After reading the Supreme Court's opinion in Oxford Health Plans, LLC v. Sutter, 133 S. Ct. 2064 (2013), some might have concluded that the Court was ready to resolve who determines the availability of class arbitration court or arbitrator — in the right case. See 133 S. Ct. at 2068 n.2. But on March 9, 2015, the Justices denied certiorari in Opalinski v. Robert Half International, Inc., Case No. 14-625, a case raising just that question. Have intervening opinions and revised arbitration agreements made the issue inconsequential or moot? Practically speaking, most contemporary arbitration agreements likely remove ambiguity about class arbitration by explicitly excluding it from available remedies.
As usual, the Court did not provide reasoning for the denial. Consequently, the certiorari briefs and prior opinions are the only sources of insight into the decision.
The Background.
In November 2014, two employees sought Supreme Court review of the Third Circuit's decision in Opalinski, which involved claims under the Fair Labor Standards Act (FLSA) that the company failed to pay them overtime and improperly classified them as exempt from overtime under the FLSA. Both plaintiffs had signed arbitration agreements that did not mention class arbitration. The Third Circuit panel held that "the availability of classwide arbitration is a substantive 'question of arbitrability' to be decided by a court absent clear agreement otherwise." 761 F.3d 326, 332 (3d Cir. 2014). The panel joined the Sixth Circuit, which had also concluded that "whether an arbitration agreement permits classwide arbitration is a gateway matter . . . reserved 'for judicial determination unless the parties clearly and unmistakably provide otherwise.'" Reed Elsevier Inc. v. Crockett, 734 F. 3d 594, 599 (6th Circuit 2013). Our November 11, 2013, blog article describes the holding in the Reed Elsevier Inc. opinion.
After the Third Circuit denied rehearing, the employees filed a petition for writ of certiorari on November 25, 2014. The petition was premised in large part on Oxford Health Plans, which we analyzed here in a blog article on June 11, 2013.
In Oxford Health Plans, a unanimous Supreme Court held that when a party agrees an arbitrator should decide if an agreement authorizes classwide arbitration, that party cannot later seek judicial intervention if it disagrees with the resulting award.
The employees in Opalinski, however, hung their bid for certiorari on a footnote in Oxford Health Plans, which stated:
133 S. Ct. at 2068 n.2 (citations omitted) (Petitioner at 2).
Coupled with the footnote, the employees asserted "[t]his open question is now the subject of an express division among the Circuits and is affecting the practice of class litigation across the country." (Id.)
Robert Half International, Inc. opposed certiorari in several ways. First, it asserted there was indeed no circuit split regarding whether the availability of class arbitration is a "question of arbitrability" presumptively for the court. In support, the company cited Reed Elsevier Inc. and the recent Ninth Circuit decision in Eshagh v. Terminix Int'l Co., 2014 U.S. App. LEXIS 24194 (9th Cir. 2014). ("Issues that 'contracting parties would likely have expected a court to have decided' are considered 'gateway questions of arbitrability' for courts, and not arbitrators, to decide.")
Second, and perhaps most important, the company argued "the practical significance of the 'who decides' issue has substantially diminished and will continue to do so." (Opposition to Certiorari Pet. at 2.) Indeed, "contracting parties now have every incentive to resolve the issue explicitly in their arbitration agreements – a practice that commentators have recognized is fast becoming the norm." (Id.)
While this was not a startling conclusion, the company added some interesting authority in support. It quoted Justice Ginsburg, during oral argument in the seminal Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662 (2010), saying "[Y]ou win this case, but then all the future AnimalFeeds you lose because they will just put in the arbitration agreement you can't proceed on class." Stolt-Nielsen ultimately held that "a party may not be compelled under the [Federal Arbitration Act] to submit to class arbitration unless there is a contractual basis for concluding the party agreed to do so."
Further, the company asserted that the Third Circuit decision in Opalinski was consistent with Supreme Court precedent, including Stolt-Nielsen. Finally, the company argued that courts were better suited to resolve a question of arbitrability. Arbitrators "might intentionally or unintentionally flavor class arbitration." "[A] decision to certify a class almost certainly would . . . increase the arbitrator's compensation" and raise "financial conflicts of interest." Citing Clancy & Stein, An Uninvited Guest, 63 Bus. Law 55, 73-74 (2007). (Opposition to Certiorari Pet. at 28.)
Bottom Line
While it may have been intellectually stimulating for the Court to decide Opalinski, the potential impact of such an opinion on the conduct of arbitrations diminishes with each passing year.
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