703 F. App'x 15
2d Cir.2017Background
- Plaintiffs (employees) challenged Sterling Jewelers’ arbitration agreement after an arbitrator certified a class that included absent employees who had not opted in.
- The district court confirmed the arbitrator’s class-certification award in part; Sterling appealed.
- This appeal focuses on whether the arbitrator had authority to bind absent class members to class arbitration procedures.
- The Second Circuit previously decided Jock I, where the arbitrator’s authority to decide whether the contract allowed class arbitration was treated as presented to the arbitrator.
- The narrow question here is distinct: even assuming the arbitrator could decide whether the agreement permitted class arbitration, could the arbitrator then certify a class including nonconsenting, absent employees?
- The Second Circuit vacated and remanded for further proceedings to determine whether the arbitrator exceeded her authority by certifying absent class members.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether arbitrator could certify a class that includes absent, non‑consenting employees | Jock: Arbitrator had authority (law of the case) and certification was permissible because arbitrator resolved that agreement allowed class arbitration | Sterling: Arbitrator lacked power to bind non‑parties/absent employees to class arbitration; certification exceeded arbitrator’s authority | Vacated and remanded: court declined to treat law of the case as resolving whether absent non‑consenting members could be bound; remand to decide if arbitrator exceeded authority |
| Whether Jock I resolved the power to bind absent class members | Jock: Prior decision meant arbitrator could decide availability of class arbitration | Sterling: Jock I did not address non‑party binding; different question | Court held Jock I did not squarely resolve the absent‑member binding issue |
| Whether Oxford Health Plans compels upholding arbitrator’s certification of absent members | Jock: Oxford supports arbitrator deciding class procedures after parties submitted question | Sterling: Oxford concerns arbitrability only when parties submitted the question; it does not authorize binding non‑consenting absent members | Court held Oxford does not answer whether an arbitrator may bind absent non‑parties to class arbitration |
| Whether an arbitration award may be vacated under 9 U.S.C. § 10(a)(4) for exceeding arbitrator’s powers by binding non‑parties | Jock: Award should stand if arbitrator had power over the issue submitted | Sterling: Exceeding powers by binding non‑parties warrants vacatur | Court instructed district court to reconsider whether arbitrator exceeded powers under § 10(a)(4) regarding absent members |
Key Cases Cited
- Duferco Int’l Steel Trading v. T. Klaveness Shipping A/S, 333 F.3d 383 (2d Cir. 2003) (standard of review for confirming arbitration awards)
- Westerbeke Corp. v. Daihatsu Motor Co., 304 F.3d 200 (2d Cir. 2002) (review standards for arbitration confirmation)
- DiRussa v. Dean Witter Reynolds, Inc., 121 F.3d 818 (2d Cir. 1997) (arbitrator power assessed by submission/agreement, not correctness)
- Jock v. Sterling Jewelers Inc., 646 F.3d 113 (2d Cir. 2011) (prior appellate decision concerning arbitrator authority to decide availability of class arbitration)
- Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064 (U.S. 2013) (class arbitration is consent‑based; arbitrator may decide only if parties authorized class procedures)
- Stolt‑Nielsen S.A. v. Animal Feeds Int’l Corp., 559 U.S. 662 (U.S. 2010) (class arbitration depends on contractual consent)
- Nationwide Mut. Ins. Co. v. Home Ins. Co., 330 F.3d 843 (6th Cir. 2003) (arbitration panel may not determine rights of non‑parties)