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The 8th Circuit Court of Appeals has ruled that although a consumer's claim that an arbitration clause is void falls within the agreement's broad range of arbitrable issues, the "plain language" setting forth exceptions to that range make the issue of arbitrability one for the courts to decide.
In Enderlin v. XM Satellite Radio Holdings, Inc., No. 06-3420, 2007 WL 1138368 (8th Cir. Apr. 18, 2007), Enderlin claimed that an arbitration agreement which he entered into through a purchase from XM Satellite Radio Holdings, Inc. (XM Radio) was void because it lacked mutuality, was unconscionable, and violated public policy. XM Radio argued that the issue of arbitrability was for the arbitrator alone to decide.
In determining the proper forum to resolve this issue, the Court noted that the agreement called for arbitration of "any claim…relating to this Agreement, or the Services." In essence, the Court said that this broad language required submission of the arbitrability question to the arbitrator.
However, the Court noted that the ensuing section of the contract excepts from arbitration any claim based upon the arbitration provision of the agreement. The "plain language of this exception" includes "a challenge to the enforceability" of the arbitration agreement itself, said the Court.
XM Radio argued that because the arbitration agreement provided for application of American Arbitration Association (AAA) rules, and those rules expressly state that the arbitrator will decide questions of arbitrability, only the arbitrator should resolve Enderlin's claim.
The Court rejected this argument, noting that the agreement expressly states that in case of conflict between AAA rules and the rules set forth in the contract, the rules of the contract will govern.
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