The Second Circuit has just issued a ruling on the hot topic of whether or arbitration agreements can bar class actions. In Jock v. Sterling Jewelers, Inc., the Second Circuit reversed a District Court decision which had reversed an arbitrator’s decision which allowed a class arbitration of an employment dispute.
The arbitration agreement submitted all matters to arbitration and did not expressly prohibit nor authorize class arbitrations. The arbitrator found an implied agreement to arbitrate. The District Court, relying on the U.S. Supreme Court’s ruling in Stolt-Nielsen S.A. v. AnimalFeeds International Corp. , __ U.S. __, 130 S. Ct. 1758 (2010),held that an agreement that does not expressly allow class arbitrations must be interpretted to prohibit them.
The Second Circuit disagreed. It held that the arbitrator’s decision cannot be vacated simply because the District Court disagreed with its legal analysis. Further, it held that Stolt-Nielsen did not hold that abitration agreements must expressly allow for class arbitrations in order for them to occur. It held that an abitrator may find an implied agreement to arbitrate.
The take away for plaintiffs is that they should advance class arbitrations even if the agreement doesn’t expressly allow them.