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Is “silence” a fiction?

Below, Vivian Wang of Stanford Law School recaps Wednesday’s oral argument in Stolt-Nielsen, S.A. v. AnimalFeeds International Corp. Vivian’s earlier preview of the case is available here. Check the Stolt-Nielsen (08-1198) SCOTUSwiki page for additional updates.

In Stolt-Nielsen v. AnimalFeeds, the Court granted certiorari to consider “whether imposing class arbitration on parties whose arbitration clauses are silent on that issue is consistent with the Federal Arbitration Act.”  But at oral argument on December 9, several members of the Court questioned whether the notion of a “silent” agreement is merely an illusion.  Seth Waxman, arguing on behalf of petitioners, proposed the following rule: arbitrators generally have the authority to decide whether an agreement permits, forbids, or is silent about class arbitration, but if they find that the agreement is silent, they lack the authority to order class arbitration.  Several justices expressed skepticism at this framework.  Justice Ginsburg opened by inquiring why the arbitrators had not simply “answered the question which they were given authority to” resolve when the parties submitted to them “the question whether the arbitration clause permitted class treatment.”  She, along with Justices Stevens, Scalia, and Breyer, seemed to take the view that an arbitrator construing an agreement with respect to class arbitration has one of only two options: she can find either that it permits class arbitration or that it forbids class arbitration.  No matter how ambiguous or inexplicit the terms, the interpreter must look to other “background considerations” – such as parol evidence, custom, and practice – until the scale tips to one side or the other.  There is no third alternative of finding “silence.”

When Waxman attempted to characterize the agreement as “truly silent” about class arbitration, Justice Breyer interjected that “there is no such answer.  When you interpret a contract and it doesn’t say, you try to figure out” based on background considerations.  Justice Scalia stated, “I really don’t understand what it means to say that the contract does not cover it. . . . The contract either requires it or does not require it.”  Justice Stevens observed that the arbitrators’ conclusion that class arbitration could proceed given a supposedly “silent” agreement seemed “little different” than a conclusion “that the best reading of this agreement is that the parties intended to authorize class arbitration,” in which case, petitioners would “have no case.”  Justices Kennedy and Alito also peppered Waxman with some questions but would remain silent during respondent’s argument.

During Cornelia Pillard’s argument on behalf of respondent, Chief Justice Roberts asked a steady stream of questions.  Unlike the Justices who questioned Waxman, the Chief Justice seemed convinced that a contract could be truly silent, as he pressed Pillard about what should happen when the agreement “doesn’t say . . .  you may arbitrate this on a class basis” and nothing in the “background rules” sheds any further light on the matter.  Chief Justice Roberts seemed concerned that imposing class arbitration in such circumstances could result in a party defending itself against class members with whom it had similar agreements but different relationships and intents.  Justice Scalia joined in with questions, as he did during Waxman’s argument, making it unclear which side he will ultimately find more persuasive.  His main concern with respondent’s position seemed to be that arbitrators could conclude that an agreement permits class arbitration on the basis of disconcertingly weak language – in this case, that the arbitration agreement covered “any dispute arising from” the contract.

If the Justices’ questions are taken at face value, respondents have likely garnered the votes of a majority of the Court.