The parties in Hall Street argued their case on November 7, 2007. While the argument was difficult to follow, I thought I could discern some of the justices’ points of view. Chief Justice Roberts suggested that when parties agree to expand judicial review of arbitration awards, they take themselves outside the scope of the Federal Arbitration Act and thus must rely on state courts to determine whether their agreement should be enforced. The Chief Justice told counsel for Hall Street that “[w]e should conclude that you don’t fall within the Federal Arbitration Act and it’s not a big deal because you can bring – you can have the contract enforced.” The Chief also suggested that the plain language of the FAA precludes enforcement of the parties’ agreement.
By contrast, Justice Scalia seemed to believe that the FAA provides default rules that he parties may contract around but that their ability to contract would be limited by what the court would have been able to do if the action had been brought in the first place. Justice Ginsburg also emphasized the issue of limitations – she pressed Hall Street’s counsel on the issue of what limitations should be imposed on parties’ agreements to expand judicial review.
Justice Kennedy seemed in favor of the Hall Street view, emphasizing that enforcing the parties’ agreements would further the policy underlying the Federal Arbitration Act. Justice Stevens may also lean Hall Street’s direction. He asked Mattel’s counsel repeatedly why the drafters of the FAA would want to prevent the parties from choosing the option they selected in this case just because, in Justice Stevens’ words, the option “would just take a little longer” than a traditional arbitration.
The other justices were harder to read. Justice Alito said very little; Justice Thomas, as is typical, said nothing. Justices Souter seemed to favor Mattel’s view of the case, although he seemed to have procedural concerns about the case. Justice Breyer’s views are also difficult to predict – at least one of his concerns was whether federal judges have the ability to permit this type of arrangement
I think the result of this argument is difficult to predict. After reading the transcript, I became more concerned that this was the wrong case to grant certiorari to if the Court really wanted to resolve the issue. That the judge was involved in the post dispute agreement to arbitrate seemed to raise questions about the inherent authority of the courts to order this type of arrangement as well as whether the court’s order was really just part of the pretrial conference aspect of FRCP 16.