Third Circuit: Courts, Not Arbitrators, Decide Whether to Require Classwide Arbitration

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Recent Supreme Court precedent has clearly reinforced the validity of contractual class action/arbitration waivers.  In AT&T Mobility v. Concepcion, the Court made clear that class action waivers are enforceable, even if state common law would hold them unconscionable.   In American Express Co. v. Italian Colors, the Court extended the same enforceability to class arbitration waivers, even where they effectively eliminate a plaintiff’s ability to vindicate a federal statutory right.

But what if an arbitration provision is silent about the availability of a classwide proceeding?  Can a defendant be required to submit to classwide arbitration?  And is that a decision for the court or for the arbitrator?

According to a Third Circuit opinion issued last week, whether an arbitration provision can be construed to permit classwide arbitration is a question for the court.  In Opalinski v. Robert Half International, the issue was whether this question is a “question of arbitrability.”  The Supreme Court has held that questions of arbitrability—a narrow range of “gateway” issues that go to whether a case is to be arbitrated at all—are presumptively for courts to decide.  Typical questions of arbitrabiltiy include whether the parties are bound by a particular arbitration provision, or whether the provision applies to a certain type of controversy.  Other questions are deemed “procedural” questions that are for the arbitrator to decide.

The Supreme Court has not decided which category characterizes the availability of class arbitration.  A plurality opinion in 2003 concluded that the question was not one of arbitrability, but more recent opinions have emphasized that the issue remains unresolved by the Court.

In holding that the availability of classwide arbitration is a question of arbitrability, the Third Circuit followed the lead of the Sixth Circuit—the only other circuit thus far to squarely weigh in on the issue.  The Third Circuit reasoned that the availability of class arbitration implicates whose claims the arbitrator may resolve, since the procedure would empower the arbitrator to resolve claims of individuals who are not parties to the litigation.  The panel also concluded that allowing class arbitration implicates the type of controversy submitted to arbitration because, as the Supreme Court has recognized in the past, class arbitration changes the nature of the arbitration to such a degree that parties should not be presumed to have consented to it merely because they agreed to the arbitration provision.

Thus, in the Third Circuit, courts will presume that the availability of classwide arbitration is an issue for the court.  What can overcome the presumption?  Nothing short of “express contractual language unambiguously delegating the question of arbitrability to the arbitrator. . . . Silence or ambiguous contractual language is insufficient to rebut the presumption.”

It remains to be seen whether other circuits will follow suit, or whether this question will ultimately work its way up to the Supreme Court.  In the meantime, would-be class action defendants who wish to avoid being forced into class arbitration by an arbitrator can protect themselves by ensuring that their contracts expressly (i) prohibit class arbitration and (ii) provide that all questions of arbitrability are to be decided by a court of competent jurisdiction.

Topics:  American Express v Italian Colors Restaurant, Arbitration, Arbitrators, AT&T Mobility v Concepcion, Class Action, Class Action Arbitration Waivers, Robert Half, SCOTUS

Published In: Alternative Dispute Resolution (ADR) Updates, Civil Procedure Updates, General Business Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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