Fifth Circuit Says Arbitrator Can Decide If Class Proceeding Is Permissible
Interpreting a broadly-written arbitration clause, a Fifth Circuit panel in Robinson v. J&K Administrative Management Services, No. 15-10360 (5th Cir. Mar. 17, 2016) held that it is the arbitrator who properly decides whether the clause encompasses the class issue. The "who decides" issue has been controversial since the U.S. Supreme Court's fractured 2003 Green Tree opinion.
In a reversal of traditional roles, the plaintiff-employee moved to compel arbitration of her FLSA claims after both her attempts to arbitrate and a communication from JAMS were ignored by the defendant. In upholding the district court, the panel held that the broad language of the arbitration clause: “claims challenging the validity or enforceability of this Agreement (in whole or in part) or challenging the applicability of the Agreement to a particular dispute or claim” encompassed the issue of whether the plaintiff could proceed on a collective basis in arbitration, and thus was properly decided by an arbitrator.
Threshold, or "gateway" questions such as the arbitrability of a dispute or the availability of the class mechanism, the Panel noted, are typically decided by the court unless the arbitration agreement provides otherwise. Here, the broad arbitration language did just that.
The Fifth Circuit relied on its prior decision in Pedcor Management Co. Inc. Welfare Benefit Plan v. Nations Personnel of Texas, Inc., 343 F.3d 355 (5th Cir. 2003) which in turn had adopted the reasoning of the Green Tree plurality. The defendant employer, who wanted the district court to decide the class issue, argued that the Supreme Court's 2010 decision in Stolt-Nielsen undercut the Fifth Circuit's Pedcor holding. The Fifth Circuit rejected this argument, stating that the "who decides" issue was not decided in Stolt-Nielsen, nor did Stolt-Nielsen articulate a national policy forcing courts to address the issue where an arbitration clause specified otherwise.
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About Adam Gonnelli
Adam Gonnelli is a partner in Faruqi & Faruqi, LLP’s New York office and focuses his practice on complex civil litigation.