The U.S. Supreme Court yesterday agreed (order list here) to decide if the federal Arbitration Act bars class arbitration unless the agreement to arbitrate allows it. As petitioners framed the issue:
In Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003), this Court granted certiorari to decide a question that had divided the lower courts: whether the Federal Arbitration Act permits the imposition of class arbitration when the parties' agreement is silent regarding class arbitration. The Court was unable to reach that question, however, because a plurality concluded that the arbitrator first needed to address whether the agreement there was in fact “silent.” That threshold obstacle is not present in this case, and the question presented here - which continues to divide the lower courts - is the same one presented in Bazzle:
Whether imposing class arbitration on parties whose arbitration clauses are silent on that issue is consistent with the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq.
Blawgletter summarized the decision below (by the Second Circuit) thus:
[T]he court turned back an attack on a "clause construction" award by a panel of arbitrators. The claimants in the arbitration proceedings had contracts for parcel tanker shipping services and alleged that Stolt-Nielsen and others conspired to restrain competition for those services, artificially inflating prices as a result. After a Connecticut district court ordered arbitration of the dispute as the contracts required, the claimants asked that the arbitration proceed on a class basis. Respondents resisted but couldn't point to contract language that prohibited class arbitration. The arbitral panel granted class treatment, but on petition of the respondents a district court vacated the award. The Second Circuit disagreed, holding that the arbitrators didn't manifestly disregard applicable law in rendering their award. Stolt-Nielsen SA v. AnimalFeeds Int'l Corp., No. 06-3474-cv (2d Cir. Nov. 4, 2008).
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