Class Wide Arbitrations – Who Gets to Decide? 

arbitration agreement with gavel

 

From Lexology, Tyler S. Laughinghouse and Ryan A. Glasgow discuss a decision in which the court said a court gets to decide class arbitrability unless the arbitration provision clearly says the arbitrator has the discretion. Tyler and Ryan write:

 In Jpay, Inc. v. Kobel, the Eleventh Circuit ruled that questions of class arbitrability should be decided by a court unless the arbitration provision vests the arbitrator with the discretion to determine class arbitrability in the first instance.

Specifically, the Eleventh Circuit recognized that class arbitrations are fundamentally a “different type of proceeding” and that the question of whether class wide arbitration is available under a particular arbitration provision is a “gateway question” that effects the entire “scope” of the arbitration. As such, the Court reasoned that courts should not presume that the parties intended to allow an arbitrator to make such a critical decision unless the arbitration provision “clearly and unmistakably” provides the arbitrator the authority to decide that initial question. In other words, when a contract is silent on who decides whether class arbitration is permissible under the arbitration provision, a court should rule on that threshold question – not the arbitrator.

After establishing this bright-line rule, the Eleventh Circuit analyzed the arbitration agreement at issue in this case and found that the parties had, in fact, evidenced a clear preference for the arbitrator to decide this threshold question. Specifically, the Court noted that the provision stated that all claims, disputes and controversies would be resolved through arbitration including that “the ability to arbitrate the dispute, claim or controversy shall likewise be determined in the arbitration.” The Court found that those statements were an “unequivocal” expression evidencing the parties’ desire to have the arbitrator to decide the issue.

Source: Class Wide Arbitrations – Who Gets to Decide? – Lexology

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