February 10, 2016 Practice Points

Third Circuit Vacates Arbitrators' Decision on Availability of Class Arbitration

The parties’ dispute arose after Scout Petroleum purchased Chesapeake Appalachia’s rights under several oil and gas leases in Pennsylvania

by Matthew Mall

On January 5, 2016, a panel for the United States Court of Appeals for the Third Circuit reaffirmed a recent Third Circuit decision holding that the availability of class arbitration is presumed to be a question for the courts, unless the parties’ arbitration agreement “clearly and unmistakably” provides otherwise. Chesapeake Appalachia, LLC v. Scout Petroleum, LLC, et al., No. 15-1275 (3d Cir. Jan. 5, 2016). The parties’ incorporation of the rules of the American Arbitration Association into their arbitration agreement did not overcome that presumption, notwithstanding that some of those rules delegate class arbitrability questions to the arbitrator.

The parties’ dispute arose after Scout Petroleum purchased Chesapeake Appalachia’s rights under several oil and gas leases in Pennsylvania. The leases contained an arbitration provision, which provided that arbitration would be resolved “in accordance with the rules of the American Arbitration Association.” Scout filed a demand for arbitration with the AAA on behalf of itself and similarly situated lessors, alleging that Chesapeake paid insufficient royalties.

Premium Content For:
  • Litigation Section
Join - Now