Volume 12, Issue 1 - January 2014

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Reed Elsevier, Inc. v. Crockett, 734 F.3d 594 (6th Cir. 2013)

Reed Elsevier, Inc. v. Crockett, 734 F.3d 594 (6th Cir. 2013)


A provider of online legal research brought action for declaratory and injunctive relief after an attorney filed a demand for class arbitration of claims against the provider for fraud, negligent representation, breach of contract, negligence, gross negligence, unjust enrichment, and violation of New York Consumer Protection Act.  The district court granted summary judgment on the declaratory judgment and dismissed the claim for injunctive relief without prejudice.


The Sixth Circuit held that (1) the question whether an arbitration agreement permits classwide arbitration is a “gateway” matter, (2) arbitration clause of a subscription plan did not authorize arbitrator to decide classwide arbitrability, and (3) arbitration clause did not authorize classwide arbitration.  Henceforth, parties must “clearly and unmistakably” provide for classwide arbitration.


In an effort to seemingly keep arbitration somewhat within the confines of the courts, the Sixth Circuit decided that the “gateway” question whether an arbitration agreement permits classwide arbitration is reserved for a court, rather than an arbitrator, to decide.  This threshold, however, can be reached in front of an arbitrator if the parties involved can “clearly and unmistakably” prove that the arbitration agreement permits classwide arbitration.  If the rule becomes the majority rule, analysts have concluded it will be another tool that companies can use to protect themselves from class actions.  It further highlights courts’ desires not to pass on interpretation of arbitration clauses to allow for class actions to arbitrators.

The Sixth Circuit recognized that the United States Supreme Court had not yet tackled the specific issue involved in this case; but, according to Judge Kethledge, had sketched a framework and border of a puzzle and the Sixth Circuit aptly filled in the middle.  In Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444 (2003), a plurality of justices on the Supreme Court held that classwide arbitraility was a subsidiary question not concerned whether parties actually agreed to arbitrated the matter, but instead the details of what kind of arbitration process the parties had agreed to.  Thus, the Sixth Circuit’s interpretation of Green Tree revolved around the process of arbitration, not whether the parties even reached the arbitration threshold in the first place.

The majority decision notes that the Supreme Court in Stolt-Nielsen S.A. v. AnimalFeeds Int’l. Corp., 559 U.S. 662 (2010) distinguished, or at least clarified, its decision in Green Tree.  In Stolt-Nielsen, the Court recognized that only a plurality had decided the gateway versus subsidiary question in Green Tree.  The Sixth Circuit interpreted the Supreme Court’s prior decision to leave the gateway question of whether classwide arbitration was available as an open question.  As the law currently stands, arbitrators only are able to answer questions or have authority over matters which the parties explicitly agreed to in advance.

In the present case, such an explicit agreement over a class action is not present.  The Sixth Circuit reasoned, then, that the Supreme Court’s decision require that arbitration clauses must be interpreted according to their terms.  The court concluded that because no explicit authorization for class action existed, they could not implicitly find such an agreement or authorization existed.

The Sixth Circuit went on to find that gateway questions are presumptively for judicial determination, unless the parties provide clearly and unmistakably otherwise.  According to Green Tree, gateway disputes include “whether the parties have a valid arbitration agreement at all or whether a concededly binding arbitration clause applies to a certain type of controversy.”  The Sixth Circuit interpreted this to mean that with any agreement without explicit authorization for a specific condition, the interpretation of silence or ambiguity should be left to the courts.  An arbitrator should not be left to such gateway question interpretation.

Subsidiary questions, on the other hand, are exactly what arbitrators were brought in for in the first place.  In First Options of Chicago Inc. v. Kaplan, 514 U.S. 938 (1995), the Supreme Court noted that “the law reverses the presumption for subsidiary questions.”  These questions grow out of the actual dispute and bear on its final disposition.  Once arbitration begins, it follows that “they would have agreed to have an arbitrator decide these subsidiary questions as well.”  But, such arbitrator authority does not reach the threshold of what or who were subject to arbitration in the first place.  Such a question is a gateway question, not a subsidiary one coming out of the dispute.  The Sixth Circuit, likewise, concluded that “whether an arbitration agreement permits classwide arbitration is a gateway matter, which is reserved for judicial determination.”

Of course, the gateway question of classwide arbitration can be overcome if the parties clearly and unmistakably assign to the arbitrator the question of a class action.  In the present case, the clause makes no mention of classwide arbitration.  Because there was no explicit mention—no clear or unmistakable statement to overcome the silence—the Sixth Circuit concluded that no inference could be appropriately made.

In conclusion, Reed Elsevier seems to be entirely consistent with the Supreme Court’s jurisprudence regarding an arbitration clause being silent on whether classwide arbitration is permissible.  Yet, because the Supreme Court has not definitively indicated a position on the matter, questions always remain.  The Sixth Circuit, however, prudently and aptly attacked the question.  It hopes—and assumes—that arbitration agreements are sufficiently specific in what and who they affect.  When an agreement is not specific, the agreement itself is not moot, but whether it can greatly affect a class (whether a group of individuals or a corporation) and such a gateway question is not previously decided, such a decision should be determined by the judiciary.  If parties do not clearly and mistakably provide for classwide arbitration, such arbitration cannot be provided for post hoc.  Subsidiary questions arising out of the dispute are left for the arbitrators.  On the other hand, gateway questions—those which must be answered before arbitration can even begin—should be left to the judiciary.

Posted in: Volume 12, Issue 1

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