Donaldson, Lufkin & Jenrette Futures, Inc. v. Barr

JUSTICE WARD, dissenting:

I must, with respect, dissent from the majority’s holding that where, in a broad arbitration clause, “it is unclear whether the subject matter of the dispute falls within the scope of the arbitration agreement, the question of substantive arbitrability should initially be decided by the arbitrator.” 124 Ill. 2d at 447-48.

First, the language of our Arbitration Act is to me indisputably clear and does not permit, much less require, interpretation. The Act, which is set out in the majority’s opinion, states that when there is a substantial and bona fide dispute as to whether the question involved is one for arbitration the issue shall be decided by the court. Thus, in the unclear cases, the Act clearly directs that the question be resolved by the court. This, of course, is consistent with the legal fundamental that the interpretation of contracts is for the court. To say that in any event the court may ultimately interpret the agreement and decide the disputed question of arbitrability cannot justify the delay and additional expense in resolving the uncertainty.

I would observe that the decision upon which the majority principally relies was handed down 25 years ago. Since then the greater number of courts, State and Federal, that have addressed the question have held that arbitrability is a matter of law to be initially decided by the court. I would note also that the comment on the Uniform Arbitration Act that the majority cites (Comment, Some Comments on Arbitration Legislation and the Uniform Arbitration Act, 10 Vand. L. Rev. 685 ) was published in 1957. That was only two years following the promulgation of the Act and prior to the development of a body of decisional law on the question of whether in unclear cases an arbitrability question should first be referred to the arbitrator or to the court.

I believe that a later law review comment on the Federal Arbitration Act and arbitrability reflects a contrary and preferable view:

“Completely deferring the issue of arbitrability to the arbitrator when a broad arbitration clause is used has logical appeal because arbitrability is a matter of contract interpretation. The parties’ use of a broad arbitration clause undeniably demonstrates their intent to send disputes concerning contract interpretation to arbitration. Sending the question of arbitrability to the arbitrator, however, violates the determination that [t]he question of whether a dispute is “arbitrable” is inescapably for the court.’ [United Steelworkers of America v. American Manufacturing Co. (1960), 363 U.S. 569 , 571, 4 L. Ed. 2d 1432 , 1433, 80 S. Ct. 1363 , 1364.] In light of this policy, it is questionable to assert that use of a broad arbitration clause mandates referring the issue of arbitrability to the arbitrator without any further judicial scrutiny.” Comment, Arbitrability of Disputes Under the Federal Arbitration Act, 71 Iowa L. Rev. 1137 (1986).

Recent decisions of State courts that disputes as to the scope of arbitration are matters of contractual interpretation and thus matters of law to be determined in the first instance by the court include:

Flynn v. Town of Newington (1984), 2 Conn. App. 230, 235 , 477 A.2d 1028, 1031 ;

Poire v. Kaplan (D.C. App. 1985), 491 A.2d 529, 533 ;

Cape Elizabeth School Board v. Cape Elizabeth Teachers Association (Me. 1983), 459 A.2d 166, 168 ;

Federal Kemper Insurance Co. v. American Bankers Insurance Co. (1984), 137 Mich. App. 134, 139 , 357 N.W.2d 834, 837 ;

Kelsey & Son, Inc. v. Architectural Openings, Inc. (Fla. 1986), 484 So. 2d 610, 611 ;

Gibbons-Grable Co. v. Gilbane Building Co. (1986), 34 Ohio App. 3d 170, 172 , 517 N.E.2d 559, 561 ;

Demers Nursing Home v. R. C. Foss & Sons (1982), 122 N.H. 757, 759-60 , 449 A.2d 1231, 1232 ;

Milwaukee Police Association v. City of Milwaukee (1983), 113 Wis. 2d 192, 198 , 335 N.W.2d 417, 420 ;

United Paperworkers International Union v. Chase Bag Co. (1981), 222 Va. 324, 327-28 , 281 S.E.2d 807, 809 ;

Hessler v. Columbia Gas Transmission Corp. (1983), 318 Pa. Super. 302, 306 , 464 A.2d 1354, 1356 ;

In re W. A. Botting Plumbing & Heating Co. v. Constructors Pamco (1987), 47 Wash. App. 681, 684 , 736 P.2d 1100, 1102 .

The position of the Supreme Court under the Federal Arbitration Act, to which the majority refers, on the question is clear. In AT & T Technologies, Inc. v. Communications Workers (1986), 475 U.S. 643 , 89 L. Ed. 2d 648 , 106 S. Ct. 1415 , the Court’s opinion began:

“The issue presented in this case is whether a court asked to order arbitration of a grievance filed under a collective-bargaining agreement must first determine that the parties intended to arbitrate the dispute, or whether that determination is properly left to the arbitrator.” ( 475 U.S. at 644 , 89 L. Ed. 2d at 653 , 106 S. Ct. at 1416 .)

The Court concluded:

“It is the court’s duty to interpret the agreement and to determine whether the parties intended to arbitrate grievances concerning layoffs predicated on a ‘lack of work’ determination by the Company. If the court determines that the agreement so provides, then it is for the arbitrator to determine the relative merits of the parties’ substantive interpretations of the agreement. It was for the court, not the arbitrator, to decide in the first instance whether the dispute was to be resolved through arbitration.” ( 475 U.S. at 651 , 89 L. Ed. 2d at 657 , 106 S. Ct. at 1420 .)

See also Atkinson v. Sinclair Refining Co. (1962), 370 U.S. 238, 241 , 8 L. Ed. 2d 467 , 465-66, 82 S. Ct. 1318, 1320-21 ; International Union, UAW v. General Electric Co. (8th Cir. 1983), 714 F.2d 830 , 831; Local Joint Executive Board of Las Vegas, Culinary Workers Union, Local 226 v. Royal Center, Inc. (9th Cir. 1985), 754 F.2d 835, 838 ; Life of American Insurance Co. v. Aetna Life Insurance Co. (5th Cir. 1984), 744 F.2d 409, 413 ; LaCourse v. Firemen’s Insurance Co. (3d Cir. 1985), 756 F.2d 10, 12 ; Local 232, Allied Industrial Workers v. Briggs & Stratton Corp. (7th Cir. 1988), 837 F.2d 782, 784 ; Brotherhood of Teamsters Auto Truck Drivers, Local No. 70 v. Interstate Distributor Co. (9th Cir. 1987), 832 F.2d 507, 509 .

The majority’s view that the arbitrator in close cases is to decide initially whether there should be arbitration may not be universally welcomed by arbitrators. Some may fear unjustified criticism that when they decide for arbitration they acted in self-interest. Some, apprehensive of criticism of this character, may be at least subliminally influenced to decide against arbitration when arbitration would have been proper.