Does Adoption of the AAA Rules Grant an Arbitrator the Authority to Decide Whether Class-Wide Arbitration Is Authorized?
This post has been viewed 2,955 times.
Prior to 2013, most federal appellate courts agreed that whether the parties authorized class-wide arbitration is normally a question for the arbitrator where the parties adopt American Arbitration Association (AAA) rules. Recent decisions by the Sixth and the Third Circuits found that adoption of the AAA rules does not constitute “clear and unmistakable” evidence that the parties delegated to an arbitrator the right to make that determination.
Supreme Court Establishes the “Clear and Unmistakable” Rule
In First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995), the Supreme Court established the general rule that courts—not arbitrators—decide gateway questions unless there is “clear and unmistakable” evidencethat the parties delegated that authority to an arbitrator. The AAA’s Commercial Arbitration Rules, effective January 1, 1999, include a provision that delegates to the arbitrator the power to decide issues regarding jurisdiction and arbitrability. The issue before subsequent courts has been whether adoption of a version of the AAA Commercial Rules effective after January 1, 1999, constituted “clear and unmistakable” evidence that the parties agreed that issues of arbitrability and jurisdiction be decided by an arbitrator.
What Constitutes Clear and Unmistakable Evidence?
In a case of first impression, the Second Circuit found that incorporation of AAA rules with a delegation provision constituted “clear and unmistakable” evidence of the parties’ intent to arbitrate whether a non-signatory can compel a signatory to arbitrate. Contec Corp. v. Remote Solution Co. LTD, 398 F.3d 205 (2005). That same year the Eleventh Circuit—in a case that cited Contec—held that by incorporating in their agreement the AAA rule that delegates to the arbitrator the power to rule on his or her own jurisdiction, the parties “clearly and unmistakably” agreed that the arbitrator should decide whether the arbitration clause is valid when the clause allegedly contains unenforceable remedial restrictions that are not severable from the remainder. Terminix Int’l Co. LP v. Palmer Ranch Ltd. P’ship, F.3d 1327 (2005).
Tags:
