Fourth District Says When Agreement Is Silent, Judge Decides; Second District Says Arbitrator Decides – So The California Supreme Court Will Have To Decide.
GATEWAY. Carol M. Highsmith, photographer. 2013. Library of Congress.
When the arbitration agreement is silent, who gets to decide whether the arbitration agreement allows for class arbitration? Judge or arbitrator? Gateway issue or procedural issue?
SCOTUS decisions hold 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 parties agreed to do so, Stolt-Nielsen S.A. v. Animalfeeds International Corp., 559 U.S. 662 (2010), with a plurality of the SCOTUS holding the arbitrator decides whether class-wide arbitration is available if the arbitration agreement is valid and the underlying dispute is within its terms, Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003).
I have blogged about two published Fourth District decisions that analyze the availability of class-wide arbitration as a threshold issue of arbitrability, and thus a gateway issue that the judge must decide. Network Capital Funding Corporation v. Papke, 230 Cal.App.4th 503 (2014) and Garden Fresh Restaurant Corp. v. Superior Court, 231 Cal.App.4th 678 (2014). See my posts of November 17, 2014 and October 13, 2014.
Now, in an unpublished decision, the Second District, Division 2, disagrees with the Fourth District, and holds that “the determination whether the parties to an arbitration agreement agreed to arbitrate class claims is a procedural question for the arbitrator, not the court.” Rivers v. Cedars-Sinai Medical Care Foundation, B249979 (2/7 Jan. 13, 2015) (Perluss, Woods, Feuer). The Court here views the issue not as a gateway issue of arbitrability, but rather as a subsidiary issue of how the arbitration proceeds – a procedural issue that the arbitrator can decide. The Court therefore reversed the order of the judge compelling the plaintiff to arbitrate her individual wage and hour claims, leaving it instead to the arbitrator to decide whether the class claims can be arbitrated.
NOTE: Footnote 2 states the issue is currently pending before the California Supreme Court. Sandquist v. Lebo Automotive, Inc., 228 Cal.App.4th 65, review granted, Nov. 12, 2014, S220812. See my post of July 22, 2014, regarding Sandquist.