This summer, we discussed that the Supreme Court is reviewing whether an arbitration agreement’s clear delegation of the question of arbitrability to the arbitrator can be negated by a provision that exempts certain claims from arbitration. Henry Schein, Inc. v. Archer & White Sales, Inc., 207 L. Ed. 2d 1050 (2019). Since the Supreme Court granted certiorari in that case, three notable appellate decisions, two in the Ninth Circuit and one in the Third Circuit, have confronted related delegation questions. These cases all underscore the importance of paying careful attention to the drafting and presentation of arbitration provisions. Even seemingly minor differences in drafting and approach can result in disputes being heard outside their intended fora.
NINTH CIRCUIT
Shivkov v. Artex Risk Solutions, Inc.
On September 9, 2020, the Ninth Circuit issued a ruling in Shivkov v. Artex Risk Solutions, Inc. that addressed an issue of first impression in the circuit.[1] A large group of individuals and related business entities involved in the insurance industry filed a putative class action lawsuit alleging that the captive insurance companies that the defendants had formed and managed were illegal and abusive tax shelters. The relevant agreements between the parties contained an arbitration clause governed by the FAA, and the defendants moved to compel arbitration based on those terms.
One of the key issues that the court addressed was whether the determination of the availability of class arbitration was presumptively for the court (rather than an arbitrator) to decide. The Shivkov court ruled definitively that “class arbitration is a gateway issue for a court to presumptively decide.”
This did not end the court’s analysis, though. The Shivkov court still needed to address the plaintiffs’ contention that the relevant arbitration provision evidenced “a clear and unmistakable intent to delegate the issue to the arbitrator.” The plaintiffs relied on the Ninth Circuit’s 2015 decision in Brennan v. Opus Bank, where the court held that “incorporation of the AAA Rules constitutes clear and unmistakable evidence that contracting parties agreed to arbitrate arbitrability.”[2] But, unlike in Brennan, in Shivkov the relevant arbitration provisions did not incorporate the AAA rules, but rather merely required that any arbitration, if necessary, be conducted before AAA. Accordingly, the Shivkov court did not “find clear and unmistakable evidence that the parties intended to delegate the gateway issue of class arbitration to the arbitrator by virtue of the AAA Rules . . . .” And “[b]ecause Plaintiffs d[id] not claim that any other provision demonstrate[d] a clear and unmistakable intent to delegate the availability of class arbitration to the arbitrator,” the Shivkov court determined that the availability of class arbitration remain[ed] a gateway issue” for the court to decide.[3]
Ultimately, because the arbitration agreement was silent as to the availability of class...
