In the case of Prima Paint Corp. v. Flood & Conklin Mfg. Co., the U.S Supreme Court was tasked with determining whether a claim of fraud in the inducement should be resolved by a court or an arbitrator, under an agreement that broadly provides for arbitration of all disputes arising out of contractual arrangements. The dispute arose when Prima Paint Corporation filed suit against Flood & Conklin Manufacturing Company alleging that it had been fraudulently induced into entering into a contract and sought to rescind it on those grounds. However, their contract contained an arbitration clause which required any dispute arising from the contract to be settled through arbitration. The Supreme Court held that if the allegation pertains specifically to fraudulent inducement within the arbitration clause itself, then courts have jurisdiction over such claims; however, if allegations are directed at whole contracts (not just at its arbitral provision), they must go before arbitrators as per agreed terms in said contracts' clauses. This decision established what is now known as "Prima Paint doctrine", separating general contractual issues from specific ones related to agreements about resolving disputes via arbitration.

In the dissenting opinion for Prima Paint Corp. v. Flood & Conklin Mfg. Co., Justice Black disagreed with the majority's decision to separate arbitration clauses from other aspects of a contract, arguing that this approach was not supported by federal law or precedent and could lead to unjust results. He contended that if a party alleges fraud in the inducement of an entire contract, it should be up to a court rather than an arbitrator to decide whether such fraud occurred before any issues are sent to arbitration. In his view, allowing an arbitrator instead of a judge to make this determination would undermine parties' rights under federal law and potentially allow fraudulent contracts to be enforced simply because they contain an arbitration clause.