifically it agreed has to sub- mit to arbitration, one can why might understand courts hesitate to interpret silence or ambiguity on the ‘who should arbitrability’ decide point giving as the arbitra- power, tors that doing might so too often force un- willing parties to arbitrate a matter reasonably would thought judge, a not an arbitrator, would decide.”
Just as agreement fundamental to as what is submitted to the arbitrator is to whom it is submit- ted. Those provisions are the two in quoted the sentence above, and it say difficult to is. important one is more than the other. I have no hesitation saying choice of important arbitrator is component agree- choice of what is to be submitted is the to arbitrate as ment him. by Options, First Thus, case is controlled Reyn- v. Dean Witter in Howsam recent more decision our pro- There, the Inc., olds, 537 U. S. by arbitration any be determined dispute “shall vided exchange which organization any self-regulatory or before (internal quotation at Id., Dean Witter is member.” omitted). Association chose the National Howsam marks (NASD), organization’s agreed to that Dealers Securities provided that Agreement” which Submission “Uniform Arbitra- governed NASD’s “Code arbitration would be turn, contained code, That Id., 82. tion Procedure.” at the arbitrator that it was for This held a limitation. interpret provision: that limitation “ ‘ dis grow “[Procedural” which out of questions disposition’ presumptively pute are and bear on final its judge, arbitrator, to decide. John for an not for the but *12 543, 557 Livingston, [& S. Wiley 376 U. Sons, Inc. v. (1964)] decide whether (holding that an arbitrator should com grievance procedure were steps two of a first pleted, tion). prerequisites to arbitra steps are where these presumption the arbitrator
So, is that too, delay, or a like de ‘allegation^] wаiver, should decide of ” arbitrability.’ Id., fense at to 84. parties’ agreement how arbitra- I think as to that the tor to the should be is more akin selected much question courts under as to what shall for the arbitrated, be delay, Options, or “allegations waiver, First of than it is to arbitrability,” questions for the like defenses which to are arbitrator under Howsam. including may regulate contracts,
“States general principles,” Allied-Bruce clauses, under law (1995). “[T]he Dobson, 265, Terminix 281 Cos. v. 513 U. S. question ordinarily of interpretation private 458 law,
statе
which this not
does
sit to review.” Volt
Sciences, Inc. v. Board
Trustees
Information
Leland
Univ.,
Junior
489 U.
468, 474
S.
Stanford
But “state
law may nonetheless be
to the
pre-empted
extent
that it ac
tually conflicts with federal
law —that
is, to the extent
it ‘stands
anas
obstacle to the accomplishment and execution
of the full
purposes
Id.,
objectives
Congress.’”
at
477 (quoting Hines v. Davidowitz,
(1941)).
(quoting Inc. 470 U. (1985) (internal quotation marks omitted)), in order to “give effect to the contractual rights expectations of the supra, parties,” Volt, at 479. See also Mitsubishi Motors, supra, (“[A]s at 626 other any contract, the parties’ in control”). tentions
Under the FAA, are “parties generally free to structure their arbitration supra, Volt, agreements see fit.” *13 at 479. Here, the saw parties fit to that agree any disputes out of arising the contracts “shall be resolved by binding arbitration one by arbitrator selеcted us with consent of you.” 34. App. Each contract defines expressly “us” as petitioner, and as the “you” respondent or respondents (“‘We’ ‘us’ and Id., at specific in that contract. named “‘You’ assigns”; and above, successors its Seller the means jointly guarantor, Buyer and above ‘your’ means each added)). speci- contract also severally” (emphasis Each . this arising . . from governs “disputes . . . all it fies that con- result from relationships which or the added). provisions, These (emphasis Id., at 34 tract.” 450-451, ignоres, ante, at simply see plurality the which buyer select, and each petitioner must quite clear make disputes between particular arbitrator for agree to, a must buyer. specific petitioner and Car- of South observation While the to the as parties was silent the the olina literally true, the availability of class-wide just- the contravenes imposition of class-wide To arbitrator. an selection' of provision the quoted about proceedings the that administered sure, be the Bazzles, the of” [petitioner] consent was “selected petitioner had App. But Buggses. 34-36. Lackey, the dispute for each right an arbitrator to choose the contractual right and this members, 3,734individual with the other peti- upon was foisted was when the same arbitrator denied may well Petitioner as well. to those claims tioner resolve of these all some or for have chosen different arbitrators reasonable' have been disputes; indeed, it would other concentrating all petitioner so, to аvoid to do order single a hands of damages risk of awards substantial Peti- Brief for correctly concedes, petitioner As arbitrator. parties choos- from prohibit 42, not tioner FAA does par- however, Here, ing proceed a basis. to on classwide simply ties did not so choose. coer- consent, under Act is matter
“Arbitration Supreme Court supra, Here, the Volt, at 479. cion.” contrary regime was imposed that, arbitra- how the express agreement of the “agreement] tor be chosen. It did nоt enforce would *14 460
to arbitrate . . . Mastrobuono, terms.” according [its] (internal supra, at 54 omitted). marks I quotation would therefore reverse the of the Court of judgment Supreme South Carolina.
Justice Thomas, dissenting.
I continue to believe that the Federal Arbitration Act (FAA), 9 U. S. C. 1 et § does not seq., apply proceedings state courts. Allied-Bruce Dobson, Terminix Cos. v. U. S. 285-297 J., also dissenting). (Thomas, Doctor’s Associates, Inc. Casarotto, U.
(1996) (Thomas, J., For reason, the FAA dissenting). cannot be a ground for a state court’s inter- pre-empting pretation of a private arbitration agreement. Accordingly, I would leave undisturbed
Court of South Carolina.