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Green Tree Financial Corp X Bazzle

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					                                 Green Tree Financial Corp. v. Bazzle
                                          Decided: 06/23/03
                                             No. 02-634
                 Full text: http://www.supremecourtus.gov/opinions/02pdf/02-634.pdf

           ARBITRATION (Arbitrator Must Interpret Terms of Arbitration Clause, not Courts)

        The United States Supreme Court held 5-4 (opinion by Breyer; concurrence by Stevens;
dissents by Rehnquist and Thomas) that decisions on what kind of proceedings parties have agreed to
in otherwise valid arbitration clauses are matters of contract interpretation and thus, within the
province of arbitrators, not the courts.

        Homeowners, Lynn and Burt Bazzle (Bazzle) brought an action against their lender (Green
Tree) in Dorchester County, South Carolina alleging that Green Tree violated provisions of the
Consumer Protection Code.

         Homeowner, Daniel Lackey (Lackey) brought a similar claim against Green Tree in Barnwell
County, South Carolina. In 1997, Bazzle asked the Circuit Court to certify its claim as a class action,
while Green Tree sought to compel arbitration. The Circuit Court certified a class action and
compelled arbitration. Similarly, Lackey sought class certification for its arbitration proceeding against
Green Tree; however, the Circuit Court did not certify this class action. Rather, the arbitrator (who
had already tried the Bazzle case) certified the class action. Following rulings in favor of Bazzle and
Lackey, Green Tree appealed both cases to the South Carolina Court of Appeals (Court of Appeals),
arguing that the contractual provisions in its agreements with Bazzle and Lackey proscribed class
arbitration. The South Carolina Supreme Court withdrew both cases from the Court of Appeals,
assumed jurisdiction, and consolidated the proceedings, holding that class arbitration was permissible
because the contracts were silent on the issue. The United States Supreme Court (the Court) held
that when contracting parties submit to a valid arbitration clause, the question of whether the
agreement forbids class arbitration is for an arbitrator to decide. The Court concluded that, although
the arbitrator certified class arbitration in the Lackey case, there was a strong likelihood that his
decision reflected the Circuit Court’s class certification ruling in the Bazzle case, as he was party to
both. Therefore, the parties must receive an arbitrator’s decision as to the interpretation of their
contracts. [Summarized by R. Grant Cook.]




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