August 28, 2014 Practice Points

Third Circuit Joins Sixth: Class Arbitration Is for Courts to Decide

By Christopher S. Moore

In Opalinski v. Robert Half Int’l Inc.,____ F.3d ____, No. 12-4444, 2014 WL 3733685 (3d Cir. July 30, 2014), the Third Circuit held that whether class arbitration was available was a “substantive issue of arbitrability” for the court, not the arbitrator, to decide absent clear agreement otherwise. In so holding, the Third Circuit joined the Sixth Circuit’s decision in Reed Elsevier, Inc. v. Crockett, 734 F.3d 594 (6th Cir. 2013).

Both named plaintiffs were former employees of defendant Robert Half International (RHI). They brought a class action against RHI alleging violations of the Fair Labor Standards Act. The plaintiffs signed employment agreements that contained an arbitration clause stating that “‘[a]ny dispute or claim arising out of or related to Employee’s employment, termination of employment or any provision of this Agreement’ shall be submitted to arbitration.” Neither agreement mentioned class arbitration.

Based on these agreements, RHI moved to compel arbitration with each of the plaintiffs individually. The district court granted that request, but held that the propriety of individual versus class arbitration was for the arbitrator to decide. The arbitrator then issued a partial award and ruled that the employment agreements permitted class arbitration. RHI moved to vacate the partial award. The district court denied the motion to vacate, and RHI appealed.

The Third Circuit observed that neither the Supreme Court nor the Third Circuit had clearly decided whether courts or arbitrators are supposed to decide the availability of class-wide arbitration. However, it compared that question to one that has long been recognized as being within the court’s prerogative, namely, “whose claims” an arbitrator may decide. Id. at *4. The court noted that the named plaintiffs were contending that their arbitration agreements empowered the arbitrator not only to decide their personal claims but also the claims of additional individuals who were not parties to the action. It held that it was the court’s responsibility to decide whose claims were subject to arbitration, those of the individual plaintiffs or those of an entire class.

The Third Circuit also noted the many substantial differences between a typical, bilateral arbitration and a class arbitration as discussed in Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010). Id. at *5. It said that it believes the Supreme Court signaled that the availability of class-wide arbitration is a “substantive gateway dispute qualitatively [different] from deciding an individual quarrel.” “Traditional individual arbitration and class arbitration are so distinct that a choice between the two goes, we believe, to the very type of controversy to be resolved.” Id. It found this to be a second and independent reason for its holding that the availability of class arbitration was for the courts, and not the arbitrator, to decide.

The Third Circuit recognized that a different result would be reached if “the parties clearly and unmistakably provide otherwise” in their arbitration agreement. Here, however, the agreement was silent on class arbitrability. Thus, the parties had not “clearly and unmistakably” provided that the arbitrator was to determine the availability of class arbitration.

The Supreme Court has not yet decided whether the availability of class arbitration presumptively should be decided by the courts. It will be interesting to see how other courts address this issue, and whether the Supreme Court will put it to rest.

Keywords: litigation, ADR, alternative dispute resolution, class arbitration, classwide arbitration, gateway issue, question of arbitrability, clear and unmistakable, arbitration clause

Christopher S. Moore is with Novack and Macey LLP in Chicago, Illinois.


Copyright © 2016, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).