Source: http://www.klgateshub.com/details/?pub=A-First-in-the-Second-Circuit-On-Remand-District-Court-Breaks-New-Ground-by-Vacating-Arbitrators-Class-Certification-Award-02-01-2018
Timestamp: 2019-04-24 08:40:46+00:00

Document:
In what appears to be a first-of-its-kind ruling, the District Court for the Southern District of New York recently concluded that a federal district court has the authority to vacate an arbitrator’s class certification award based on the due process rights of absent class members. That this potentially ground-breaking decision arose from the long-standing litigation in Jock v. Sterling Jewelers, Inc.  is no surprise. Over the course of a decade in Jock, the district court and the Second Circuit Court of Appeals have rendered multiple decisions addressing the proper role of a court in reviewing an arbitrator’s authority to determine whether parties have agreed to class arbitration. In the latest decision, the district court became the first court to apply Justice Alito’s concurrence in Oxford Health Plans LLC v. Sutter  to strike down an arbitrator’s ruling. The Jock court determined that, absent an express class arbitration provision in each putative class member’s arbitration agreement, an arbitrator does not have the authority to bind absent class members to a class judgment—even if they signed the same form of arbitration agreement as the named plaintiffs.  As discussed below, this novel decision could have significant implications.
How the latest decision in Jock may impact businesses that use arbitration agreements remains to be seen, particularly pending the Second Circuit’s ruling on the appeal plaintiffs have filed. As a practical matter, many businesses have already incorporated express class waiver provisions into their arbitration agreements. And Congress’s recent nullification of the Consumer Financial Protection Bureau’s arbitration agreements rule (which sought to curb the use of class action waiver provisions in consumer financial service contracts), should allow consumer finance companies to continue to do so. Such provisions serve to limit the interpretive role of the arbitrator as it relates to the potential for class proceedings. But for companies whose arbitration agreements do not contain class waiver provisions, this latest development may provide some insulation from the risk of class arbitration.
 No. 08 CIV. 2875 (S.D.N.Y.).
 Jock v. Sterling Jewelers, Inc., --- F. Supp. 3d ----, 2018 WL 418571, at *2-4 (S.D.N.Y. Jan. 15, 2018), appeal docketed No. 18-153 (2d Cir. Jan. 18, 2018).
 Jock v. Sterling Jewelers, Inc., 564 F. Supp. 2d 307, 310-12 (S.D.N.Y. 2008). The district court did so based upon its view that the question of whether an arbitration agreement provides for class proceedings is a “procedural issue.” Id. at 310. Although several federal courts of appeals have concluded differently (namely that the question is substantive and thus presumptively for a court to decide), the Second Circuit has not decided the issue, and there is disagreement even among the sessions of the Southern District of New York. Compare Anwar v. Fairfield Greenwich Ltd., 950 F. Supp. 2d 633, 639 (S.D.N.Y. 2013), with Wells Fargo Advisors, L.L.C. v. Tucker, 195 F. Supp. 3d 543, 547-51 (S.D.N.Y. 2016). Tucker is presently on appeal, and was argued on August 17, 2017. See No. 16-3854 (2d Cir.).
 Jock v. Sterling Jewelers, Inc., 677 F. Supp. 2d 661, 663 (S.D.N.Y. 2009).
 Jock v. Sterling Jewelers, Inc., 725 F. Supp. 2d 444, 444, 447-51 (S.D.N.Y. 2010).
 Jock v. Sterling Jewelers, Inc., 646 F.3d 113, 115-18, 121-27 (2d Cir. 2011), cert. denied 565 U.S. 1259 (2012).
 569 U.S. at 571-73 (“Oxford chose arbitration, and it must now live with that choice. Oxford agreed with Sutter that an arbitrator should determine what their contract meant, including whether its terms approved class arbitration. The arbitrator did what the parties requested: He provided an interpretation of the contract resolving that disputed issue. His interpretation went against Oxford, maybe mistakenly so. But still, Oxford does not get to rerun the matter in a court.”).
 Id. at 574 (Alito, J., concurring).
 Id. (“It is true that they signed contracts with arbitration clauses materially identical to those signed by the plaintiff who brought this suit. But an arbitrator's erroneous interpretation of contracts that do not authorize class arbitration cannot bind someone who has not authorized the arbitrator to make that determination.”).
 Jock v. Sterling Jewelers, Inc., 143 F. Supp. 3d 127, 128-29 (S.D.N.Y. 2015).
 Id. (“All members of the class certified by the Arbitrator signed the RESOLVE agreements; the Arbitrator interpreted these agreements to permit class arbitration; and the Second Circuit upheld the Arbitrator’s authority to do so. Given that holding, this Court sees no basis for vacating the Class Determination Award on the ground that the Arbitrator has now exceeded her authority in purporting to bind absent class members.”).
 Jock v. Sterling Jewelers, Inc., 703 F. App’x 15, 16-17 (2d Cir. 2017).
 See 2018 WL 418571, at *4.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.