SCOTUS Declines Review Of Second Circuit Ruling Endorsing Class Arbitration

• Published date: 05 November 2020
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution, Class Actions, Trials & Appeals & Compensation
• Law Firm: Kilpatrick Townsend & Stockton LLP
• Author: Mr James F. Bogan III

Takeaway: The concept of class arbitration has endured stiff headwinds. In Lamps Plus, Inc. v. Varella, 139 S. Ct. 1407 (2019), the Supreme Court ruled that a party cannot be required to participate in a class arbitration unless the parties' arbitration agreement explicitly authorizes class arbitration. Because agreements expressly authorizing class arbitration generally do not exist, we thought the Lamps Plus ruling - for the most part - signaled the end of class arbitration. See What the Lamps Plus court did not say about class arbitration (May 13, 2019). But in Jock v. Sterling Jewelers Inc., 942 F.3d 617 (2d Cir. 2019), cert. denied, No. 19-1382, __ S. Ct. __, 2020 WL 5882321 (U.S. Oct. 5, 2020), the Second Circuit reminded us that class arbitration works just fine, so long as the entire putative class executed identical arbitration agreements that incorporated the rules of the American Arbitration Association (AAA) and do not include an express class action waiver.

In Jock, Plaintiff Laryssa Jock, a retail sales employee of Sterling Jewelers, sued Sterling Jewelers over 10 years ago (in 2008), claiming that she and other female employees were paid less than their male counterparts, in violation of Title VII of the Civil Rights Act of 1964. All Sterling employees agreed to compulsory arbitration through Sterling's "RESOLVE Program" agreement, which provided (a) the arbitrator "shall have the power to award any types of legal or equitable relief that would be available in a court of competent jurisdiction"; (b) "[q]uestions of arbitrability" and "procedural questions" "shall be decided by the arbitrator"; and (c) arbitration would be conducted "in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association." Ultimately, the arbitrator certified a class of roughly 44,000 women with respect to the plaintiffs' Title VII disparate impact claims for declaratory and injunctive relief. This class of 44,000 women consisted of Ms. Jock and other individually-named plaintiffs, other claimants who had specifically opted in to the class arbitration proceeding, and unnamed claimants who had not opted in.

The Southern District of New York vacated the arbitrator's class certification ruling, holding the arbitrator could not bind absent class members to class procedures under an arbitration agreement that did not explicitly authorize class arbitration, even if the named parties had agreed to submit the class...