Green Tree Financial Corp. v. Bazzle

In Green Tree Financial Corp. v. Bazzle (2003) 539 U.S. 444 (plur. opn. of Breyer, J.), a plurality of four Justices determined the question is a subsidiary matter for the arbitrator when the arbitration agreement itself is valid and the underlying dispute falls within its terms. (Id. at p. 452.) In Bazzle the parties' agreement required arbitration of "all disputes, claims or controversies arising from or relating to this contract or the relationships which result from this contract" but did not specifically mention class claims. (Bazzle, supra, 539 U.S. at p. 448.) The South Carolina Supreme Court held state law controls when the contract is silent on class arbitration and then interpreted the contract as permitting class arbitration. The United States Supreme Court granted certiorari to determine whether that holding was consistent with the Federal Arbitration Act (FAA). With a plurality opinion by Justice Breyer (joined by Justices Scalia, Souter and Ginsberg), the Court vacated the judgment of the South Carolina Supreme Court. Because there was no question as to the validity of the agreement or the applicability of the dispute to its terms, Justice Breyer explained, there was no gateway issue requiring a judicial determination. The only relevant question in those circumstances was "what kind of arbitration proceeding the parties agreed to." (Id. at p. 452.) That question, Justice Breyer wrote, "concerns contract interpretation and arbitration procedures. Arbitrators are well situated to answer that question." (Ibid.)