Two recent decisions illustrate the impact arbitration provisions can have on the availability of classwide relief.

In Kaspers v. Comcast Corp., plaintiff, a Comcast customer, refused to pay for certain billed services and had his debt referred to a collection agency. Plaintiff submitted the dispute to the American Arbitration Association (AAA) pursuant to a contractual arbitration provision. When the AAA refused to arbitrate due to an alleged defect in the arbitration provision, plaintiff brought a putative class action for the payments he made to Comcast and the property damage he sustained during the alleged defective service. The court compelled arbitration of plaintiff’s individual claims but not the class claims, since the contract prohibited “arbitrat[ion] or litigat[ion]” of class claims. The arbitrator granted plaintiff his damages, but plaintiff did not stop there—he reopened the class action in district court, arguing that the contractual class action waiver was invalid because it “effectively preclude[d] subscribers from obtaining relief” and that arbitration provisions prohibiting class actions were “unconscionable and unlawfully exculpatory.” The district court disagreed, finding that the class action waiver was valid and enforceable. On appeal, the Eleventh Circuit affirmed, clarifying that plaintiff could not circumvent the arbitration provision by alleging the “practical difficulty” of arbitrating with a purportedly recalcitrant defendant.

In Jock v. Sterling Jewelers, plaintiffs’ putative class action alleging sex discrimination was referred to arbitration pursuant to a dispute resolution agreement. After three years of proceedings, the arbitrator issued a class determination award that certified plaintiffs’ claims as to declaratory and injunctive relief but not as to money damages. The arbitrator permitted members of this certified class to opt out. On defendant’s motion to vacate the arbitration award, the district court found, first, that the arbitrator was within her authority to include in the class members beyond those who filed opt-in notices or were represented by counsel—all had signed the agreement, and the arbitrator had determined that agreement permitted class arbitration. That reading of the agreement was sanctioned by earlier rulings in the litigation.

However, the district court found the arbitrator had exceeded her authority in certifying an opt-out class. Examining the text of the arbitrator’s award closely, the court found she had certified a 23(b)(2) class for declaratory and injunctive relief and, therefore, could not allow opt-outs since relief was required to affect the entire class at once. The court disagreed with plaintiffs’ argument that her 23(b)(2) determination was not essential to the award, finding that courts were required to assess the arguments offered by the arbitrator, not the arguments devised post hoc to justify her ruling. The arguments she offered, the court said, clearly evinced an intent to certify a 23(b)(2) class. There was no way around the fact that individuals who opted out would be bound by the broad injunctive relief sought by the class, even if they were empowered to pursue their own equitable remedies in later proceedings.

Kaspers v. Comcast Corp., No. 15-12066, 2015 WL 7145318 (11th Cir. Nov. 16, 2015).

Jock v. Sterling Jewelers, No. 08 Civ. 2875(JSR), 2015 WL 7076011 (S.D.N.Y. Nov. 15, 2015).