Class Arbitration/Appealability: Second District, Div. 2 Agrees With Those Courts That Have Ruled That Arbitrator, Rather Than Court, Decides Whether Parties Agreed To Class Arbitration

Law Concerning “Gateway Issues” Is Messy

Court Of Appeal Also Had To Overcome Procedural Hurdle Of Appealability To Address The “Gateway” Procedural Issue

     So-called “gateway” issues concerning whether the parties have submitted a particular dispute to arbitration are generally decided by a judge, not an arbitrator, unless the parties have agreed to delegate the power to decide the issue to the arbitrator.  The question presented in Sandquist v. Lebo Automotive, Inc., B244412 (2/7 July 22, 2014) (Segal, Perluss, Woods), is “whether the parties agreed to class arbitration was for the arbitrator rather than the court to decide. . . .”  Put another way, is that issue a gateway issue?

     The Court of Appeal acknowledges, “[c]ourts that have decided the issue have reached conflicting conclusions.”  However, the Court of Appeal finds persuasive the plurality opinion in Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444 (2003) that the arbitrator, not the court, determines whether the arbitration agreement provides for class arbitration where the arbitration agreement is silent.  The Court views the issue presented as one concerning a “procedural device,” rather than a “gateway” issue, and thus as an issue for the arbitrator to decide.

      This seems to be an issue that the Court really wanted to reach, because in order to address it, the Court had to “liberally construe” the notice of appeal of an August 14, 2012 order “to encompass the trial court’s October 5, 2012 order.”  The August 14 order, granting a motion compelling the plaintiff to arbitrate his individual claims, and dismissing class claims without prejudice was not appealable, A) because motions granting an order to compel arbitration are not appealable; and B) the “death knell” doctrine, applying to orders that effectively terminate class claims but permit individual claims to continue, did not apply here to class claims dismissed without prejudice.  But the October 5, 2012 order, dismissing class claims with prejudice, was appealable under the death knell doctrine.  So with the application of a little appellate court judicial jujutsu, Mr. Sandquist’s appeal was successful. 

     Photo from 1922 publication.  Wikipedia article, “Jujutsu.”

     The trial court’s order dismissing class claims was reversed and the matter remanded to the trial court “with directions to vacate its order dismissing class claims and to enter a new order submitting the issue of whether the parties agreed to arbitrate class claims to the arbitrator.”