Henderson v. U.S Patent Commission, Ltd.
188 F. Supp. 3d 798
N.D. Ill.2016Background
- Plaintiff Yolanda Henderson contracted with U.S. Patent Commission under two agreements ("Step 1" and "Step 2") that included arbitration clauses providing disputes be submitted to the AAA or a similar organization.
- Henderson paid for services under the agreements and later sued defendants in federal court alleging fraud and conspiracy relating to her invention; the court previously compelled arbitration of her claims.
- Henderson filed a JAMS arbitration demand seeking class treatment of her claims.
- Defendants moved under FAA § 4 to require Henderson to arbitrate individually (i.e., to prohibit class arbitration).
- The principal legal question was whether the availability of class arbitration is for the court or the arbitrator to decide, and if for the court, whether the contracts permit class arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides whether class arbitration is available? | The arbitrator should decide because the clause sends disputes to an arbitral forum and incorporates its rules. | The court should decide because class arbitrability is a gateway question for courts. | Court decides: class arbitrability is presumptively a question of arbitrability for the court. |
| Did the parties clearly and unmistakably delegate the class-arbitrability question to the arbitrator? | The arbitration clause (naming AAA or similar) incorporates forum rules so the arbitrator should decide. | Clause does not clearly and unmistakably delegate that question; it is silent on class arbitration. | No clear-and-unmistakable delegation; court retains decision. |
| Do the Step 1 and Step 2 Agreements permit class arbitration? | Silence or bilateral-language does not preclude an inference permitting class arbitration; incorporation of AAA/JAMS rules permits it. | Silence and bilateral language preclude class arbitration; parties did not consent to class proceedings. | Agreements do not permit class arbitration; plaintiff must proceed individually. |
| Effect on case management | Plaintiff argued law-of-the-case precluded defendants' current position. | Defendants argued the issue was not previously decided and can be raised now. | Law-of-the-case does not apply because the court never decided class arbitrability earlier. |
Key Cases Cited
- Oxford Health Plans LLC v. Sutter, 569 U.S. 564 (2013) (parties may not be compelled to submit to class arbitration absent contractual basis)
- Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010) (silence on class procedures cannot be construed as consent to class arbitration; class arbitration changes nature of arbitration)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) (gateway questions of arbitrability presumptively for courts unless clear delegation)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (classwide arbitration involves different stakes and procedures; courts should be cautious in inferring consent)
- Wausau Emp’rs Ins. Co. v. Century Indem. Co., 443 F.3d 573 (7th Cir. 2006) (distinguishing gateway arbitrability and procedural questions; persuasive on who decides consolidation/class issues)