Agreement to AAA’s Employment Rules Necessarily Includes Agreement To AAA Class Action Rules.
On February 28, 2015, I posted about an unpublished case holding that a reference to AAA Commercial Rule R-7 ambiguously delegates power to the arbitrator, because it gives the power to rule to the arbitrator, without saying that a trial judge lacks the same power. Eakins v. Corinthian Colleges, Inc, E058330 (4/2 Feb. 23, 2015). Now, a published case comes along, holding that an agreement to the AAA’s Employment Rules includes an agreement to the AAA Supplementary Rules for Class Arbitrations (Class Arbitration Rules). Here, the parties “agreement to resolve their arbitration under the AAA rules constitutes clear and unmistakable evidence of their intent that the arbitrator, not the court, interpret the arbitration agreement and decide whether it permits arbitration of class and/or representative claims.” Universal Protection Service, L.P. v. The Superior Court of San Diego County, Case No. D066919 (4/1 Feb. 27, 2015) (O’Rourke, Nares, McIntyre).
COMMENT: The key to the Universal Protection Service, L.P. opinion is the reference to the AAA Class Arbitration Rules. The rule in question provides in part: “Upon appointment, the arbitrator shall determine as a threshold matter, in a reasoned, partial final award on the construction of the arbitration clause, whether the applicable arbitration clause permits the arbitration to proceed on behalf of or against a class (the ‘Clause Construction Award’).”
Typically gateway issues of arbitrability are within the provenance of the court, where a clear delegation of those issues to the arbitrator is absent. If you want the court to decide issues concerning the arbitrability of class-wide claims, then you must proceed with great caution before simply incorporating AAA Rules, or else you may be in for a big surprise.