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A Sixth Circuit panel has ruled that courts rather than arbitrators should determine whether class arbitration is authorized when the arbitration agreement &ldquo;says nothing about classwide arbitration.&rdquo;&nbsp; Citing First Options of Chicago v. Kaplan, 514 U.S. 938, 945 (1995), the Court was clear that an arbitrator can only decide &ldquo;class arbitrability&rdquo; &ldquo;if the parties have authorized the arbitrator to answer that question.&rdquo;&nbsp; Judge Raymond Kethledge, author of the opinion in <a href="https://employmentclassactionreport.bakerhostetlerblogs.com/wp-content/uploads/sites/8/2013/11/elsevier.pdf">Reid Elsevier, Inc. v. Crockett, (Case No. 12-3574)</a>, admitted there was less certainty as to the showing required to authorize an arbitrator to decide class arbitrability.&nbsp; Ultimately, the appellate court determined not only that courts should decide the &ldquo;gateway issue&rdquo; but also that the agreement did not provide for classwide arbitration. The Background LexisNexis, a division of Reed Elsevier, provides on-line legal research services.&nbsp; In 2007 Craig Crockett and his former firm agreed to a LexisNexis Subscription Plan.&nbsp; Disputes arose over additional fees that were charged for using a database outside the Plan in Crockett&rsquo;s initial and subsequent firms.&nbsp; The Plan contains an arbitration clause and in 2010 Crockett filed an arbitration demand with the American Arbitration Association against LexisNexis on behalf of himself and two putative classes seeking damages in excess of $500 million.&nbsp; LexisNexis responded by suing Crockett in the Southern District of Ohio for a declaratory judgment that the Plan&rsquo;s arbitration clause does not authorize class arbitration.&nbsp; The District Court, after surveying the relevant caselaw, granted summary judgment for LexisNexis on its declaratory claims.&nbsp; See opinion in <a href="https://employmentclassactionreport.bakerhostetlerblogs.com/wp-content/uploads/sites/8/2013/11/craig-crockett.pdf">Case No. 3:10cv248 </a>decided February 24, 2012 by Judge Walter H. Rice. The Appellate Analysis Despite the plurality decision in Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444 452 (2003), concluding that classwide arbitrability was only a &ldquo;subsidiary question&rdquo;, the Sixth Circuit found otherwise.&nbsp; The Court&rsquo;s reasoning was based on four grounds: (1) arbitration&rsquo;s purported benefits, including lower costs, greater efficiency and speed are much less assured in classwide arbitration giving reason to question the parties&rsquo; mutual consent to it; (2) confidentiality is more difficult in class arbitration &ldquo;potentially frustrating the parties assumptions when they agreed to arbitrate&rdquo;; (3) the stakes of class action arbitration are similar to those of class action litigation even though the scope of judicial review is more limited; and (4) there are due process concerns with respect to absent parties which can be better addressed in court.&nbsp; The panel concluded that &ldquo;whether an arbitration agreement permits classwide arbitration is a gateway matter . . . reserved &lsquo;for judicial determination unless the parties clearly and unmistakenly provide otherwise&rsquo;&rdquo;. Next, the court found that Crockett could not make the required showing.&nbsp; &ldquo;The principal reason to conclude that this arbitration clause does not authorize class arbitration is that the clause nowhere mentions it.&rdquo;&nbsp; Turning to other agreement language, the court found the arbitration clause limited the scope to those claims &ldquo;arising from or in connection with this Order&rdquo;, not other customers&rsquo; orders.&nbsp; And, while the agreement does not expressly exclude class arbitration, it does not include it either.&nbsp; Indeed, Judge Kethledge reiterated that courts cannot infer implicit&nbsp; agreement to class arbitration &ldquo;solely from the fact of the parties&rsquo; agreement to arbitrate&rdquo;, citing Stolt-Nielson S.A. v. Animal Feeds Int&rsquo;l Corp. 559 U.S. 662, 685 (2010).&nbsp; Impact The Sixth Circuit&rsquo;s decision adds clarity to an area where some confusion previously existed &ndash; what is a &ldquo;gateway&rdquo; versus a &ldquo;subsidiary&rdquo; question?&nbsp; And, what language in the arbitration agreement can properly be equated with both authorization of the arbitrator to decide the issue and authorization of class arbitration? In June, 2013 another Sixth Circuit panel wrote the unreported decision in <a href="https://employmentclassactionreport.bakerhostetlerblogs.com/wp-content/uploads/sites/8/2013/11/chase.pdf">Lowry v. JPMorgan Chase Bank, N.A., Case No. 12-4222 (June 11, 2013)</a>.&nbsp; &nbsp;In Lowry the District Court had compelled arbitration of Lowry&rsquo;s class action claims.&nbsp; On appeal, the Sixth Circuit reviewed an agreement which contained an express class action waiver: IF EITHER OF US CHOOSES TO ARBITRATE, YOU WILL GIVE UP YOUR RIGHT TO PARTICIPATE AS A CLASS OR OTHER REPRESENTATIVE ON BEHALF OF THE PERSONS OR AS A CLASS MEMBER OR OTHER REPRESENTED PERSON ON ANY CLASS CLAIM OR OTHER REPRESENTATIVE TYPE FO CLAIM YOU MAY HAVE AGAINST US INCLUDING ANY RIGHT TO CLASS OR OTHER REPRESENTATIVE ARBITRATION OR ANY CONSOLIDATION OF INDIVIDUAL ARBITRATIONS. But, Judge Boyce F. Martin, Jr. found the question of class arbitrability still should be submitted to the arbitrator for resolution because of that agreement&rsquo;s definition of controversies subject to arbitration as:&nbsp; &ldquo;Any claim or dispute . . . including the interpretation and scope of this clause, and the arbitrability of the claim or dispute . . . .&rdquo; So, despite &ldquo;an unambiguous class-action waiver, the provision requiring an arbitrator to resolve disputes about arbitrability does not exclude class claims&rdquo;, said Judge Martin.&nbsp; Was this bad draftsmanship or a difference of opinion regarding Stolt-Nielsen?&nbsp; How many class waivers or clauses withdrawing class arbitrability from an arbitrator&rsquo;s consideration were required?&nbsp; Now, the published decision in LexisNexis provides some definitive answers. The Bottom Line: While not an employment case, the LexisNexis decision provides welcome guidance to employers.&nbsp; First, &ldquo;classwide arbitrability&rdquo; is a gateway issue.&nbsp; Second, an implicit agreement to arbitrate class claims cannot be inferred from the fact that the parties agreed to arbitrate.&nbsp; But, the greater use of explicit class action waivers in arbitration agreements may eventually render these issues moot.&nbsp;

LexisNexis v. Crockett — Sixth Circuit Performs A Gateway Analysis In Class Arbitration Controversy