Jock et al v. Sterling Jewelers, Inc
OPINION AND ORDER re: 162 MOTION to Vacate the Arbitrator's Class Determination Award. filed by Sterling Jewelers, Inc. The Court finds that the Arbitrator may not so bind non-parties to class action procedures where, as h ere, the Court has determined that the arbitration agreement does not, in fact, permit class action procedures. Therefore the Court finds that the Arbitrator here had no authority to decide whether the RESOLVE agreement permitted class action proce dures for anyone other than the named parties who chose to present her with that question and those other individuals who chose to opt in to the proceeding before her. See Granite Rock, 561 U.S. at 299; see also Porzig v. Dresdner, Kleinwort, Benson, N. Am. LLC, 497 F.3d 133, 140-41 (2d Cir. 2007). As the arbitrator exceeded her powers, see Porzig, 497 F.3d at 140 (an arbitrator exceeds her powers when she "goes beyond [the] self-limiting agreement between consenting parties"), the Cou rt grants Sterling's motion to vacate the February 2, 2015 Award in so far as that Award certifies a class that includes individuals who have not affirmatively opted in to the arbitral proceedings. The Clerk is directed to close docket entry number 162. SO ORDERED. (Signed by Judge Jed S. Rakoff on 1/15/18) (yv)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
LARYSSA JOCK, et al.,
08 Civ. 2875
OPINION AND ORDER
STERLING JEWELERS INC.,
JED S. RAKOFF, U.S.D.J.
Plaintiffs, current and former female employees of defendant
them in pay and promotion on the basis of their gender.
plaintiffs moved to compel
"RESOLVE agreement"), see Dkt. 25, which motion this Court granted
by Order dated June 18, 2008, see Dkt. 52. There followed extensive
some of which are briefly summarized
below and more specific familiarity with which is here presumed.
Now before the Court is Sterling's motion to vacate a Class
plaintiffs' Title VII disparate impact claims for declaratory and
inJunctive relief, a class that, Sterling estimates, includes over
70,000 "absent" class members,
Sterling employees other than
Arbitrator. See Dkts. 137-1-3. According to Sterling, even though
the Arbitrator is planning to permit members of the certified class
to opt out, the Arbitrator exceeded her authority by purporting to
bind this larger group in any way as they never submitted to her
authority or presented to her the question of whether the RESOLVE
Memorandum of Law in Support of its Renewed Motion to Vacate the
Arbitrator's Class Certification Award ("Def. Mem.") at 5-7, Dkt.
Plaintiffs oppose Sterling's motion,
arguing that the Court
must defer to the Arbitrator's interpretation of the agreement and
Certification Award ("Pl. Mem.") at 8-9, Dkt. 165.
convoluted litigation. Briefly, in 2009, the Arbitrator determined
that the RESOLVE agreement permitted class arbitration.
moved to vacate that determination, and by bottom-line Order dated
August 31, 2009, the Court initially denied Sterling's motion. See
Sterling timely appealed.
appeal was pending, the Supreme Court issued an opinion in StoltNielsen S.A. v. AnimalFeeds Int' l Corp., which reversed the Second
Circuit's reversal of the undersigned's decision holding that a
class action proceeding is not available in arbitration unless the
contracting parties so provide,
Stolt-Nielsen SA v.
435 F. Supp. 2d 382, 384
(S.D.N.Y. 2006), rev'd,
(2d Cir. 2008), rev'd and remanded sub nom., 559 U.S. 662
Sterling moved pursuant to Federal Rules of
Procedure 62. 1 and 60 (b)
2009 Opinion and Order
re 1 i ef from the December 2 8,
(which had relied,
inter alia, on the now
reversed Second Circuit decision in Stolt-Nielsen), and the Second
On August 6,
this Court reversed its earlier decision
and granted Sterling's motion to vacate, see Order dated August 6,
to identify any concrete basis
arbitrator to conclude that the parties manifested an intent to
arbitrate class claims." Memorandum Order dated July 27, 2010 at
10, Dkt. 85. Plaintiffs timely appealed, see Dkt. 88, and a divided
panel of the Second Circuit reversed,
with the majority finding
that (1) the parties had squarely presented the question of whether
"whether the arbitrator was right or wrong in
her analysis, she had the authority to make the decision, and the
646 F.3d 113, 124-127
disparate impact claims. See Dkts.
moved to vacate that Award,
(2d Cir. 2011)
137-1-3. On March 3, Sterling
arguing that the Arbitrator exceeded
her authority by purporting to bind employees other than the named
proceedings before the Arbitrator. See Dkts. 135, 136. On November
15, 2015, the Court denied Sterling's motion, finding that vacatur
was "foreclosed by earlier rulings in this case." Opinion and Order
which affirmed the
Arbitrator's prerogative to decide whether the RESOLVE agreement
permitted class action procedures,
is "no basis
the Court reasoned that there
vacating the C 1 ass
Determination Award on the
purporting to bind absent class members." Id.
the Second Circuit
On July 24,
vacated the November 2015 Opinion and
Order, holding that the "decision in Jock I .
. did not squarely
address whether the arbitrator had the power to bind absent class
to class arbitration given that
[the absent class
arbitrator determining whether class arbitration was permissible
instructed the parties and
this Court that the issue "pertinent" on remand is:
arbitrator, who may decide .
whether an arbitration agreement
it for decision,
may thereafter purport to bind non-
parties to class procedures on this basis." Id. at 18.
Arbitrator may not so bind non-parties to class action procedures
agreement does not,
in fact, permit class action procedures.
The Federal Arbitration Act provides that a district court
may vacate an arbitration award where the arbitrator has exceeded
1 O (a) ( 4)
See 9 U.S.C.
The Court's "inquiry under§
thus focuses on whether the arbitrator 
had the power,
based on the parties' submissions or the arbitration agreement, to
correct 1 y
decided that issue." Westerbeke Corp. v. Daihatsu Motor Co., Ltd.,
304 F. 3d 200, 220
(2d Cir. 2002)
(internal quotation omitted).
Plainly it is the law of the case that the Arbitrator does
70,000-person class. The Court considered the question of whether
See Memorandum Order dated July 27,
those individuals who did not affirmatively
opt in to the class proceeding here did not agree to permit class
procedures by virtue of having signed RESOLVE agreements.2
The RESOLVE agreements authorize arbitration to be conducted by
the American Arbitration Association ("AAA") in accordance with
AAA rules, as amended or modified by certain RESOLVE-specific
agreement be construed according to Ohio
Construction Award, Ex. F. to Sterling Memorandum of Law in Support
of Motion to Vacate, Dkt. 58. Nowhere do the RESOLVE agreements
mention class procedures. The Arbitrator, however, decided that
class procedures were nonetheless available as ( 1) the RESOLVE
agreements did not prohibit class arbitration; (2) under Ohio law
the RESOLVE agreements were contracts of adhesion; and in a
contract of adhesion, (3) unless the drafter expressly prohibits
plaintiffs may avail themselves of that
procedural right. See id. at 4-5. But an Ohio intermediate
appellate court construing the very same agreements expressly
found that they were not adhesive or unconscionable. See W.K. v.
Farrell, 167 Ohio App. 3d 14, 26-27 (2006) (rejecting Sterling
employee's claim that the RESOLVE agreement was adhesive or
unconscionable). Moreover, the AAA Supplementary Rules for Class
Arbitrations, which the Arbitrator applied here, are not, by their
own terms, to be automatically incorporated. See Reed Elsevier,
Inc. v. Crockett, 734 F.3d 594, 599-600 (6th Cir. 2013).
2 Note that, for the reasons stated below, the Court need not reach
the question of whether, had the RESOLVE agreement, in fact,
permitted class procedures, the Arbitrator would have had the
authority to bind absent class members based on the fact that each
absent class member agreed to such procedures by virtue of having
signed the agreement.
the remaining question here is whether the Arbitrator
had the authority to certify a
70,000-person class because the
whether the RESOLVE agreement allowed for class procedures to the
arbitrator is "typically an
Granite Rock Co.
'issue for judicial determination.'"
(quoting Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79,
RESOLVE agreements permitted class procedures,
brought by these
plaintiffs on behalf of themselves and all others who opted into
the class, and the Arbitrator's authority to decide that the absent
class members' RESOLVE agreements permitted class procedures that
would bind these individuals unless they opted out. According to
plaintiffs, the named and absent class members "have all executed
the same arbitration agreement which the Arbitrator interpreted to
. as long as the due process
permit the aggregate litigation .
requirements of Rule 23, tracked in AAA Supplementary Rule 4, are
satisfied." Pl. Mem. at 9.
position has some force.
But plaintiffs overlook the
the plaintiff class
[who have not
Arbitrator's authority "1n any way." Oxford Health Plans LLC v.
Sutter, 569 U.S. 564, 574 (2013)
(Alito, J., concurring); contrast
Jock I, 646 F.3d at 124 (holding that the Arbitrator had authority
arbitration" because it "was squarely presented to the arbitrator"
by the parties).
class members may have
contracts with arbitration clauses "materially identical to those
erroneous interpretation of contracts that do not authorize class
arbitrator to make that determination."
agreement, then her improper assertion of authority would open the
given that the Arbitrator was wrong as a matter of law
about whether the RESOLVE agreement permits opt-out classes, it is
hard to see how courts could bind individuals who do not opt out,
but who have not otherwise opted in, to her decisions. After all,
arbitrators are not Judges. Nowhere in the Federal Arbitration Act
does Congress confer upon these private citizens the power to bind
i ndi vi duals
re 1 evant
(arbitration is "simply a matter of contract between the parties");
Stanford Junior Univ.,
a matter of consent,
Trustees of Leland
Nor could Congress delegate
Constitution entrusts the judicial power to the Judicial branch.3
the Arbitrator here had no
authority to decide whether the RESOLVE agreement permitted class
action procedures for anyone other than the named parties who chose
to present her with that question and those other individuals who
chose to opt in to the proceeding before her.
at 299; see also Porzig v.
See Granite Rock,
N. Am. LLC, 497 F.3d 133, 140-41 (2d Cir. 2007).
As the arbitrator exceeded her powers,
(an arbitrator exceeds her powers when she "goes beyond
Moreover, as Justices Alito and Thomas suggested in their
concurring opinion in Oxford Health, the "distribution of opt-out
notices does not cure this
flaw in the class
arbitration proceeding," because an "offeree's silence does not
normally modify the terms of a contract." 569 U.S. at 574 (citing
Restatement (Second) of Contracts § 69 (1) (1979)). "Accordingly,
at least where absent class members have not been required to opt
in, it is difficult to see how an arbitrator's decision to conduct
class proceedings could bind absent class members who have not
authorized the arbitrator to decide on a classwide basis which
arbitration procedures are to be used." Id. at 574-75.
self-limiting agreement between consenting parties"),
Court grants Sterling's motion to vacate the February 2, 2015 Award
in so far as that Award certifies a class that includes individuals
who have not affirmatively opted in to the arbitral proceedings.
The Clerk is directed to close docket entry number 162.
Dated: New York, NY
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?