The inclusion of mandatory pre-dispute arbitration provisions in agreements involving, among other things, employment and consumer transactions has recently come under scrutiny, especially in circumstances where the employee or consumer lacks bargaining power. It is likely that recent attention given to mandatory pre-dispute arbitration provisions by Congress is responsible for the decision of some major financial institutions to remove those very provisions from agreements governing relationships between the financial institutions and many of their customers. Moreover, as a result of the U.S. Supreme Court’s recent decision in Rent-A-Center West Inc. v. Jackson, 130 S.Ct. 2772 (2010), and the perceived effect the Jackson decision could have on challenges to arbitration agreements in court, the scrutiny of mandatory pre-dispute arbitration agreements is likely to increase. Thus, although the effect of the Jackson decision on who decides issues of arbitrability may be minimal, the perceived effect of Jackson could spur the enactment of legislation or regulations prohibiting the use of mandatory pre-dispute arbitration provisions in agreements related to a wide variety of activity.
Jackson involved a stand-alone arbitration agreement executed by Antonio Jackson, the plaintiff in the underlying district court action, when his employment with Rent-A-Center West (RAC) commenced. The arbitration agreement, which plaintiff was apparently required to execute as a condition of his employment, contained a provision requiring arbitration of all disputes arising out of plaintiff’s past, present or future employment with RAC. The arbitration agreement also provided that the arbitrator would have exclusive authority to resolve disputes concerning arbitrability, including claims that the arbitration agreement was void or voidable.
