The availability of class arbitration has become a heavily litigated topic. Courts and arbitrators alike have grappled with the “who decides” question. Namely – should a court or an arbitrator determine whether an issue is appropriate to proceed in arbitration as a class? This question will only surface if the contract at issue is silent or ambiguous as to class arbitration. Some contracts contain class arbitration waivers. Despite the availability of class action waivers, many parties continue to enter into contracts that are silent or ambiguous as to class arbitration.
The “who decides” question turns on whether class arbitration is a gateway or procedural matter. Gateway matters are substantive, for example whether parties have a valid arbitration agreement, and are reserved for the court. Procedural matters address how an arbitration will proceed, and should be decided by the arbitrator. In its plurality opinion in Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003), the Supreme Court held that the question of class arbitrability was a procedural matter for an arbitrator to decide. Notably, courts commenting on Green Tree have referred to it as not controlling because it is a plurality; however, in his concurrence Justice Stevens notes that in the absence of his concurrence, “there would be no controlling judgment of the Court.” Id. at 455.
In Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010), the Supreme Court held that class arbitration could not be inferred from silence in a contract, but did not answer the “who decides” question due to a stipulation by the parties that there was no agreement as to class arbitration. In AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), the Supreme Court outlined the differences between class and bilateral arbitration, but once more declined to hold who should decide. In Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064 (2013), the Supreme Court approved class arbitration based upon an arbitrator’s finding of an implicit intent to allow class arbitration where a broad arbitration clause existed and the parties never expressly excluded class arbitration. However, the Court still has not squarely address the “who decides” issue.
In the absence of a clear holding by the Supreme Court, federal courts across the country have taken conflicting positions on the class arbitrability question. In a recent New Jersey case, Opalinski v. Robert Half Int’l, Inc., ___ F.3d ___, 2014 WL 3733685 (Jul. 30, 2014), an appellate court held that the question was for the district court. Earlier this year in New York, the Second Circuit held in In re A2P SMS Antitrust Litig., 2014 U.S. Dist. LEXIS 74062 (S.D.N.Y. May 29, 2014) that class arbitrability was a question for the arbitrator, not the court. The Second Circuit reasoned that class arbitrability is “an issue that simply pertains to the conduct of proceedings that are properly before the arbitrator.” Id. at 32.
Until the Supreme Court definitively answers the “who decides” question, federal courts will continue to interpret it in differing ways. The best way to avoid unpredictable results in litigation regarding class arbitration is to explicitly address the matter in a contract.