Is There A Meaningful Distinction Between Contract Enforcement And Contract Formation For Purposes Of FAA Preemption?
Kate Howard’s October 26, 2016 post about “Petitions To Watch” in Scotusblog notes that an arbitration case, Tamko Building Products, Inc. v. Hobbs, No. 15-1318, is up for consideration at the conference of October 28, 2016.
According to the petition, signed by Paul D. Clement, the issue presented is: “Whether a state court can evade the preemptive force of the Federal Arbitration Act by framing its refusal to enforce an arbitration agreement as a product of supposed defects in “contract formation” that would not prevent the formation of any other contract.”
Petitioner Tamko is trying to come within the rule of Concepcion, which held that courts must place arbitration agreements on “equal footing” with other contracts. In other words, the courts can’t place burdens on arbitration agreements that they couldn’t place on other agreements, absent clear congressional intent to do so.
Respondent frames the issue differently: “Does the Federal Arbitration Act preempt the lower court’s application of this rule1 to a case where the evidence suggests that the arbitration clause was not presented in a way that would give the consumer notice of its existence or the fact that keeping the product would supposedly constitute agreement to arbitration?”
1 In context, “this rule” means, “unless a party has actual knowledge of
the contract terms, the party’s conduct does not signify assent unless there was reasonable notice of the terms and the conduct that would be deemed to manifest assent