Supreme Court Won’t Review Class Arbitrability Question Now, But Second Circuit May Hear Case That Could Generate Circuit Split

By Andrew C. Glass and Roger L. Smerage

The United States Supreme Court recently declined to review a Third Circuit decision holding that ordinarily a court, not an arbitrator, determines the availability of classwide arbitration.  Opalinski v. Robert Half International, Inc.  761 F.3d 326 (3d Cir. 2014), cert. denied No. 14-625, — S. Ct. —-, 2015 WL 998611 (U.S. Mar. 9, 2015).  The Opalinski decision is important to businesses that use consumer arbitration agreements.  The benefits of traditional, individual arbitration – such as lower costs, confidentiality, and the limited scope of an arbitrator’s award – are typically not present in class arbitration.  Having a judge, rather than an arbitrator, make the decision of whether to compel individual or class arbitration is meaningful because a judge’s ruling is subject to the regular appellate review process, while an arbitrator’s ruling is subject to only very limited judicial review.

In Opalinski, the Third Circuit held that whether an arbitration agreement provides for classwide arbitration is a gateway “question of arbitrability” and, thus, is presumptively a question that a court must resolve.  In so ruling, the Third Circuit joined the Sixth Circuit, which had reached a similar conclusion in Reed Elsevier, Inc. v. Crockett, 734 F.3d 594, 596 (6th Cir. 2013), cert. denied sub nom. Crockett v. Reed Elsevier, Inc., 134 S. Ct. 2291 (2014).  The Supreme Court’s denial of certiorari in Opalinski was not unexpected given the absence of a circuit split on the issue.

Despite the denial of certiorari in Opalinski, other cases may eventually present the Supreme Court with the opportunity to address the question.  In one such case, a judge from the Southern District of New York recently decided that an arbitrator should decide the availability of classwide arbitration and then certified the question for an interlocutory appeal to the Second Circuit.  See In re A2P SMS Antitrust Litig., No. 12-CV-2656 (AJN), 2015 WL 876456, at *2–7 (S.D.N.Y. Mar. 2, 2015).  The Southern District of New York judge relied on the Supreme Court’s plurality opinion in Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003), which examined, but did not establish, the rule for deciding the availability of class arbitration.  If the Second Circuit grants the petition for review, it will have to decide whether to join the Third and Sixth Circuits on the one hand or the Supreme Court’s Bazzle plurality on the other.

K&L Gates will report on how the Second Circuit rules and will post further alerts on the issue.

For more background, see K&L Gates’s alert on the Third Circuit’s decision in Opalinski and K&L Gates’s alert on the Supreme Court’s denial of certiorari in Reed Elsevier.