December 18, 2017

Can an Arbitrator Certify an Opt-Out Class?

Mitchell L. Marinello – December 18, 2017

On July 24, 2017, by summary order, the Second Circuit reversed a district court decision that confirmed an arbitral award certifying a class that included "absent class members"; that is, members of a described class whose names were not in the caption and who did not opt into the class. Jock v. Sterling Jewelers, Inc., 15-3947-cv (2nd Circuit July 24, 2017).

The court remanded the case for further consideration of the "narrow question presented here," which is "whether the arbitrator had the authority to certify a class that included absent class members." The court disagreed with the following part of the district court's analysis:

The district court suggested that Justice Alito's concurrence in Oxford Health Plans (joined by Justice Thomas) provides additional support for its conclusion here, which is based principally (but erroneously) on law of the case.

The circuit found that Justice Alito did not directly address the narrow question presented. Pointing to this error, the Second Circuit did not answer the question itself but instead remanded "for further consideration of whether the arbitrator exceeded her authority in certifying a class that contained absent class members who have not opted in."

Many arbitrators have wondered what authority they have to handle class actions. This case, once it is finally decided, may provide some guidance.

Mitchell L. Marinello is a partner at Novack and Macey LLP in Chicago, Illinois.


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Mitchell L. Marinello – December 18, 2017