Continuing its recent extraordinary interest in issues involving the Federal Arbitration Act, the U.S. Supreme Court has granted the petition for writ of certiorari in Stolt-Nielsen S.A. v. Animal- Feeds International Corp. to consider whether the FAA permits class arbitration to be imposed when the arbitration agreement is silent on the question. Stolt-Nielsen presents the Court with an opportunity to resolve the uncertainty in the lower courts following its 2003 decision in Green Tree Financial Corp. v. Bazzle, in which a plurality of the Court held that the arbitrator must in the first instance decide as a matter of state law whether class arbitration is permissible despite the agreement’s silence. Since Bazzle, there have been numerous decisions by arbitrators, primarily in consumer arbitrations, allowing class arbitrations despite “silent” clauses. Some courts, including the Second Circuit in the Stolt-Nielsen case, consider Bazzle to have ruled that the FAA does not prohibit class arbitrations when the agreement is silent. Other courts have ruled that Bazzle did not reach the issue, and have held that the FAA prohibits a class arbitration unless the agreement expressly allows it. This important issue of whether the FAA requires affirmative evidence of intent to permit class arbitration now will be addressed by the Supreme Court.
Consumer arbitrations continue to come under fire in various ways. There are legislative proposals in Congress to invalidate every pre-dispute contractual arbitration agreement requiring arbitration of employment, consumer, or franchise disputes. As part of a settlement with the Minnesota Attorney General, the National Arbitration Forum, a major administrator of consumer arbitrations, has ceased to administer consumer arbitration disputes. And the American Arbitration Association, the world’s largest provider of ADR services, has announced that, pending its determination that “broadly acceptable due process protocols specific to these cases are in place,” it will not accept new consumer debt collection arbitration filings in which the consumer has not agreed to arbitrate at the time of the dispute, and the dispute involves a credit card or telecom debt, or a consumer finance matter.