Under Arbitration Agreement at Issue, Arbitrator Decides Whether Class Arbitration is Available
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The California Supreme Court has issued an important decision on the availability of class arbitration: Sandquist v. Lebo Automotive, Inc. (2016) 1 Cal.5th 233.
Timothy Sandquist worked for Lebo Automotive, Inc., as a car salesman. On Sandquist’s first day of employment, his manager gave him approximately 100 pages of forms to complete as a condition of his employment. Among those pages were three arbitration agreements.
Twelve years later, Sandquist sued Lebo individually and on behalf of others, alleging race discrimination against non-Caucasian workers. The trial court compelled individual arbitration, and, upon learning that all putative class members were subject to the same arbitration policies, dismissed the class allegations with prejudice. The Court of Appeal reversed in part, holding that the trial court should have allowed the arbitrator to decide whether class arbitration was available.
The Supreme Court granted review and affirmed the Court of Appeal, holding as follows:
No universal rule allocates the decision regarding the availability of class arbitration to either the court or the arbitrator. Instead, he parties’ agreement determines who will decide. State law applies generally to disputed issues of contract interpretation and governs here, at least in the first instance.
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