Court, not arbitrator, decides if class arbitration is available

Where employers have entered into pre-dispute arbitration agreements with their workers, who decides if the workers can force the company to arbitrate class claims: a judge or an arbitrator? The answer can often drive the entire case. If an arbitrator gets to decide the question, it means the case effectively goes to the arbitrator, even if just for that issue. An employer that entered into an arbitration agreement, which does not permit class actions, finds itself having to arbitrate a class action, or at least having to arbitrate whether it should have to arbitrate a class action.

This was the reasoning by the Eighth Circuit in a recent decision where it observed that sending the case to the arbitrator, if even for just that one issue, would mean “(t)he benefits of arbitration are substantially lessened in a class arbitration proceeding.” Accordingly, the court joined the Third, Fourth and Sixth Circuits, holding that judges in court should decide, as a threshold of any arbitration action, whether any given arbitration agreement permits class actions. This leaves the California Supreme Court the lone holdout for the more plaintiff-friendly position that would send the case to an arbitrator.

Source: Catamaran Corp. v Towncrest Pharmacy

Tenth Circuit holds conflicting arbitration agreements mean no arbitration agreement

The company and a worker entered into six agreements, each of which contained an arbitration provision. While there was no doubt the parties intended to arbitrate any disputes between them covered by the agreements, the arbitration provisions were not identical. They differed in their details.

The agreements contain conflicting arbitration provisions. See Aplt. App. 167–87. Suffice it to say the conflicts involve (1) which rules will govern, (2) how the arbitrator will be selected, (3) the notice required to arbitrate, and (4) who would be entitled to attorneys’ fees and on what showing.

The Tenth Circuit held those differences were “irreconcilable” and as such established that there had been no meeting of the minds. Worse, as is often in contracts, there was no clause saying which agreement would control over the others in the event of a conflict. Accordingly the Court refused to compel arbitration.

The decision reminds parties to review all their agreements and to keep the terms of their arbitration provisions, in particular, consistent.

The case was Ragab v. Howard, case no. 15-1444 (10th Cir. 11/21/16).