BedbugThe Fourth Circuit ruled that Rent-a-Center (RAC) won't have to answer in court for leasing a trundle bed full of bedbugs to Christine and Antwan Seney.

The vermin had bitten the Seneys' son, for whom they'd gotten the trundle, and when RAC retrieved the rental its movers dragged the bed through the Seneys' home, spreading the critters to the entire abode.

The district court granted RAC's motion to compel arbitration under a clause in the rental contract. Affirming, the Fourth Circuit held that a Federal Trade Commission ban on "pre-dispute" arbitration applied only to breach of warranty claims relating to the sale of goods, not to leases. Seney v. Rent-a-Center, Inc., No. 13-1064 (4th Cir. Dec. 11, 2013).

But in the course of getting there, the panel raised a question that points to a way around the deluge of pro-arbitration and anti-class rulings that have poured out of the U.S. Supreme Court in recent years. The parties's arguments, the court noted, "expose an important tension between major doctrines of statutory construction." Id. slip op. at 8. The panel explained:

In Shearson/American Express, Inc. v. McMahon, the Supreme Court instructed courts to evaluate the arbitrability of statutory rights in light of the liberal “federal policy favoring arbitration.”  482 U.S. 220, 226 (1987).  McMahon established that if a statute is silent with respect to arbitration, courts should presume its permissibility.  Id. at 226–27.  McMahon, however, did not address whether agencies should also presume the permissibility of arbitration.  The FTC, the agency that promulgated regulations interpreting the MMWA, did not employ a pro-arbitration presumption.  See 40 Fed. Reg. at 60,210.  Rather, as explained above, it concluded that pre-dispute binding arbitration was impermissible under the Act.  16 C.F.R. § 703.5(j).  Pursuant to the Supreme Court’s directive in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., that interpretation, if reasonable, should control.  467 U.S. 837, 842–43 (1984).

Id. at 8-9. Although the court concluded that it need not decide "whether agencies" — like courts — "should also presume the permissibility of arbitration", the suggestion that courts may have to defer to agencies' interpretation of their statutory authority to ban arbitration strikes Blawgletter as bold. It for sure runs counter to the Supreme Court's late leanings.

It also seems to conflict with a recent ruling by the Fifth Circuit on whether the National Labor Relations Board could prohibit employers from forcing employees to waive class or collective treatment of labor disputes. D. R. Horton, Inc. v. NLRB, No. 12-60031 (5th Cir. Dec. 3, 2013) (striking down Board's conclusion that employer violated National Labor Relations Act by mandating that employees enter into arbitration agreement that waived right to pursue collective or class action). The Fifth Circuit appears to have given no deference to the NLRB's construction of the National Labor Relations Act and instead applied the pro-arbitration presumption that the Seney panel questioned.

How courts reconcile these strands should prove interesting.