Pros and Cons of Arbitration - Association of Corporate ... and Cons of Arbitration George T ... • Difficulty of getting quick equitable relief such as ... RHI proceeded with the

1

Pros and Cons of Arbitration

George T. (Buck) LewisShareholder, Baker Donelson

AAA Arbitrator

901.577.2256

[email protected]

2www.bakerdonelson.com© 2015 Baker, Donelson, Bearman, Caldwell & Berkowitz, PC

POSSIBLE PROS OF ARBITRATION

• Speed of resolution

• Reduced costs

• Arbitrators with specialized expertise

• Privacy/Lack of Transparency

• Forum selection

• Selection of arbitrator or method of selection

• Elimination/mitigation of class action risks

• Arbitration with non-signatories

• Limited future precedential impact

2


POSSIBLE CONS OF ARBITRATION

• Filing fees and arbitrators' fees

• Lack of discovery

• No appeal and VERY limited review of arbitrator decision and conduct

• Privacy/Lack of transparency

• Ease of filing for multiple plaintiffs

• Ease of filing and maintenance of baseless claims compared to federal standard under Twombly

• Difficulty of getting quick equitable relief such as TROs and temporary injunctions. (See handouts re Interim Measures and Emergency Measures in AAA rules.)


POSSIBLE CONS OF ARBITRATION (continued)

• Possibility of simultaneous litigation and arbitration

• Possibility of litigation, including appellate litigation, over arbitrability issues under FAA and TAA

• Uncertainty regarding procedural and evidentiary issues due to lack of clear rules and precedent

• Lack of recourse if arbitrators do not follow the law

• Arbitration with non-signatories

• Limited precedential impact

3


CHECKLIST FOR ARBITRATION AGREEMENT AND EXAMPLES OF AGREEMENTS

• Method of selection

• Arbitrator qualifications and location

• Location of hearing

• Governing law on primary dispute and arbitrability

• Conditions precedent such as mediation (see new AAA Commercial rule 9.)

• Preliminary relief, interim measures, emergency measures under AAA rules

• Consolidation

• Document discovery and production including electronically stored information

• Deposition limitations and scope of use


CHECKLIST FOR ARBITRATION AGREEMENT AND EXAMPLES OF AGREEMENTS (continued)

• Duration of matter and length of multiple hearings if necessary

• Limitation upon remedies such as punitive damages, specific performance, and damages caps

• Baseball arbitration

• Attorneys' fees

• Reasoned opinion

• Confidentiality

• Contractual limitations periods and tolling of limitations periods during mediation

4


Questions?

https://www.adr.org/aaa/ShowProperty?nodeId=/UCM/ADRSTG_004103

R-37. Interim Measures

(a) The arbitrator may take whatever interim measures he or she deems necessary,

including injunctive relief and measures for the protection or conservation of property

and disposition of perishable goods.

(b) Such interim measures may take the form of an interim award, and the arbitrator may

require security for the costs of such measures.

(c) A request for interim measures addressed by a party to a judicial authority shall

not be deemed incompatible with the agreement to arbitrate or a waiver of the right

to arbitrate.

R-38. Emergency Measures of Protection

(a) Unless the parties agree otherwise, the provisions of this rule shall apply to

arbitrations conducted under arbitration clauses or agreements entered on or after

October 1, 2013.

(b) A party in need of emergency relief prior to the constitution of the panel shall notify

the AAA and all other parties in writing of the nature of the relief sought and the

reasons why such relief is required on an emergency basis. The application shall also

set forth the reasons why the party is entitled to such relief. Such notice may be given

by facsimile or e-mail or other reliable means, but must include a statement certifying

that all other parties have been notified or an explanation of the steps taken in good

faith to notify other parties.

(c) Within one business day of receipt of notice as provided in section (b), the AAA shall

appoint a single emergency arbitrator designated to rule on emergency applications.

The emergency arbitrator shall immediately disclose any circumstance likely, on the

basis of the facts disclosed on the application, to affect such arbitrator’s impartiality


or independence. Any challenge to the appointment of the emergency arbitrator must

be made within one business day of the communication by the AAA to the parties of

the appointment of the emergency arbitrator and the circumstances disclosed.

(d) The emergency arbitrator shall as soon as possible, but in any event within two

business days of appointment, establish a schedule for consideration of the application

for emergency relief. Such a schedule shall provide a reasonable opportunity to all

parties to be heard, but may provide for proceeding by telephone or video conference

or on written submissions as alternatives to a formal hearing. The emergency arbitrator

shall have the authority vested in the tribunal under Rule 7, including the authority to

rule on her/his own jurisdiction, and shall resolve any disputes over the applicability

of this Rule 38.

(e) If after consideration the emergency arbitrator is satisfied that the party seeking the

emergency relief has shown that immediate and irreparable loss or damage shall

result in the absence of emergency relief, and that such party is entitled to such relief,

the emergency arbitrator may enter an interim order or award granting the relief and

stating the reason therefore.

(f) Any application to modify an interim award of emergency relief must be based on

changed circumstances and may be made to the emergency arbitrator until the

panel is constituted; thereafter such a request shall be addressed to the panel. The

emergency arbitrator shall have no further power to act after the panel is constituted

unless the parties agree that the emergency arbitrator is named as a member of

the panel.

(g) Any interim award of emergency relief may be conditioned on provision by the party

seeking such relief for appropriate security.

(h) A request for interim measures addressed by a party to a judicial authority shall not


be deemed incompatible with this rule, the agreement to arbitrate or a waiver of the

right to arbitrate. If the AAA is directed by a judicial authority to nominate a special

master to consider and report on an application for emergency relief, the AAA shall

proceed as provided in this rule and the references to the emergency arbitrator shall

be read to mean the special master, except that the special master shall issue a report

rather than an interim award.

(i) The costs associated with applications for emergency relief shall initially be

apportioned by the emergency arbitrator or special master, subject to the power

of the tribunal to determine finally the apportionment of such costs

32. Interim Measures

At the request of any party, the arbitrator may grant any remedy or relief that

would have been available to the parties had the matter been heard in court,

as stated in Rule 39(d), Award.

A request for interim measures addressed by a party to a judicial authority shall

not be deemed incompatible with the agreement to arbitrate or a waiver of the

right to arbitrate.

FindLaw Caselaw United States US 3rd Cir. OPALINSKI v. ROBERT HALF INTERNATIONAL INC

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OPALINSKI v. ROBERT HALF INTERNATIONAL INC

United States Court of Appeals,Third Circuit.

David OPALINSKI; James McCabe, on behalf of themselves and all others

similarly situated v. ROBERT HALF INTERNATIONAL INC; Robert Half

Corporation; Appellants.

No. 12–4444.

Decided: July 30, 2014

Before AMBRO, JORDAN, and ROTH, Circuit Judges. Richard L. Alfred, Esquire, (Argued), Patrick J. Bannon,

III, Esquire, Carla J. Easton, Esquire, James M. Hlawek, Esquire, Seyfarth Shaw LLP, Boston, MA, Christopher

H. Lowe, Esquire, Seyfarth Shaw LLP, Alexander Wood, Esquire, Paul Hastings, New York, NY, James M.

Harris, Esquire, Seyfarth Shaw LLP, Los Angeles, CA, Adam N. Saravay, Esquire, McCarter & English, Newark,

NJ, for Appellants. Shannon Liss–Riordan, Esquire, (Argued), Lichten & Liss–Riordan, P.C., Boston, MA,

Anthony L. Marchetti, Jr., Esquire, Marchetti Law, P.C., Cherry Hill, NJ, for Appellees.

OPINION OF THE COURT

We consider whether a district court, rather than an arbitrator, should decide if an agreement to arbitrate

disputes between the parties to that agreement also authorizes classwide arbitration. Because of the

fundamental differences between classwide and individual arbitration, and the consequences of proceeding

with one rather than the other, we hold that the availability of classwide arbitration is a substantive “question

of arbitrability” to be decided by a court absent clear agreement otherwise.

I. Background

Plaintiffs David Opalinski and James McCabe (sometimes collectively referred to as “Appellees”), former

employees of Robert Half International, Inc. (“RHI”), bring this action on behalf of themselves and other

individuals, alleging that RHI failed to pay them overtime and improperly classified them as overtime-exempt

employees in violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq. Both McCabe and

Opalinski signed employment agreements that contained arbitration provisions. They provide that “[a]ny

dispute or claim arising out of or relating to Employee's employment, termination of employment or any

provision of this Agreement” shall be submitted to arbitration. Neither agreement mentions classwide

arbitration.

RHI moved to compel arbitration of Opalinski and McCabe's claims on an individual basis. In October 2011,

the District Court granted the motion in part, thus compelling arbitration but holding that the propriety of

individual (also known as bilateral) versus classwide arbitration was for the arbitrator to decide (the “October

2011 Order”). The Court subsequently entered an order terminating the case. Rather than immediately

appealing the October 2011 Order, RHI proceeded with the arbitration process and did not return to the

District Court until the arbitrator issued a partial award and ruled that the employment agreements permitted

classwide arbitration. RHI then moved the District Court to vacate the arbitrator's partial award. The District

Court denied the motion to vacate (the “December 2012 Order”).

RHI appeals the December 2012 Order. The crux of the appeal, however, is not the underlying issue whether

the employment agreements between the parties permit classwide as opposed to only bilateral arbitration.

Rather, the question before us is who decides—that is, should the availability of classwide arbitration have

been decided by the arbitrator or by the District Court?

II. Jurisdiction and Standard of Review

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Page 1 of 5OPALINSKI v. ROBERT HALF INTERNATIONAL INC - FindLaw

2/23/2015http://caselaw.findlaw.com/us-3rd-circuit/1674095.html

The District Court had jurisdiction over this action per 28 U.S.C. § 1331 because Plaintiffs brought claims

under the FLSA. We have jurisdiction under 9 U.S.C. § 16(a)(1)(D) (“An appeal may be taken from ․ an order ․

confirming or denying confirmation of an award or partial award[.]”).

Appellees argue that this appeal is untimely because although RHI styles it as one based on the District Court's

December 2012 Order denying its motion to vacate, the appeal actually challenges only the October 2011

Order's holding that the availability of classwide arbitration is a question for the arbitrator. The October 2011

Order, Appellees contend, was a final decision that was immediately appealable on an interlocutory basis, and

RHI's attempt now to appeal the merits of that decision is untimely. See Fed. R.App. P. 4(a)(1)(A) (party

seeking to appeal a final decision must file notice of appeal within 30 days of entry of the judgment or order

appealed from).

The Federal Arbitration Act “preserves immediate appeal of any ‘final decision with respect to an arbitration,’ ․

whether the decision is favorable or hostile to arbitration.” Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79,

86, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000) (quoting 9 U.S.C. § 16(a)(3)). A “final decision” is one that “ends the

litigation on the merits and leaves nothing more for the court to do but execute the judgment.” Id. (quotation

marks and citation omitted). Here the October 2011 Order was not a final decision because it effected only a

non-final, administrative closure, and explicitly acknowledged the potential need for further litigation before

the District Court. Freeman v. Pittsburgh Glass Works, LLC, 709 F.3d 240, 247 (3d Cir.2013) (“administrative

closings are not final orders”). RHI timely appealed the District Court's final decision—the December 2012

Order—and we have jurisdiction to consider this appeal.

“On appeal from a district court's ruling on a motion to confirm or vacate an arbitration award, we review its

legal conclusions de novo and its factual findings for clear error.” Sutter v. Oxford Health Plans LLC, 675 F.3d

215, 219 (3d Cir.2012), aff'd, ––– U.S. ––––, 133 S.Ct. 2064, 186 L.Ed.2d 113 (2013).

III. Discussion

We decide first what arguments we may properly consider on this appeal. Appellees contend that because RHI

did not argue in its Motion to Vacate that the District Court (and not the arbitrator) should have determined

the permissibility of classwide arbitration, it has waived its right to raise that argument in this appeal.

However, waiver, which is intended to protect litigants from unfair surprise and prevent district courts from

being reversed on grounds that were never argued before them, does not apply in this instance. Appellees were

well aware of RHI's argument that the District Court, not the arbitrator, should decide the availability of

classwide arbitration: the Court expressly addressed the issue in its October 2011 Order, RHI objected to the

arbitrator's determination whether classwide arbitration was permissible throughout the arbitration

proceedings, and RHI did flag the “who decides” issue in its Motion to Vacate by reminding the Court that

“from the outset [RHI] has maintained that the class action issue is for this Court to decide.” Thus, our

addressing the issue on appeal prejudices neither Appellees nor the District Court.

We proceed to the merits of the case and consider whether, in the context of an otherwise silent contract, the

availability of classwide arbitration is to be decided by a court rather than an arbitrator. The analysis is

twofold. We decide whether the availability of classwide arbitration is a “question of arbitrability.” See

Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002) (internal

quotation marks and citation omitted). If yes, it is presumed that the issue is “for judicial determination unless

the parties clearly and unmistakably provide otherwise.” Id. (internal quotation marks, citations, and

alteration omitted). If the availability of classwide arbitration is not a “question of arbitrability,” it is

presumptively for the arbitrator to resolve. See First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944–45, 115

S.Ct. 1920, 131 L.Ed.2d 985 (1994).

A. Is the availability of classwide arbitration a “question of arbitrability”?

“[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which

he has not agreed so to submit.” Howsam, 537 U.S. at 83 (internal quotation marks and citation omitted).

While federal policy favors arbitration agreements, an arbitrator has the power to decide an issue only if the

parties have authorized the arbitrator to do so. Because parties frequently disagree whether a particular

dispute is arbitrable, courts play a limited threshold role in determining “whether the parties have submitted a

particular dispute to arbitration, i.e., the ‘question of arbitrability [.]” ’ Id. at 83 (emphasis in original).

“Questions of arbitrability” are limited to a narrow range of gateway issues. They may include, for example,

“whether the parties are bound by a given arbitration clause” or “whether an arbitration clause in a concededly

binding contract applies to a particular type of controversy.” Id. at 84. On the other hand, questions that the

parties would likely expect the arbitrator to decide are not “questions of arbitrability.” Id. Those include “

‘procedural’ questions that grow out of the dispute and bear on its final disposition[,]” as well as allegations of

waiver, delay, or similar defenses to arbitrability. Id.

The Supreme Court has not yet decided whether the availability of class arbitration is a “question of

arbitrability.” In Green Tree Financial Corp. v. Bazzle, 539 U.S. 444, 123 S.Ct. 2402, 156 L.Ed.2d 414 (2003), a

plurality of the Court concluded that the availability of classwide arbitration was not a question of arbitrability



because “it concerns neither the validity of the arbitration clause nor its applicability to the underlying dispute

between the parties ․ [, but only] contract interpretation and arbitration procedures.” Id. at 451, 452–53.

Subsequent Supreme Court decisions, however, cast doubt on the Bazzle plurality's decision. In Stolt–Nielsen

S.A. v. AnimalFeeds International Corp., 559 U.S. 662, 130 S.Ct. 1758, 176 L.Ed.2d 605 (2010), the Court

specifically noted that “only the plurality” in Bazzle decided that an arbitrator should determine whether a

contract permits classwide arbitration and Bazzle is accordingly not binding on this point. Id. at 680. And in

Oxford Health Plans LLC v. Sutter, ––– U.S. ––––, 133 S.Ct. 2064, 186 L.Ed.2d 113 (2013), the Court again

stated that it “has not yet decided whether the availability of class arbitration” is for a court or for an arbitrator

to resolve. Id. at 2069 n. 2.

Our Court has also not decided whether the availability of classwide arbitration is a question of arbitrability.

We briefly addressed the issue in Quilloin v. Tenett HealthSys. Philadelphia, Inc., 673 F.3d 221 (3d Cir.2012),

where we concluded that classwide arbitration was not a question of arbitrability. Id. at 232 (“Silence regarding

class arbitration generally indicates a prohibition against class arbitration, but the actual determination as to

whether class action is prohibited is a question of interpretation and procedure for the arbitrator.”). However,

this single sentence addressing “who decides” is a dictum because at the district court level the parties in

Quilloin had already agreed that the arbitrator should be the one to determine whether the contract provided

for class action arbitration. See Quilloin v. Tenett HealthSys. Philadelphia, Inc., 763 F.Supp.2d 707, 727 n. 22

(E.D.Pa.2011). Additionally, Quilloin relied solely on the Supreme Court's decision in Stolt–Nielsen for its

conclusion that the availability of class arbitration is a question of procedure for the arbitrator to decide. See

673 F.3d at 232. This reliance falls short: not only does Stolt–Nielsen expressly state that the Supreme Court

has not yet resolved the “who decides” issue but, as explained below, the opinion also indicates that the

availability of classwide arbitration is a question of substance rather than procedure. Thus, whether the

availability of classwide arbitration is a “question of arbitrability” to be presumptively decided by a court

remains an open question.

Our Court has explained that questions of arbitrability generally fall into two categories—(1) when the parties

dispute “whether [they] have a valid arbitration agreement at all” (whose claims the arbitrator may

adjudicate); and (2) “when the parties are in dispute as to whether a concededly binding arbitration clause

applies to a certain type of controversy” (what types of controversies the arbitrator may decide). Puleo v. Chase

Bank USA, N.A., 605 F.3d 172, 178 (3d Cir.2010) (en banc) (internal quotation marks and citation omitted).

The crucial consideration is the expectation of the contracting parties: We do not “forc[e] parties to arbitrate a

matter that they may well not have agreed to arbitrate.” Howsam, 537 U.S. at 83. We now hold that whether an

agreement provides for classwide arbitration is a “question of arbitrability” to be decided by the District Court.

1. The availability of class arbitration implicates whose claims the arbitrator may resolve.

The Supreme Court has long recognized that a district court must determine whose claims an arbitrator is

authorized to decide. In John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 84 S.Ct. 909, 11 L.Ed.2d 898

(1964), the defending company claimed it was not bound by the arbitration provisions of an agreement signed

by a company with which it had merged. Id. at 546–47. The Court stated that there was “no doubt” that the

issue “whether or not the company was bound to arbitrate, as well as what issues it must arbitrate, is a matter

to be determined by the Court․” Id. at 546–47 (internal quotation marks and citations omitted). Similarly, in

First Options individual business owners argued that they were not personally bound by an arbitration

agreement they had signed on behalf of their wholly owned company. See 514 U.S. at 941–42. The Court again

concluded that this was a “question of arbitrability” to be presumptively determined by a court absent clear

contractual language to the contrary. Id. at 946–47. Our Circuit has also held repeatedly that whose claims an

arbitrator may decide is an issue for the courts. See, e.g., Allstate Settlement Corp. v. Rapid Settlements, Ltd.,

559 F.3d 164, 169 (3d Cir.2009) (“[w]hether the arbitrator's award binds [a third-party] is a question that the

court must decide”); Sandvik AB v. Advent Int'l Corp., 220 F.3d 99, 107 (3d Cir.2000) (determining “whether

Huep's signature bound Advent” was “a necessary prerequisite to the court's fulfilling its role of determining

whether the dispute is one for an arbitrator to decide”).

Here, based on the agreement to arbitrate with Opalinski and McCabe, RHI moved to compel bilateral

arbitration with each of them. By seeking classwide arbitration, however, Opalinski and McCabe contend that

their arbitration agreements empower the arbitrator to resolve not only their personal claims but the claims of

additional individuals not currently parties to this action. The determination whether RHI must include absent

individuals in its arbitrations with Opalinski or McCabe affects whose claims may be arbitrated and is thus a

question of arbitrability to be decided by the court. See Stolt–Nielsen, 559 U.S. at 683 (“parties may specify

with whom they choose to arbitrate their disputes” (emphasis in original)); id. at 686 (in classwide arbitration,

the arbitrator “no longer resolves a single dispute between the parties to a single agreement, but instead

resolves many disputes between hundreds or perhaps even thousands of parties”). Additionally, as Justice

Alito warned in his concurrence in Oxford Health, courts should be wary of concluding that the availability of

classwide arbitration is for the arbitrator to decide, as that decision implicates the rights of absent class

members without their consent. 133 S.Ct. at 2071–72 (Alito, J., concurring) (“at least where absent class

members have not been required to opt in, it is difficult to see how an arbitrator's decision to conduct class

proceedings could bind absent class members who have not authorized the arbitrator to decide on a classwide

basis which arbitration procedures are to be used” (emphasis in original)).



2. The availability of classwide arbitration implicates the type of controversy submitted to arbitration.

The availability of classwide arbitration is a “question of arbitrability” for a second, independent reason—it

concerns “whether a concededly binding arbitration clause applies to a certain type of controversy.” Puleo, 605

F.3d at 178 (internal quotation marks and citation omitted); see also Granite Rock Co. v. Int'l Bhd. of

Teamsters, 561 U.S. 287, 297, 130 S.Ct. 2847, 177 L.Ed.2d 567 (2010) (“[A] court may order arbitration of a

particular dispute only where the court is satisfied that the parties agreed to arbitrate that dispute

[ .]” (emphasis in original)).

Opalinski and McCabe argue that, because class actions in the context of traditional litigation are a procedural

construct, the availability of classwide arbitration is also a procedural question. In Stolt–Nielsen, however, the

Supreme Court expressly disclaimed classwide arbitration as simply procedural. 559 U.S. at 687 (the

differences between class and individual arbitration cannot be characterized as a question of “merely what

‘procedural mode’ [i]s available to present [a party's] claims”). The Court stated that “class-action arbitration

changes the nature of arbitration to such a degree that it cannot be presumed the parties consented to it by

simply agreeing to submit their disputes to an arbitrator.” Id. at 685. To further the point, it continued on to

explain the numerous differences between bilateral and class arbitration, notably that

[ (1) a]n arbitrator ․ no longer resolves a single dispute between the parties to a single agreement, but instead

resolves many disputes between hundreds or perhaps even thousands of parties ․ [; (2) ] the presumption of

privacy and confidentiality that applies in many bilateral arbitrations [does] not apply in class arbitrations[,]

thus potentially frustrating the parties' assumptions when they agreed to arbitrate[; (3) t]he arbitrator's award

no longer purports to bind just the parties to a single arbitration agreement, but adjudicates the rights of

absent parties as well[; and (4) ] the commercial stakes of class-action arbitration are comparable to those of

class-action litigation, even though the scope of judicial review is much more limited.

Id. at 686–87 (internal quotation marks and citations omitted). In AT & T Mobility LLC v. Concepcion, –––

U.S. ––––, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011), the Court similarly emphasized that the “changes brought

about by the shift from bilateral arbitration to class-action arbitration are fundamental,” concluding that “[a]

rbitration is poorly suited to the higher stakes of class litigation” and that classwide arbitration “is not

arbitration as envisioned by the FAA.” Id. at 1750, 1751–53 (internal quotation marks and citations omitted)

(emphasis added).

Accordingly, we read the Supreme Court as characterizing the permissibility of classwide arbitration not solely

as a question of procedure or contract interpretation but as a substantive gateway dispute qualitatively

separate from deciding an individual quarrel. Traditional individual arbitration and class arbitration are so

distinct that a choice between the two goes, we believe, to the very type of controversy to be resolved. We turn

below to the support our Sixth Circuit colleagues give to this conclusion.

3. Other Circuits

The only other Circuit Court of Appeals to have squarely resolved the “who decides” issue is the Sixth, which

has also held that “whether an arbitration agreement permits classwide arbitration is a gateway matter” that is

presumptively “for judicial determination[.]” Reed Elsevier, Inc. v. Crockett, 734 F.3d 594, 599 (6th Cir.2013)

(internal quotation marks and citation omitted). Citing to Concepcion, Oxford Health, and Stolt–Nielsen, the

Sixth Circuit Court reviewed the differences between classwide and bilateral arbitration and noted that

“recently the [Supreme] Court has given every indication, short of an outright holding, that classwide

arbitrability is a gateway question rather than a subsidiary one.” Id. at 598. Specifically, the Sixth Circuit

reasoned that

[g]ateway questions are fundamental to the manner in which the parties will resolve their dispute—whereas

subsidiary questions, by comparison, concern details. And whether the parties arbitrate one claim or 1,000 in a

single proceeding is no mere detail. Unlike the question whether, say, one party to an arbitration agreement

has waived his claim against the other—which of course is a subsidiary question—the question whether the

parties agreed to classwide arbitration is vastly more consequential than even the gateway question whether

they agreed to arbitrate bilaterally. An incorrect answer in favor of classwide arbitration would “forc[e] parties

to arbitrate” not merely a single “matter that they may well not have agreed to arbitrate” but thousands of

them.

Id. at 598–99 (second alteration in original) (internal citation omitted) (quoting Howsam, 537 U.S. at 84). This

analysis is persuasive and guides our own.

Appellees argue that the First, Second and Eleventh Circuits have also considered the “who decides” question

and have concluded that the availability of classwide arbitration is not a question of arbitrability for the court

but rather a question of procedure for the arbitrator to decide. See S. Commc'ns Servs., Inc. v. Thomas, 720

F.3d 1352 (11th Cir.2013); Fantastic Sams Franchise Corp. v. FSRO Ass'n Ltd., 683 F.3d 18 (1st Cir.2012); Jock

v. Sterling Jewelers Inc., 646 F.3d 113 (2d Cir.2011). This is untrue, as none of those Circuits ruled, or even

expressed a view, on the issue before us. The First Circuit's decision in Fantastic Sams involved associational

arbitration, not class arbitration, and expressly recognized that an “associational action ․ is [not] equivalent to

a class action.” 683 F.3d at 23. In Jock, the Second Circuit noted repeatedly that the parties had submitted the



question whether their contract allowed for classwide arbitration to the arbitrator, and so the “who decides”

question was not before the Court. See 646 F.3d at 116, 124. And far from holding that the availability of

classwide arbitration is for the arbitrator to decide, the Eleventh Circuit has specifically stated that the

question remains unresolved. See S. Commc'ns Servs., 720 F.3d at 1359 n. 6 (“Like the Supreme Court, we also

have not decided whether the availability of class arbitration is a question of arbitrability[.]”).

Since Bazzle, the Supreme Court has not directly decided whether the availability of class arbitration is a

question of arbitrability. The Court's line of post-Bazzle opinions, however, indicates that, because of the

fundamental differences between classwide and bilateral arbitration, and the consequences of proceeding with

one rather than the other, the availability of classwide arbitrability is a substantive gateway question rather

than a procedural one. We thus join the Sixth Circuit Court of Appeals in holding that the availability of class

arbitration is a “question of arbitrability.”

B. There is no evidence rebutting the presumption that the District Court should decide all questions of

arbitrability.

It is presumed that courts must decide questions of arbitrability “unless the parties clearly and unmistakably

provide otherwise.” Howsam, 537 U.S. at 83 (internal quotation marks and citation omitted). The burden of

overcoming the presumption is onerous, as it requires express contractual language unambiguously delegating

the question of arbitrability to the arbitrator. See Major League Umpires Ass'n v. Am. League of Prof'l Baseball

Clubs, 357 F.3d 272, 280–81 (3d Cir.2004). Silence or ambiguous contractual language is insufficient to rebut

the presumption. Gen. Elec. Co. v. Deutz AG, 270 F.3d 144, 154–55 (3d Cir.2001). Here, Opalinski and

McCabe's employment agreements provide for arbitration of any dispute or claim arising out of or relating to

their employment but are silent as to the availability of classwide arbitration or whether the question should be

submitted to the arbitrator. Nothing else in the agreements or record suggests that the parties agreed to submit

questions of arbitrability to the arbitrator. Thus, the strong presumption favoring judicial resolution of

questions of arbitrability is not undone, and the District Court had to decide whether the arbitration

agreements permitted classwide arbitration.

The District Court's October 2011 Order directing the arbitrator to decide the availability of classwide

arbitration, and December 2012 Order denying RHI's motion to vacate the arbitrator's partial final award, are

reversed. This case is remanded for the District Court to determine whether Appellees' employment

agreements call for classwide arbitration.

“Arbitration is fundamentally a creature of contract, and an arbitrator's authority is derived from an agreement

to arbitrate.” Puleo, 605 F.3d at 194 (alteration in original) (internal quotation marks and citation omitted).

Here, where we have an agreement to arbitrate individual disputes and no mention of arbitration for a wider

group, we believe the parties would have expected a court, not an arbitrator, to determine the availability of

class arbitration. This is especially so given the critical differences between individual and class arbitration and

the significant consequences of that determination for both whose claims are subject to arbitration and the

type of controversy to be arbitrated. Hence we hold that the availability of class arbitration is a “question of

arbitrability” for a court to decide unless the parties unmistakably provide otherwise.

AMBRO, Circuit Judge.

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Justices Asked To Weigh Robert Half Class

Arbitration Fight

By Ben James

Law360, New York (December 04, 2014, 4:16 PM ET) -- Former Robert Half International

Inc. workers have urged the U.S. Supreme Court to review a Third Circuit ruling that

courts, not arbitrators, should decide if classwide proceedings are allowed when an

arbitration pact doesn't explicitly mention class arbitration, arguing that the decision

conflicts with other appeals courts.

David Opalinski and James McCabe filed a Nov. 25 petition for high court review targeting

a precedential July 30 panel decision that sided with the staffing company and said that

class arbitration's availability should be decided by a court absent a clear agreement to the

contrary.

The workers — who lodged an underlying suit in 2010 accusing Robert Half of

misclassifying its staffing managers as overtime exempt — say Robert Half got two bites at

the apple, by first getting the suit sent to arbitration and then turning back to a district

court when they got a ruling from the arbitrator that the company didn't like.

“It could have, but did not, make explicit in its arbitration clause that class actions would

not be allowed," the petition said. "By compelling the case to arbitration with an

agreement that did not expressly address class actions, it took its chances with the

arbitrator."

The issue of who gets to decide if class arbitration is permitted is ripe for high court review

and “widely recurrent,” the brief said. The Supreme Court should use the Opalinski case to

resolve uncertainty left open by its June 2013 ruling in Sutter v. Oxford Health, which said

in a footnote that the high court had yet to decide whether the availability of class

arbitration was for courts or arbitrators, the workers said.

The Third and Sixth circuits have held that the availability of class arbitration is

presumptively for courts to tackle, but the First, Second, Seventh and Eleventh have said

that's a questions for the arbitrator, according to the petition.

The Third Circuit reversed both a 2011 district court order telling an arbitrator to rule on

whether classwide arbitration was available and a December 2012 order rejecting Robert

Half's bid to vacate the arbitrator's ruling that the staffing agency's pacts permitted class

arbitration.

According to the Third Circuit panel, the only other circuit that had “squarely resolved the

'who decides' question” was the Sixth Circuit, in a 2013 ruling issued in a case called

Reed Elsevier Inc. v. Crockett. The Third Circuit denied rehearing in August.

Page 1 of 2Justices Asked To Weigh Robert Half Class Arbitration Fight - Law360

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“This is now one of the big issues that are dividing courts around the country,” said

Shannon Liss-Riordan of Lichten & Liss-Riordan PC, who represents the petitioners and

noted that the high court has taken on a string of high-profile cases involving arbitration in

recent years.

“It's really hard to believe that arbitration is supposed to be revered and respected, except

when it goes against big companies,” she added.

Judges Thomas L. Ambro, Judge Kent A. Jordan and Judge Jane R. Roth sat on the panel

for the Third Circuit.

The petitioners are represented by Shannon Liss-Riordan of Lichten & Liss-Riordan PC.

Robert Half was represented at the Third Circuit by Richard Alfred, Patrick Bannon III,

James M. Hlawek, Christopher Lowe and James Harris of Seyfarth Shaw LLP, Adam

Saravay of McCarter & English LLP, and Alexander Wood of Paul Hastings LLP.

The case is David Opalinski et al. v. Robert Half International Inc. et al., case number 14-

625 in the U.S. Supreme Court.

--Editing by Jeremy Barker.

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Page 2 of 2Justices Asked To Weigh Robert Half Class Arbitration Fight - Law360

2/23/2015http://www.law360.com/articles/601591/print?section=appellate