What is the Summary of Volt Info. Sci., Inc. v. Bd. of Trustees of Leland Stanford Junior Univ.?

Question from cu, What is the Summary of Volt Info. Sci., Inc. v. Bd. of Trustees of Leland Stanford Junior Univ.?

Answer from AI:

Case Overview

Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University is a significant case in the realm of arbitration law in the United States. The case was decided by the U.S. Supreme Court in 1989 and is reported at 489 U.S. 468.

Key Facts

– **Parties Involved**: Volt Information Sciences, Inc. (Volt) and the Board of Trustees of Leland Stanford Junior University (Stanford).
– **Contractual Agreement**: The dispute arose from a construction contract between Volt and Stanford, which included an arbitration clause.
– **State Law**: The contract specified that California law would govern the agreement.

Legal Issue

The primary legal issue was whether the Federal Arbitration Act (FAA) preempts a California state law that allows a court to stay arbitration pending the resolution of related litigation involving third parties not bound by the arbitration agreement.

Supreme Court’s Decision

The Supreme Court held that the FAA does not preempt the California law in this context. The Court reasoned that the parties had agreed to be governed by California law, which includes the provision allowing a stay of arbitration. Therefore, enforcing the state law did not conflict with the FAA’s objectives.

Key Points from the Decision

– **Federal Arbitration Act (FAA)**: The FAA generally promotes arbitration and preempts state laws that undermine arbitration agreements.
– **State Law Application**: The Court found that when parties explicitly agree to be governed by state law, the state law can be applied without conflicting with the FAA.
– **Contractual Freedom**: The decision emphasized the importance of honoring the parties’ contractual choices, including their choice of applicable law.

Implications of the Case

– **Arbitration Agreements**: This case underscores the importance of clearly specifying the governing law in arbitration agreements.
– **State vs. Federal Law**: It illustrates the balance between federal and state law in arbitration matters, particularly when parties have made specific contractual choices.

When to Seek Legal Advice

Given the complexities of arbitration law and the potential for conflicts between state and federal regulations, it is advisable to consult with a legal professional when drafting or disputing arbitration agreements. Legal advice is crucial to ensure that the agreement is enforceable and that the chosen governing law is appropriately applied.

Additional Resources

For further reading, you can refer to the full text of the Supreme Court’s decision in [Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University](https://supreme.justia.com/cases/federal/us/489/468/).

For more information on the Federal Arbitration Act, you can visit the [U.S. Code Title 9 – Arbitration](https://www.law.cornell.edu/uscode/text/9).

Remember, while this summary provides a general understanding, it is always best to consult with a legal professional for specific legal advice tailored to your situation.