California Landmark Cases on Class Arbitration
(1) Arbitration generally:
Arbitration is a matter of contract. (American Express Co. v. Italian Colors Restaurant (2013) it is an "overarching principle that arbitration is a matter of contract"; accord, Oxford Health Plans LLC v. Sutter (2013) (Oxford).)
As with any contract, the parties may structure their arbitration agreement as they see fit: They may limit the issues they choose to arbitrate, define the rules under which arbitration will proceed, designate who will serve as the arbitrator and even limit with whom they choose to arbitrate. (Stolt-Neilsen S.A. v. Animalfeeds International Corp. (2010) 559 U.S. 662, 683-684 (Stolt-Neilsen); see Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc. (1985) 473 U.S. 614, 626 "as with any other contract, the parties' intentions control"; City of Los Angeles v. Superior Court (2013) 56 Cal.4th 1086, 1096 same.)
Unless the parties to an arbitration agreement have clearly and unmistakably provided otherwise, questions of arbitrability require a judicial determination. (Howsam v. Dean Witter Reynolds, Inc. (2002) 537 U.S. 79, 83 (Howsam); accord, AT&T Technologies, Inc. v. Communications Workers of America (1986) 475 U.S. 643, 649; City of Los Angeles v. Superior Court, supra, 56 Cal.4th at p. 1096.) "Linguistically speaking, one might call any potentially dispositive gateway question a 'question of arbitrability . . . .'" (Howsam, at p. 83.)
However, the United States Supreme Court has made clear that phrase is applicable only in the "kind of narrow circumstances where contracting parties would likely have expected a court to have decided the gateway matter, where they are not likely to have thought that they had agreed that an arbitrator would do so, and, consequently, where reference of the gateway dispute to the court avoids the risk of forcing parties to arbitrate a matter that they may well not have agreed to arbitrate." (Ibid.)
Thus, questions of arbitrability include such "gateway issues" as the validity of the arbitration agreement, its scope and who is bound by its terms. (See Id. at p. 84 citing cases.)
Otherwise, "subsidiary matters," those "'procedural' questions which grow out of the dispute and bear on its final disposition' are presumptively not for the judge, but for an arbitrator to decide." (Ibid.; see John Wiley & Sons, Inc. v. Livingston (1964) 376 U.S. 543, 546-547 arbitrator should decide whether the first two steps of grievance procedure were completed where exhaustion was prerequisite to arbitration; Moses H. Cone Memorial Hospital v. Mercury Construction Corp. (1983) 460 U.S. 1, 24-25 103 S.Ct. 927, 74 L.Ed.2d 765 issues of waiver, delay or defense to arbitrability are presumptively for arbitrator to decide.)
(2) Class Arbitration in California:
It is now settled that "a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so." (Stolt-Neilsen, supra, 559 U.S. at p. 684.) What remains a matter of dispute in the federal and California appellate courts is who decides--the court or the arbitrator--whether the parties have agreed to arbitrate claims on a classwide basis when the agreement itself does not expressly mention class actions.
Supreme Court decisions since Bazzle have explained the issue of who determines the class arbitration question remains undecided. (See Stolt-Nielsen, supra, 559 U.S. at p. 680 "The parties appear to have believed that the judgment in Bazzle requires an arbitrator, not a court, to decide whether a contract permits class arbitration. In fact, however, only the plurality decided that question. We need not revisit that question here because the parties' supplemental agreement expressly assigned this issue to the arbitration panel, and no party argues that this assignment was impermissible."; Oxford, supra, 133 S.Ct. at p. 2068, fn. 2 "Stolt-Nielsen made clear that this Court has not yet decided whether the availability of class arbitration is a question of arbitrability" and "this case gives us no opportunity to do so".)
Several courts, including this court in Sandquist, a case currently pending in the California Supreme Court, have found Justice Breyer's opinion in Bazzle persuasive and have concluded the question is a matter of how the arbitration proceeds--a determination for the arbitrator--rather than a question of arbitrability for the court. (See Lee v. JPMorgan Chase & Co. (C.D. Cal. 2013) 982 F. Supp.2d 1109, 1112-1114; Guida v. Home Savings of America, Inc. (E.D.N.Y. 2011) 793 F.Supp.2d 611, 617-618; see generally Texas v. Brown (1983) 460 U.S. 730, 737 103 S.Ct. 1535, 75 L.Ed.2d 502 Supreme Court plurality opinion, while not binding precedent, is nonetheless "persuasive authority"; Thalheimer v. City of San Diego (9th Cir. 2011) 645 F.3d 1109, 1127, fn. 5 same.)
Other courts have found the question one of arbitrability for the court.
These courts have identified the question as involving two gateway matters for which a judicial determination is required: Whether a particular claim, that is, a "class claim," is within the intended scope of the agreement, and whether a particular party can enforce or be bound by it. (See Network Capital Funding Corporation v. Papke (2014) 230 Cal.App.4th 503, 664, 666 (Network Capital); Garden Fresh Restaurant Corp v. Superior Court (2014) 231 Cal.App.4th 678, 688-689 (Garden Fresh); Huffman v. Hilltop Companies, LLC (6th Cir. 2014) 747 F.3d 391, 398-399; Reed Elsevier, Inc. v. Crockett (6th Cir. 2013) 734 F.3d 594, 598-599; Opalinski v. Robert Half Internat. Inc. (3d. Cir. 2014) 761 F.3d 326, 332-333.)