Will Justices Take up Classwide Arbitration Split?

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By Perry Cooper

Sept. 27 — The most pressing class action question the U.S. Supreme Court may soon accept for review is who gets to decide whether classwide arbitration is available.

The issue came up in a petition for review considered by the justices during their Sept. 26 conference.

Grants from the so-called long conference, which addresses all petitions filed during the summer when the court is not in session, are expected Sept. 29. Denials are likely Oct. 3, the first day of the new term.

So far the Supreme Court doesn’t appear on track to continue its focus on class actions.

Compared to the three cases with class action implications the court heard last term, only one is on its fall docket so far: Microsoft Corp. v. Baker, No. 15-457.

There, in a product liability suit against Microsoft Corp. over Xbox gaming consoles, the court will consider whether plaintiffs can ensure their ability to appeal the denial of class certification by voluntarily dismissing their individual claims.

Class Arbitration: Who Decides?

The question of who makes the call on the availability of classwide arbitration—the court or the arbitrator—has been bubbling up through the federal courts of appeals and state high courts.

The issue turns the typical plaintiff versus defendant arguments on their heads: whereas defendants usually push for arbitration, here they argue that the court should make the call. Plaintiffs argue it should be the arbitrator.

That’s because of the general perception that arbitrators are more likely to interpret an arbitration agreement to allow for class arbitration than are the courts. The cynical explanation for that: arbitrators have more to gain financially in a class proceeding.

The Supreme Court considered, during their Sept. 26 conference, a case where the Third Circuit held that the “arbitrability” decision lies with the courts, Scout Petroleum LLC v. Chesapeake Appalachia LLC, No. 15-1242.

Other Review Petitions Raising Class Issues Considered Sept. 26

Schulman v. LexisNexis Risk & Info. Analytics Grp. Inc. , No. 15-1420: Whether a class settlement resolving allegations that Lexis sold personal data reports to debt collectors was properly approved. Objectors argue class members were inappropriately forced to waive any claim for statutory damages in exchange for injunctive relief.

ABM Indus. Inc. v. Castro, No. 15-1427: Whether penalties sought under California’s Private Attorneys General Act can be included in the calculations to reach the $5 million threshold for federal jurisdiction under the Class Action Fairness Act.

Sergeants Benevolent Ass’n Health & Welfare Fund v. Sanofi-Aventis U.S. LLP, No. 15-1525: Whether class certification was properly denied in a federal racketeering suit alleging doctors wouldn’t have prescribed a Sanofi-Aventis drug if the company hadn’t concealed the risk of liver injury.

In Scout Petroleum, an oil and gas royalty case, the Third Circuit said it was bound by precedent to leave the question for the courts unless the parties’ arbitration agreement “clearly and unmistakably” provides otherwise ( 17 CLASS 12, 1/8/16 ).

Other petitions before the top court highlight the split. The Fourth Circuit held the decision is up to the court in Carlson v. Del Webb Cmtys. Inc., No. 16-137 ( 17 CLASS 335, 4/8/16 ).

But the Fifth Circuit held that the decision is up to the arbitrator in J&K Admin. Mgmt. Servs. Inc. v. Robinson, No. 16-95.

The California Supreme Court went with the pro-plaintiff arbitrator answer in a July employment discrimination decision ( 17 CLASS 791, 8/12/16 ).

Long Shot

The disagreement among the courts makes the issue a logical grant for the court, as does the increasing prevalence of arbitration provisions in consumer and employment contracts.

Of course, having your petition granted by the Supreme Court is always a long-shot, and even more so at the court’s “long conference” after its summer break.

Complicating the situation even further is the current eight-justice make up of the court. It’s likely that the justices want to avoid too-controversial cases that are likely to end in 4-4 split decisions.

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bna.com

To contact the editor responsible for this story: Steven Patrick at spatrick@bna.com

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