SUPREME COURT OF THE UNITED STATES
NITRO-LIFT TECHNOLOGIES, L. L. C.
v. EDDIE LEE HOWARD et al.
on petition for writ of certiorari to the
supreme court of oklahoma
No. 11–1377. Decided November 26,
2012
Per Curiam.
State courts rather than federal courts are most
frequently called upon to apply the Federal Arbitration Act (FAA),
9 U. S. C. §1
et seq., including the
Act’s national policy favoring arbitration. It is a matter of
great importance, therefore, that state supreme courts adhere to a
correct interpretation of the legislation. Here, the Oklahoma
Supreme Court failed to do so. By declaring the noncompetition
agreements in two employment contracts null and void, rather than
leaving that determination to the arbitrator in the first instance,
the state court ignored a basic tenet of the Act’s
substantive arbitration law. The decision must be vacated.
* * *
This dispute arises from a contract between
petitioner Nitro-Lift Technologies, L. L. C., and two of
its former employees. Nitro-Lift contracts with operators of oil
and gas wells to provide services that enhance production.
Respondents Eddie Lee Howard and Shane D. Schneider entered a
confidentiality and noncompetition agreement with Nitro-Lift that
contained the following arbitration clause:
“ ‘Any dispute,
difference or unresolved question between Nitro-Lift and the
Employee (collectively the “Disputing Parties”) shall
be settled by arbitration by a single arbitrator mutually agreeable
to the Disputing Parties in an arbitration proceeding conducted in
Houston, Texas in accordance with the rules existing at the date
hereof of the American Arbitration Association.’ ”
Pet. for Cert. 5.
After working for Nitro-Lift on wells in
Oklahoma, Texas, and Arkansas, respondents quit and began working
for one of Nitro-Lift’s competitors. Claiming that
respondents had breached their noncompetition agreements,
Nitro-Lift served them with a demand for arbitration. Respondents
then filed suit in the District Court of Johnston County, Oklahoma,
asking the court to declare the noncompetition agreements null and
void and to enjoin their enforcement. The court dismissed the
complaint, finding that the contracts contained valid arbitration
clauses under which an arbitrator, and not the court, must settle
the parties’ disagreement.
The Oklahoma Supreme Court retained
respondents’ appeal and ordered the parties to show cause why
the matter should not be resolved by application of Okla. Stat.,
Tit. 15, §219A (West 2011), which limits the enforceability of
noncompetition agreements. Nitro-Lift argued that any dispute as to
the contracts’ enforceability was a question for the
arbitrator. It relied for support— as it had done before the
trial court—upon several of this Court’s cases
interpreting the FAA, and noted that under
Buckeye Check
Cashing, Inc. v.
Cardegna,
546 U.S.
440, 446 (2006), “this arbitration law applies in both
state and federal courts.” Record in No. 109,003 (Okla.), p.
273.
The Oklahoma Supreme Court was not persuaded. It
held that despite the “[U. S.] Supreme Court cases on
which the employers rely,” the “existence of an
arbitration agreement in an employment contract does not prohibit
judicial review of the underlying agreement.” 2011 OK 98,
¶15, n. 20, ¶16, 273 P.3d 20, 26, n. 20, 27.
For that proposition, the court relied on the “exhaustive
overview of the United States Supreme Court decisions construing
the Federal Arbitration Act” in
Bruner v.
Timberlane Manor Ltd. Partnership, 2006 OK 90,
155 P.3d 16, which found Supreme Court jurisprudence “not
to inhibit our review of the underlying contract’s
validity.” 273 P. 3d, at 26. Finding the arbitration
clauses no obstacle to its review, the court held that the
noncompetition agreements were “void and unenforceable as
against Oklahoma’s public policy,” expressed in Okla.
Stat., Tit. 15, §219 A. 273 P. 3d, at 27.
The Oklahoma Supreme Court declared that its
decision rests on adequate and independent state grounds.
Id., at 23–24, n. 5. If that were so, we would
have no jurisdiction over this case. See
Michigan v.
Long,
463 U.S.
1032, 1037–1044 (1983). It is not so, however, because
the court’s reliance on Oklahoma law was not
“independent”—it necessarily depended upon a
rejection of the federal claim, which was both
“ ‘properly presented to’ ” and
“ ‘addressed by’ ” the state
court.
Howell v.
Mississippi,
543
U.S. 440, 443 (2005) (
per curiam) (quoting
Adams
v.
Robertson,
520 U.S.
83, 86 (1997) (
per curiam))
. Nitro-Lift claimed
that the arbitrator should decide the contract’s validity,
and raised a federal-law basis for that claim by relying on Supreme
Court cases construing the FAA. “ ‘[A] litigant
wishing to raise a federal issue can easily indicate the federal
law basis for his claim in a state-court petition or brief
. . . by citing in conjunction with the claim the federal
source of law on which he relies
or a case deciding such a claim
on federal grounds . . . .’ ”
Howell,
supra, at 444 (quoting
Baldwin v.
Reese,
541 U.S.
27, 32 (2004); emphasis added). The Oklahoma Supreme Court
acknowledged the cases on which Nitro-Lift relied, as well as their
relevant holdings, but chose to discount these controlling
decisions. Its conclusion that, despite this Court’s
jurisprudence, the underlying contract’s validity is purely a
matter of state law for state-court deter-mination is all the more
reason for this Court to assert jurisdiction.
The Oklahoma Supreme Court’s decision
disregards this Court’s precedents on the FAA. That Act,
which “declare[s] a national policy favoring
arbitration,”
Southland Corp. v.
Keating,
465 U.S.
1, 10 (1984), provides that a “written provision in
. . . a contract evidencing a transaction involving
commerce to settle by arbitration a controversy thereafter arising
out of such contract or transaction . . . shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at
law or in equity for the revocation of any contract.” 9
U. S. C. §2. It is well settled that “the
substantive law the Act created [is] applicable in state and
federal courts.”
Southland Corp.,
supra, at 12;
see also
Buckeye,
supra, at 446. And when parties
commit to arbitrate contractual disputes, it is a mainstay of the
Act’s substantive law that attacks on the validity of the
contract, as distinct from attacks on the validity of the
arbitration clause itself, are to be resolved “by the
arbitrator in the first instance, not by a federal or state
court.”
Preston v.
Ferrer,
552 U.S.
346, 349 (2008); see also
Prima Paint Corp. v.
Flood
& Conklin Mfg. Co.,
388 U.S.
395 (1967). For these purposes, an “arbitration provision
is severable from the remainder of the contract,”
Buckeye,
supra, at 445, and its validity is subject
to initial court determination; but the validity of the remainder
of the contract (if the arbitration provision is valid) is for the
arbitrator to decide.
This principle requires that the decision below
be va-cated. The trial court found that the contract contained a
valid arbitration clause, and the Oklahoma Supreme Court did not
hold otherwise. It nonetheless assumed the arbitrator’s role
by declaring the noncompetition agreements null and void. The state
court insisted that its “[own] jurisprudence controls this
issue” and permits review of a “contract submitted to
arbitration where one party assert[s] that the underlying agreement
[is] void and unenforceable.” 273 P. 3d, at 26. But the
Oklahoma Supreme Court must abide by the FAA, which is “the
supreme Law of the Land,” U. S. Const., Art. VI,
cl. 2, and by the opinions of this Court interpreting that
law. “It is this Court’s responsibility to say what a
statute means, and once the Court has spoken, it is the duty of
other courts to respect that understanding of the governing rule of
law.”
Rivers v.
Roadway Express, Inc.,
511 U.S.
298, 312 (1994). Our cases hold that the FAA forecloses
precisely this type of “judicial hostility towards
arbitration.”
AT&T Mobility LLC v.
Concepcion, 563 U. S. ___, ___ (2011) (slip op., at
8).
The state court reasoned that Oklahoma’s
statute “addressing the validity of covenants not to compete,
must govern over the more general statute favoring
arbitration.” 273 P. 3d, at 26, n. 21. But the
ancient interpretive principle that the specific governs the
general (
generalia specialibus non derogant) applies only to
conflict between laws of equivalent dignity. Where a specific
statute, for example, conflicts with a general constitutional
provision, the latter governs. And the same is true where a
specific state statute conflicts with a general federal statute.
There is no general-specific exception to the Supremacy Clause,
U. S. Const. Art. VI, cl. 2.
“ ‘[W]hen state law prohibits outright the
arbitration of a particular type of claim, the analysis is
straightforward: The conflicting rule is displaced by the
FAA.’ ”
Marmet Health Care Center, Inc. v.
Brown, 565 U. S. ___, ___–___ (2012) (
per
curiam) (slip op., at 3–4) (quoting
AT&T Mobility
LLC, supra, at
___–___ (slip op., at 6–7)).
Hence, it is for the arbitrator to decide in the first instance
whether the covenants not to compete are valid as a matter of
applicable state law. See
Buckeye, 546 U. S., at
445–446.
For the foregoing reasons, the petition for
certiorari is granted. The judgment of the Supreme Court of
Oklahoma is vacated, and the case is remanded for proceedings not
inconsistent with this opinion.
It is so ordered.