JPMorgan loses attempt to prohibit class arbitrations

November 19, 2013 by

Class Actions Practice Area urlA California federal district court judge on Thursday rejected the attempt by JPMorgan Chase & Co. to stop two former appraisers from arbitrating wage-and-hour claims on a classwide basis, holding that it wasn’t in the court’s purview to decide whether their agreement authorized class proceedings.

U.S. District Judge Josephine L. Staton denied JPMorgan’s motion to compel arbitration on an individual basis, relying on a 2003 plurality ruling by the U.S. Supreme Court in Green Tree v. Bazzle as “useful guidance” even though that opinion wasn’t binding.  Judge Staton noted that in the JPMorgan case, neither side contested that the plaintiffs’ claims were subject to arbitration.
“The only question, as in Bazzle, is the interpretive one of whether or not the agreements authorize Plaintiffs to pursue their claims on a class, collective, or representative basis. That question concerns the procedural arbitration mechanisms available to Plaintiffs, and does not fall into the limited scope of this Court’s responsibilities in deciding a motion to compel arbitration,” Thursday’s ruling said.

Former appraisers Kenneth Lee and Mark Thompson — along with David Agree, identified in court papers as a current Chase appraiser — said in October 18 court papers that they already had agreed to refile their Fair Labor Standards Act collective action, California state law class claims and Private Attorneys General Act representative claims in arbitration.

Lee and Thompson filed their putative class and collective action in March, claiming JPMorgan misclassified appraisers as exempt from overtime pay requirements.

The Supreme Court hasn’t yet decided whether the question of who — the court or the arbitrator — gets to interpret an arbitration agreement and decide whether class arbitration is permissible, Judge Staton noted.

The plurality in Bazzle agreed that determining whether certain arbitration agreements allowed class arbitration was for an arbitrator, not a court, Thursday’s ruling said, but JPMorgan argued that the high court’s 2010 Stolt-Nielsen decision rendered Bazzle unpersuasive, and that letting an arbitrator decide whether class arbitration was authorized ran afoul of the Stolt-Nielsen decision.

But according to Judge Staton, Stolt-Nielsen tackled only the question of how to decide whether class arbitration is allowed, not who decides. The Stolt-Nielsen decision said parties can’t be forced to submit to class arbitration unless there a contractual basis for agreeing they agreed to do so — demanding that courts and arbitrators be faithful to agreements’ terms without weighing on their respective authority, Thursday’s decision said.

A recent Sixth Circuit decision — Reed Elsevier v. Crockett — found Bazzle unpersuasive and reasoned that since the Supreme Court had said that various features of class actions made them ill-suited for arbitration, that the question of the availability the class mechanism was one for the court, Thursday’s ruling said.

But Judge Staton aligned herself with the Third Circuit, which said in a 2011 ruling that the availability of class proceedings was a question for an arbitrator, and ruled that the high court had only pointed out those features to explain why the standard for determining if the parties had agreed to class arbitration was so tough.

The case is Kenneth J Lee et al. v. JPMorgan Chase and Co et al., case number 8:13-cv-00511, in the U.S. District Court for the Central District of California.

Steve Larson
An experienced trial lawyer who handles both hourly and contingent fee cases, Steve has expertise in class actions, consumer cases, antitrust litigation, securities litigation, corporate disputes, intellectual property disputes, unfair competition claims, employment matters, and disputes involving family wealth. Steve regularly represents individuals and businesses in federal and state court and has obtained class-wide recovery in multiple class actions. A veteran practitioner, Steve's clients value his creative approach to resolving complex litigation matters.

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