Class Actions Brief Blog

It is one thing for a federal trial court to decide, based on precedent and Rule 23, whether a class of individuals can be allowed – consistent with the principles of due process – to assert claims against a defendant.  But it is another – entirely – to contemplate an arbitrator making those decisions:  “class arbitration” can send chills down the spine of even the most seasoned defense lawyer. In NCR Corp. v. Jones, No. 3:15-cv-444 (Jan. 5, 2016), Judge Cogburn had to decide whether the parties’ arbitration agreement – which was silent on the subject – permitted class arbitration. (Unlike some cases, the parties in Jones agreed that the court – not the arbitrator – was empowered to make this decision).  Acknowledging that the “Fourth Circuit has not yet had an opportunity to address the precise issue of silence in an arbitration agreement as to class arbitration,” the Court noted that the circuits are “somewhat divided” on the subject. Analyzing the issue “under the principles of North Carolina contract law,” Judge Cogburn relied upon the “exclusive bilateral terms” of the arbitration agreement (i.e., the absence of a reference to arbitration with anyone other than the contracting parties) and the agreement’s reference to a single venue location. The court also weighed practical issues with class arbitration, including the fact that arbitrators may not be as knowledgeable as courts about key procedural issues like certification and the protection of absent parties. The court held that it “will not read the absence of a term regarding class arbitration to mean that the parties agreed to class arbitration.” It remains to be seen whether the employee – a declaratory defendant in the case – will take this first-impression issue to Richmond for ultimate decision.