Third Circuit Holds That A Court, Not An Arbitrator, Must Decide Whether An Arbitration Agreement Authorizes Class-Wide Arbitration

Who decides whether an arbitration agreement allows for class-wide arbitration — a court or an arbitrator? In the wake of mixed signals from the U.S. Supreme Court, lower courts have been reluctant to answer this question. However, on July 30, 2014, in Opalinski v. Robert Half International, Inc., the U.S. Court of Appeals for the Third Circuit became the second federal court of appeals to definitively hold that the availability of class-wide arbitration is a threshold question for the court, not a subsidiary question for the arbitrator.

The plaintiffs in Opalinski signed employment agreements with Robert Half International (RHI) that contained arbitration provisions requiring that "[a]ny dispute or claim arising out of or relating to Employee's employment, termination of employment or any provision of this Agreement" be submitted to arbitration. Neither agreement mentioned class-wide arbitration. The plaintiffs brought a putative class action against RHI in federal district court, asserting claims under the Fair Labor Standards Act. RHI moved to compel arbitration on an individual basis. The district court granted the motion in part, compelling arbitration but holding that the arbitrator must decide whether class-wide or individual arbitration was proper. The arbitrator subsequently entered an award in the plaintiffs' favor and ruled that the employment agreements allowed for class-wide arbitration. RHI filed a motion to vacate the award, which the district court denied.

The Third Circuit reversed, holding that the availability of class-wide arbitration is a threshold question for the court. Outlining the respective roles of courts and arbitrators, the Third Circuit explained that courts decide questions of arbitrability, i.e., whether the parties agreed to submit a particular dispute to arbitration, and arbitrators then decide subsidiary questions arising out of a dispute that is properly before them. Questions of arbitrability generally fall into two categories: (1) disputes about whether a valid arbitration agreement exists between the parties (i.e., whose claims (if any) the arbitrator may adjudicate), and (2) disputes about whether an admittedly valid arbitration agreement applies to the specific dispute (i.e., what types of controversies the arbitrator may decide).

The Third Circuit held that the availability of class-wide arbitration implicates both categories, and thus, presents a question of arbitrability. First, the Court...