“Who decides whether class arbitration is available?” This seemingly simple question has fueled much litigation and is hotly debated between the Federal Courts of Appeals. This question also implicates other foundational questions: “Is class arbitration a proper remedy in this case?” “Is class arbitration a good tool to resolve disputes?” “Are the class-action waivers that lead to the use of class arbitration conscionable?” “Is the use of arbitration clauses in consumer, employment, and other contracts between large organizations and single persons a just practice?”
This article does not presume to answer any of those questions. Instead, this article examines a very narrow issue that has caused a substantial circuit split: “Is incorporation of the American Arbitration Association (AAA) rules in an arbitration clause a proper delegation of authority to the arbitrator to decide whether class arbitration is available?” The solution to this problem, and to the class arbitrability delegation problem in general, is important because it will determine how many claims go to class arbitration. Arbitrators are more likely to decide that class arbitration is available because they believe they can handle the challenge and can bill much more time in a class arbitration. Courts, meanwhile, will embrace the Supreme Court’s skepticism against class arbitration and rule that it is not available. Therefore, a resolution on this issue will have a profound impact on the number of class arbitrations filed and resolved.
I begin with a brief examination of the background of arbitration, the delegation doctrine, and class arbitration. Then, I examine the Supreme Court’s treatment of class arbitration and the question of who decides class arbitrability. Next, I define the different positions the federal circuits have taken on the AAA incorporation question, which has resulted in a four to three circuit split. Finally, I propose my own resolution of the split, analyze the Supreme Court’s likely solution, and examine possible effects of that decision.