Class action arbitration continues to be a hot topic among the federal appellate courts this summer.
The 8th Circuit followed the lead of other circuit courts, finding that courts, not arbitrators, presumptively decide whether the parties’ arbitration agreement allows for class arbitration. Catamaran Corporation v. Towncrest Pharmacy, 2017 WL 3197622 (July 28, 2017). In support of its decision, the court raised concerns about class arbitration, including loss of confidentiality, due process concerns for absent parties, and a concern about the lack of appellate review. [Interesting that it didn’t cite any of CFPB’s report on this, but just cited other case law… ] Therefore, unless the parties have “clearly and unmistakably delegated” the class arbitration issue to the arbitrator, a court will decide the issue. Furthermore, the court said that incorporating the AAA rules is not a clear and unmistakable delegation of the class arbitration decision, even though citing the AAA rules is sufficiently clear in analogous issues in regular “bilateral arbitration.” The court remanded to the district court to determine whether there was a contractual basis for class arbitration.
Halfway across the country, the 9th Circuit held that employees could bring their claims related to a data breach as a class action in arbitration. Varela v. Lamps Plus, Inc., 2017 WL 3309944 (Aug. 3, 2017). The employees had first brought their class claims to federal court, and the employer moved to compel individual arbitration. The district court found the arbitration agreement was valid, but ambiguous about whether class actions were waived. Construing that ambiguity against the employer who drafted the agreement, the district court ordered class arbitration. On appeal, the 9th Circuit affirmed the finding of ambiguity, sending the class to arbitration as a group. One judge issued a two sentence dissent, noting “we should not allow Varela to enlist us in this palpable evasion of Stolt-Nielsen…”