In Reed Elsevier, Inc. v. Crockett, No. 12-3574 (6th Cir. Nov. 5, 2013), the Sixth Circuit held that whether an arbitration agreement permits arbitration of a class action is a “gateway” issue to be decided by the courts and not by the arbitrators, unless the arbitration agreement clearly grants such authority to the arbitrators.

In 2007, Craig Crockett and his former law firm subscribed to LexisNexis (owned by Reed Elsevier, Inc.). Crockett and LexisNexis later had a billing dispute, and Crockett’s agreement with LexisNexis contained an arbitration clause. Crockett filed an arbitration demand with the American Arbitration Association against LexisNexis on behalf of himself and two putative classes. In response, LexisNexis filed a declaratory judgment action against Crockett, seeking a declaration that the arbitration clause did not authorize class arbitration. The District Court granted summary judgment in favor of LexisNexis.

On November 5, 2013, the Sixth Circuit affirmed the District Court’s decision. An arbitrator has the authority to determine whether an arbitration agreement permits classwide arbitration only if the agreement grants the arbitrator the authority to answer that question. In making this determination, the Sixth Circuit noted that so-called “gateway disputes” in arbitration, including questions of jurisdiction, are reserved for judicial determination “unless the parties clearly and unmistakably provide otherwise.” In contrast, “subsidiary disputes” arise out of, and bear on the final results of, the dispute itself. Unlike gateway disputes, subsidiary disputes relating to an arbitration provision are presumed to be within the province of an arbitrator unless the arbitration provision clearly provides otherwise.

Due to the significance attributed to permitting classwide arbitration of disputes, and given the policy and due process concerns associated with permitting classwide arbitration, the Sixth Circuit held that the issue of whether an arbitration provision permits the arbitration of class actions constitutes a “gateway” dispute to be resolved by the courts, unless the arbitration provision clearly provides otherwise. Because the arbitration provision in the agreement between Crockett and LexisNexis did not expressly permit classwide arbitration but was, at best, “silent or ambiguous” on the issue, the Sixth Circuit held that the arbitration agreement did not clearly provide for classwide arbitration and affirmed the District Court’s decision.

A full copy of the Sixth Circuit’s decision is available here.