Third Circuit: Availability Of Classwide Arbitration Is An Issue For The Courts – Not Arbitrators – Unless The Parties Agreed Otherwise

Wednesday, the Third Circuit held that the determination of whether an agreement allows classwide arbitration is a question of arbitrability for the courts "unless the parties unmistakably provide otherwise." Opalinski v. Robert Half International Inc., Case No. 12-4444 (3d Cir. July 30, 2014).

In Opalinski, former Robert Half International, Inc. (RHI) employees filed a putative collective action under the Fair Labor Standards Act (FLSA) in which they alleged that they were misclassified as exempt employees. Prior to doing so, both plaintiffs had signed employment agreements with arbitration provisions - but the agreements did not mention whether classwide arbitration was allowed. Though the district court granted RHI's motion to compel arbitration, the district court held that the availability of classwide arbitration was a question for the arbitrator.

Following the referral to arbitration, the arbitrator issued a partial final award and held that classwide arbitration was permitted, a holding the district court refused to vacate. Accordingly, RHI appealed the denial of the motion to vacate the arbitration award in which it posited the question: should the availability of classwide arbitration have been decided by the arbitrator or by the district court?

The Third Circuit reversed the district court's initial ruling that the determination of whether an arbitration agreement allows classwide arbitration is a question for the arbitrator, and reversed the district court's later ruling denying RHI's motion to vacate the arbitrator's award allowing classwide arbitration. In so doing, the Third Circuit explained that "it is presumed that courts must decide questions of arbitrability unless the parties clearly and unmistakably provide otherwise." The court determined that the availability of classwide arbitration is a question of arbitrability because it implicates whose claims the arbitrator must resolve. The court explained that "the Supreme Court has long recognized that a district court must determine whose claims an arbitrator is authorized to decide." Citing John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543 (1964). The court concluded that "[t]he determination whether RHI must include absent individuals in its arbitrations with [plaintiffs] affects whose claims may be arbitrated and is thus a question of arbitrability to be decided by the court." Additionally, the court found that availability of classwide arbitration is a question of...