Following The Sixth Circuit's Lead, Ohio Appellate Courts Find Whether An Agreement Allows Class Arbitration Is A 'Gateway Issue'

As we stated previously, the potential impact of whether entitlement to class arbitration is a "gateway issue" will likely diminish with each passing year. (See our March 12, 2015, blog article on the denial of certiorari in Opalinski v. Robert Half International, Inc.) This is because of the increasing number of class action waivers now being placed in arbitration agreements.

Nevertheless, since December 2014, two Ohio appellate courts have decided the issue, holding that when the contract is silent, it is a gateway issue to be decided by the judiciary. First, in Bachrach v. Cornwell Quality Tools Co., 9th Dist. No. 27113, 2014-Ohio-5778, the Ninth Appellate District considered who should decide whether a franchise agreement authorized class arbitration. The trial court had concluded as a matter of law that "an arbitration agreement that is silent as to class versus individual arbitration is a question for the arbitrator, not the court to decide."

The court of appeals disagreed. Following the Sixth Circuit's opinion in Reed Elsevier, Inc. v. Crockett, 734 F.3d. 594, 598 (6th Cir. 2013), the Bachrach court held, "[w]hen a contract between parties is silent on who will decide whether a claim may be arbitrated as a class, the issue is one for the courts not the arbitrators to decide." We discussed the Crockett opinion in our November 11, 2013, blog article.

In June of this year, a second Ohio court of appeals addressed the gateway issue in Shakoor v. VXI Global Solutions, Case No. 14 MA 59, 2015-Ohio-2587. Shakoor arose from a class action complaint alleging that XVI Global Solutions, with call centers in Youngstown, Canton, and Cincinnati, Ohio, violated Ohio wage and hour law by requiring its employees to perform certain computer- and phone system-related work before clocking in.

The appellate court considered two related questions. The first was whether the activity complained of was covered by the arbitration agreement. Both sides, however, agreed that the wage and hour claim was an arbitrable issue. The second issue, the type of arbitration (class or individual) required, was therefore dispositive of the appeal.

The Shakoor court found that the confusion over whether class arbitration was a gateway or subsidiary issue had its genesis in two U.S. Supreme Court decisions - Green Tree Financial Corp. v. Bazzle, 539 U.S. 444, 452-453 (2003) (plurality opinion) and Stolt-Nielsen S.A. v. AnimalFeeds Internatl. Corp., 559 U.S. 662, 687 (2010).

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