U.S. Supreme Court To Decide Another Major Class/Collective Action Arbitration Case

On December 7, 2012, the U.S. Supreme Court granted certification in Oxford Health Plans LLC v. Sutter, No. 12-135, 675 F.3d 215 (3rd Cir. 2012). In Oxford, the Third Circuit affirmed a decision that an arbitrator did not exceed his authority in holding that an arbitration agreement which is silent as to class actions still permits class arbitrations. The Oxford decision, as well as the Second Circuit's decision in Jock v. Sterling Jewelers Inc., 646 F.3d 113 (2d Cir. 2011), are at odds with the Fifth Circuit's decision in Reed v. Florida Metropolitan Univ., 681 F.3d 630 (5th Cir., 2012), which openly disagreed with the Second Circuit over the interpretation of the U.S. Supreme Court's holding in Stolt-Nielsen v. AnimalFeeds International Corp., 130 S. Ct. 1758, 1776 (2010). The question presented as described by the Supreme Court is as follows:

In Stolt-Nielsen v. AnimalFeeds International Corp., 130 S. Ct. 1758, 1776 (2010), this Court made clear that "class-action arbitration changes the nature of arbitration to such a degree that it cannot be presumed the parties consented to it by simply agreeing to submit their disputes to arbitration." In this case, an arbitrator concluded that the parties affirmatively consented to class arbitration on the basis of a contract provision stating: "No civil action concerning any dispute arising under this Agreement shall be instituted before any court, and all such disputes shall be submitted to final and binding arbitration." The question presented is:

Whether an arbitrator acts within his powers under the Federal Arbitration Act (as the Second and Third Circuits have held) or exceeds those powers (as the Fifth Circuit has held) by determining that parties affirmatively "agreed to authorize class arbitration," Stolt-Nielsen, 130 S. Ct. at 1776, based solely on their use of broad contractual language precluding litigation and requiring arbitration of any dispute arising under their contract.

After Stolt-Nielsen, some courts and arbitrators have held that when an arbitration agreement is silent as to class/collective action waiver, the parties impliedly agree to class/collective treatment of claims in arbitration. These courts and arbitrators hold such an intention may be inferred and need not be explicitly stated. As one court stated: "Stolt-Nielsen did not insist on express consent to class arbitration."

With respect to wage claims, what occasionally happens in an arbitration clause construction...