On the first day of its new term, the Court granted certiorari in another FAA preemption case.  In MHN Government Services v. Zaborowski, the Court agreed to decide whether, as SCOTUS Blog styled it, “California violates federal arbitration law when it treats arbitration contracts differently from other contracts, in determining whether all or only part of an arbitration agreement is void under state law.”  

Petitioners in that case alleged that California courts apply a different rule of severability to arbitration agreements than to ordinary contracts.  Petitioners alleged that the rule applied to arbitration agreements is anti-arbitration as it voids the entire arbitration agreement if a court finds one provision objectionable.  In contrast, for ordinary contracts, California courts sever the offending provision and enforce the remainder of the contract.  Under the Court’s well-developed FAA jurisprudence, according to Petitioners, the FAA preempts California’s anti-severability rule.

I fear yet another strong pronouncement from the Court restricting states’ ability to regulate arbitration agreements.

Jill Gross is a Professor of Law and the Director of the Investor Rights Clinic at Pace Law. She teaches the Investor Rights Clinic and Seminar, Mediation and Arbitration, Professional Responsibility, and Securities Litigation and Enforcement. She has published numerous law review articles in the area of dispute resolution and investor justice, and has been quoted in the national media on issues relating to securities arbitration. She is also a contributor to ADR Prof Blog.