JPay, Inc. v. Cynthia Kobel
904 F.3d 923
11th Cir.2018Background
- Plaintiffs Cynthia Kobel and Shalanda Houston used JPay services and sued for alleged overcharges, seeking to pursue claims on a class basis and filed a Demand for Arbitration with the AAA.
- JPay's Terms of Service required arbitration under AAA consumer or commercial rules and included: (1) incorporation of AAA rules; (2) a clause stating "the ability to arbitrate... shall likewise be determined in the arbitration"; and (3) a broad agreement to "arbitrate any and all such disputes, claims and controversies."
- JPay sued in state court for declaratory relief to prevent class arbitration and to compel bilateral arbitration; the case was removed to federal court and proceeded in the Southern District of Florida.
- The district court granted summary judgment to JPay, holding that (a) availability of class arbitration is a question of arbitrability presumptively for courts, and (b) JPay's agreement did not clearly and unmistakably delegate that question to an arbitrator.
- On appeal, the Eleventh Circuit reviewed de novo and addressed two questions: (1) whether class-arbitration availability is a question of arbitrability (who decides), and (2) whether the contract clearly and unmistakably delegated that question to an arbitrator.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether availability of class arbitration is a question of arbitrability (who decides) | Kobel: class availability is procedural and for the arbitrator to decide (follow Green Tree/Bazzle) | JPay: class availability is a gateway question of arbitrability and presumptively for courts | Held: Class availability is a question of arbitrability, presumptively for courts to decide |
| Whether the arbitration agreement clearly and unmistakably delegates questions of arbitrability to the arbitrator | Kobel: yes — incorporation of AAA rules + express clause delegates arbitrability (including class availability) | JPay: incorporation alone (and bilateral wording) does not show intent to delegate class-availability question | Held: Agreement clearly and unmistakably delegates arbitrability questions to the arbitrator (incorporation of AAA rules + explicit clause + broad language) |
| Whether the district court could decide class availability despite the delegation | Kobel: district court lacked power once delegation found | JPay: court should determine class availability initially | Held: Because the parties delegated arbitrability, the district court erred; arbitrator must decide class availability |
| Appropriate remedy on appeal | Kobel: vacate denial to compel arbitration and compel arbitration on class availability | JPay: affirm district court orders | Held: Vacated in part, reversed in part — remanded with instructions to refer the demand to arbitration |
Key Cases Cited
- AT&T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643 (U.S. 1986) (arbitrators derive authority only from parties' agreement)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (U.S. 2002) (distinguishes "procedural" questions for arbitrators from "questions of arbitrability" for courts)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (courts should presume questions of arbitrability remain with courts absent clear and unmistakable delegation)
- Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662 (U.S. 2010) (class arbitration is fundamentally different; parties must consent to class procedures)
- Oxford Health Plans LLC v. Sutter, 569 U.S. 564 (U.S. 2013) (Court noted it has not definitively decided whether class-availability is a question of arbitrability)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (U.S. 2011) (FAA preempts state rules that interfere with arbitration agreements; discusses differences between bilateral and class arbitration)
- Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (U.S. 1983) (doubts about arbitrability generally resolved in favor of arbitration)
- Terminix Int'l Co. v. Palmer Ranch Ltd. P'ship, 432 F.3d 1327 (11th Cir. 2005) (incorporation of AAA rules that empower arbitrator to decide jurisdiction amounts to clear-and-unmistakable delegation)
- U.S. Nutraceuticals, LLC v. Cyanotech Corp., 769 F.3d 1308 (11th Cir. 2014) (reaffirming that incorporation of AAA rules shows clear delegation of arbitrability)
- Spirit Airlines, Inc. v. Maizes, 899 F.3d 1230 (11th Cir. 2018) (holding incorporation of AAA rules can delegate class-availability questions; relied on Terminix)
- Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63 (U.S. 2010) (parties can agree to arbitrate gateway questions of arbitrability)