In this case, Jeffrey Hedrick brought an action in Kansas federal court on behalf of himself and others similarly situated under the Fair Labor Standards Act (“FLSA”) against BNC National Bank, Hedrick’s employer. The bank filed a motion to stay, or dismiss, the action pending arbitration, under the Federal Arbitration Act, or in the alternative, to dismiss under Fed. R. Civ. P. 12(b)(6) for failure to state a claim. Given that his employment agreement contained an arbitration clause, Hedrick did not dispute his claim is subject to arbitration and did not oppose staying the case pending arbitration. However he argued that the arbitrator, rather than the court, should decide whether the arbitration can proceed as a class claim under the FLSA. The bank argued that the court should decide the class arbitration issue, and that the claim should proceed to arbitration as an individual claim.
Given that the bank’s motion to stay the action pending arbitration was unopposed, the Kansas federal court granted the motion. The court also noted that the Tenth Circuit has not directly addressed the question of who determines the availability of class arbitration. However, the court noted that that there are “fundamental differences” between bilateral and class-wide arbitration that “presumably create gateway issues of arbitrability that should be resolved by the court, rather than the arbitrator”. However, the court went on to hold that “even assuming that the availability of class arbitration is a ‘question of arbitrability’, … the arbitrator [in this case] must determine this question as the Employment Agreement provides ‘clear and unmistakable evidence’ that the parties intended the arbitrator to determine questions of arbitrability.” In this regard, the court noted that the arbitration clause provided that the arbitration would be administered by the American Arbitration Association under its National Rules for the Resolution of Employment Disputes, which state that “[t]he Arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement.” Thus, the court found that the parties’ incorporation of these rules into their arbitration clause constitutes “clear and unmistakable” delegation of questions of arbitrability to the arbitrator, and thus, that the class arbitration issue must be determined by the arbitrator.
Hedrick v. BNC National Bank, No. 15-9358 (D. Kan. May 16, 2016).