Jonathan R. Harkavy, a lawyer, arbitrator and mediator, has taught labor and employment law at Wake Forest School of Law and corporate finance at Duke Law School and the University of North Carolina at Chapel Hill School of Law. He has written and lectured widely on employment law and alternative dispute resolution.
Last week the Supreme Court passed up an opportunity to resolve a hotly disputed aspect of employment arbitration law: Whether judges or arbitrators should decide whether class (or collective) arbitration is available when an arbitration agreement is silent on the subject. The Court’s denial of certiorari in Opalinski v. Robert Half International, Inc., 583 U.S. — (No. 16-1456) (Order List of October 30, 2017, p. 10) thus put a precipitous and somewhat unexpected end to a bit of suspense about this case over the last few months. While the arbitration spotlight is currently focused on the Court’s consideration of whether enforcement of class arbitration waivers violate the National Labor Relations Act, see, Epic Systems Corp. v Lewis, No. 16-285 (argued in tandem with Ernst & Young LLP v. Morris, No. 16-300 and N.L.R.B. v. Murphy Oil USA, No. 16-307 on October 2, 2017), lurking in the shadows is a corollary issue presented in Opalinski: What happens when an employment agreement specifying arbitration does not contain such a class action waiver? That is, if an agreement says nothing about class arbitration one way or the other, who decides whether class treatment is permissible? More precisely, is class treatment a procedural question for an arbitrator or is it a gateway arbitrability question for a judge to decide?
Interest in the Opalinski issue may have been heightened by the Court’s treatment of the petition for certiorari. Following its filing last June, the petition was distributed to the Court for consideration at the annual September long conference. In August, however, the Court suddenly called for a response to the petition, fixing the due date two days after the long conference. That move caused some observers to speculate that someone on the Court must have been interested in dealing with the “who shall decide” issue raised by the petition. No amici briefs supporting or opposing review were filed, however, thus indicating an apparent lack of concern about the petition itself, if not the underlying legal issue. In any event, after the op-cert and reply were filed, the petition was promptly considered and denied without comment at the October 27, 2017 conference. And thus ended, at least for the time being, an attempt to resolve a class arbitration issue that inheres in what must surely be thousands of employment agreements that lack class action waivers.
In spite of this dead-end result, a few more words about the “Opalinski attempt” may be worthwhile. First, the Supreme Court itself noted just a few terms ago that it “has not yet decided whether the availability of class arbitration is a question of arbitrability” for the court to decide, or a procedural matter for the arbitrator. Oxford Health Plans, LLC v. Sutter, 133 S. Ct. 2064, 2068, n. 2 (2013). That gratuity is ordinarily regarded as an invitation for a petition for certiorari. Second, this unresolved “who shall decide” issue is likely to be outcome determinative as to the availability of class arbitration. Indeed, in Opalinski itself, an arbitrator first ruled that unpaid overtime claims could be arbitrated on a collective basis under the FLSA before that ruling was effectively vacated and replaced with a court decision that any complaining employees would have to arbitrate their overtime claims individually, if at all. So, there’s little question about the practical importance of resolving who shall decide whether class treatment of employment claims is available. Third, the lower courts have so far failed to establish a uniform protocol for deciding who shall decide the question of class treatment in arbitrations. Whether that failure constitutes a bright-line circuit split was contested in Opalinski. But, there is scant basis for concluding that the question left open in Oxford Health Plans is on its way to resolution in the circuits. Fourth, the Court’s denial of certiorari might best be explained by the employer’s argument in its op-cert that the “who shall decide” issue is “on the road to practical extinction.” That is, in contrast to the fifteen year old agreements in Opalinski, employers are now using class action waivers in order to put a stop to class or collective arbitrations, and that development alone will effectively moot the issue that the Opalinski petition presented.
Finally, the irony of the Court’s denial of certiorari should not go unnoticed. By failing to grant review in Opalinski, the Court conveniently closeted its romance with arbitration in favor of having a judicial decision about whether FLSA overtime claims should be foreclosed from collective treatment and subjected instead to mandatory individual determinations. And, not so incidentally, the Court’s action may have also revealed its attitude about mandatory individual determinations to such a degree that one can now better predict the outcome of the class waiver argument in the Epic Systems cases. All in all, the “Opalinski attempt” is, perhaps, more telling – and ominous – than the average cert denial.