Yahoo! Inc. v. Iversen
836 F. Supp. 2d 1007
N.D. Cal.
2011

Background

  • Employment dispute between Yahoo and Iversen; Iversen signed arbitration agreement on Sept. 17, 2007; Iversen filed a class AAA demand under PAGA on June 23, 2011; Yahoo seeks to compel individual arbitration under FAA §4; dispute centers on whether the agreement permits class arbitration; court must decide arbitrability issue given contract language and incorporated AAA rules; court finds material dispute over class arbitration and appoints arbitrator to decide such issues; petition to compel individual arbitration is denied.
  • Iversen alleged classwide wage and related claims under Cal. Labor Code and UCL in AAA Proceeding; Yahoo argues the arbitration clause excludes class arbitration or makes arbitrability a matter for the court; Iversen contends the contract allows class arbitration via AAA Supplementary Rules; court treats arbitration agreement as incorporating AAA rules as of 2003, including Supplementary Rules; court concludes there is a contractual basis to submit arbitrability to the arbitrator, not the court.
  • Court notes the FAA limits to agreements parties consent to; interpretation of arbitration agreements generally governed by state contract law unless it would frustrate FAA objectives; incorporation of AAA rules by reference constitutes clear and unmistakable evidence of submitting arbitrability to arbitrator; court applies Stolt-Nielsen framework to determine who decides arbitrability; court denies petition to compel individual arbitration.
  • Court recognizes that whether class arbitration is available remains undecided pending Clause Construction Award by arbitrator; decision emphasizes that Concepcion does not require an express class-arbitration clause; emphasizes that the FAA’s purpose is to enforce contracts according to their terms and to honor contractual rights.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Who decides arbitrability of class claims Yahoo argues arbitrability is court’s decision Iversen argues arbitrator decides arbitrability via incorporation of AAA rules Arbitrability to be decided by arbitrator
Whether the arbitration agreement permits class arbitration Yahoo contends no express permission for class arbitration Iversen contends AAA Supplementary Rules authorize class arbitration Question remains for arbitrator; no ruling on merits of class-arbitration availability at this stage
Impact of Concepcion on need for express class-arbitration clause Yahoo relies on Concepcion to require express consent Concepcion does not foreclose implied consent via contract interpretation Concepcion does not compel express clause; contract may permit class arbitration interpretations

Key Cases Cited

  • Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662 (2010) (arbitration cannot be compelled for class claims absent contractual basis; discusses ambiguity on who decides arbitrability)
  • Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003) (plurality on class arbitration; relates to whether arbitration panel or court decides class-arbitration availability)
  • Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) (arbitrability issues may be arbitrated per contract and rules)
  • Volt Info. Sciences, Inc. v. Bd. of Trustees of Leland Stanford Jr. Univ., 489 U.S. 468 (1989) (court vs arbitrator for questions of contract interpretation; enforceability of arbitration agreements)
  • First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (who decides arbitrability depends on what the parties agreed; incorporation of AAA rules can show intent to submit questions to arbitrator)
  • Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (arbitration agreements are contracts; interpretation follows state-law rules unless FAA objectives are obstructed)
  • Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (2009) (arbitration clause interpretation under state law; limits on FAA preemption of contract interpretation)
  • AT&T Mobility LLC v. Concepción, 563 U.S. 333 (2011) (no express class-arbitration clause required to recognize class arbitration if contract so permits; FAA objectives honored)
  • Dream Theater, Inc. v. Dream Theater, 124 Cal.App.4th 547 (2004) (California appellate; discusses broad arbitration agreements and class-arbitration implications)
  • Gilbert Street Developers, LLC v. La Quinta Homes, LLC, 174 Cal.App.4th 1185 (2009) (incorporation of AAA rules constitutes clear and unmistakable evidence of submitting arbitrability to arbitrator)
  • Rodriguez v. American Technologies, Inc., 136 Cal.App.4th 1110 (2006) (California appellate on contractual interpretation and incorporation of rules)
  • Dream Theater, Inc. v. Dream Theater, 124 Cal.App.4th 547 (2004) (California appellate; covered above)
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