Recent Supreme Court decisions have favored the enforcement of consumer arbitration agreements requiring individual, rather than classwide, dispute resolution. A number of courts, however, have found that arbitrators, whose decisions are subject only to minimal scrutiny,[1] should decide the availability of classwide arbitration. Those courts relied on a 2003 plurality decision from the Supreme Court, Green Tree Financial Corp. v. Bazzle,[2] which suggested that ordinarily an arbitrator should make that decision. Recently, however, the Supreme Court declined to review a Sixth Circuit decision, Reed Elsevier, Inc. v. Crockett,[3] which reached the opposite conclusion from Bazzle. The Supreme Court’s refusal casts significant doubt on whether the Bazzle plurality’s suggestion remains a viable theory.
In Reed Elsevier, the Sixth Circuit held that the issue of whether an arbitration agreement provides for classwide arbitration was a gateway issue of arbitrability for a court, not an arbitrator, to decide. The subject dispute arose over legal research fees charged by LexisNexis (a division of Reed Elsevier, Inc.) to Crockett. To resolve the dispute, Crockett filed an arbitration demand pursuant to the terms of his agreement with LexisNexis. And, although the agreement contained no reference to classwide arbitration, Crockett purported to assert claims on behalf of a putative class of LexisNexis subscribers. LexisNexis sued Crockett in federal court seeking a declaration that the arbitration agreement did not allow Crockett to assert class claims. The district court agreed, and Crockett took an appeal to the Sixth Circuit.[4]
Before analyzing the district court’s reasoning, the Sixth Circuit first had to determine if the district court was the correct body to decide whether the arbitration agreement permitted class proceedings. Noting the Supreme Court’s recent reiteration in Stolt-Nielsen S.A. v. AnimalFeeds International Corp.[5] that the Bazzle decision was not precedential,the Sixth Circuit predicted the Supreme Court would rule differently from the Bazzle plurality if directly presented with the question. Indeed, the court of appeals reasoned that “recently the [Supreme] Court has given every indication, short of an outright holding, that classwide arbitrability is a gateway question” presumptively for a court to decide. Accordingly, the Sixth Circuit held that the district court properly decided the classwide arbitrability issue, as the arbitration agreement contained no delegation of that issue to the arbitrator.[6]
Two other federal courts of appeal had previously adopted the Bazzle plurality position as their own, holding that an arbitrator should decide the availability of classwide arbitration on the basis that is a mere procedural determination.[7] In light of this split of authority among the courts of appeals, Crockett sought Supreme Court review of the Sixth Circuit’s decision. Although the Court declined to grant Crockett’s petition, the Court’s recent discussion of the issue in dicta in Stolt-Nielsen—where the Court remarked that “we see the question as being whether the parties agreed to authorize class arbitration”—indicates that a majority of the justices view the issue as one that may worth consideration in a future case.[8]
In the meantime, Reed Elsevier remains the law of the Sixth Circuit, as recently...
