Be Quick-but Don't Hurry: Competing Purposes of the Federal Arbitration Act and Hall Street Associates v. Mattel

Summary

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I. FAA Background: Congress Reacts To Court Hostility Toward Arbitration Agreements. II. The Controversy Tips Off: Circuits Begin To Split. III.Hall Street Associates v. Mattel: The Struggle Between Enforcing Agreements And The Independence Of Arbitration Awards. A. Procedural Background. B. The Majority Opinion. C. The Dissenting Opinions. Iv. State Law Rejection Of Hall Street. V. Hall Street's Impact: A Technical Answer, Not Necessarily A Solution. A. A Critical Look at the Decision. B. Hall Street: Not an End, Merely a Stumbling Block to Judicial Review of Arbitration Awards. VI. Conclusion.

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Be Quick-but Don't Hurry: Competing Purposes of the Federal Arbitration Act and Hall Street Associates v. Mattel

The author would like to thank Professor Glenn G. Morris for his insight and guidance. He would also like to thank his parents, Rusty and Darla, and his brother, Kevin, for their love and support.

"Be quick-but don't hurry" is an old adage attributed to the great basketball coach, John Wooden.1 Coach Wooden was likely trying to teach his players to play both fast and confident while avoiding the mistakes that accompany rushing. Though on its face alternative dispute resolution has very little to do with basketball, the aphorism holds form in the context of arbitration. As companies become more specialized and supply chains swell, parties want disputes to be settled quickly and amicably so that their relationships and businesses can continue with minimal disruption.

Enter binding arbitration: the answer to quicker, cheaper dispute resolution. Arbitration's great virtue is in its customization. It can be tailored to be as quick and efficient or as thorough and reaching as the parties desire within the broad confines outlined in statutes that authorize such agreements. Some parties choose to provide for what they have determined to be the best of both worlds: arbitration subject to judicial review for errors of law. These parties wish for a quick, cordial process, but one that is less susceptible to mistaken conclusions of law. They want speed, but not at the expense of the correct outcome. The United States Supreme Court has recently hindered parties from striking their own balance between speed and review by blocking the enforcement of expanded judicial review of arbitral awards in Hall Street Associates v. Mattel, Inc. (Hall Street).2

The purpose of this Note is twofold: first, to give relevant background and history of the circumstances giving rise to the Supreme Court's decision in Hall Street, and second, to take a critical look at the effect of Hall Street on both federal and state arbitration law. Part I of this Note details relevant background information. Part II illustrates the competing lines of jurisprudence leading up to the Hall Street decision. Part III lays out the facts and opinion of the Supreme Court's decision in Hall Street and the California Supreme Court's decision in Cable Connection, Inc. v. DIRECTV. Part IV critically analyzes Hall Street by examining whether it was the right case for this issue. Then, Part V argues that the case has little effect on federal law because of the narrowness of the holding. Finally, this Note shows that state arbitration laws will become the focus of more legislative and judicial attention in light of the California Supreme Court's response to the opinion.

I. FAA Background: Congress Reacts To Court Hostility Toward Arbitration Agreements

The Federal Arbitration Act (FAA) was created with the central purpose of ensuring "that private agreements to arbitrate are enforced according to their terms."3 This policy is clearly set forth in the substantive portion of the FAA, section 2.4 In enacting the FAA to "abrogate the general common-law rule against specific enforcement of arbitration agreements,"5 Congress also recognized that the FAA furthers the purposes of both efficiency and expediency.6 While the FAA usually serves both speed and party autonomy ...

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