A Colorado federal court recently denied DISH Network (“DISH”)’s petition to vacate an arbitration award that decided an arbitration agreement with former employee Ray permitted collective or class certification. The arbitrator had decided as a jurisdictional matter that he had authority to determine whether the agreement permitted collective or class arbitration, and then held on the merits that the disputed agreement permitted arbitration of this kind.
First, the court upheld the arbitrator’s decision that he had authority to determine whether the agreement permitted collective or class arbitrations, but on slightly different grounds than the arbitrator decided the issue. The arbitrator found that the question of whether an agreement permits collective or class arbitration is not a “gateway” issue—or “question of arbitrability”—so she therefore had jurisdiction to decide the substantive issue. Alternatively, the arbitrator found that the agreement itself clearly and unmistakably indicated the parties’ intent to submit the issue to the arbitrator. The court, on the other hand, followed persuasive authority from other circuits holding that the question of whether an agreement permits collective or class arbitration is a question typically decided by a court and not the arbitrator. It still upheld the finding of jurisdiction, however, because it found that the parties manifested an intent to delegate questions of arbitrability to the arbitrator by incorporating the American Arbitration Association’s National Rules for the Resolution of Employment Disputes—which provide for determination of such issues by the arbitrator—into their arbitration agreement.
Second, the court refused to vacate the arbitrator’s decision that the agreement permitted collective or class certification, based primarily on the limited review applicable to arbitration awards under the Federal Arbitration Act. The arbitrator weighed a series of six features of the agreement’s language, three of which counseled for construing the agreement to permit collective or class arbitration of Ray’s claims and three counseled against permitting collective or class arbitration. Regarding the permissibility of collective arbitration provided by the Fair Labor Standards Act, the arbitrator decided that the three features supporting collective arbitration outweighed the three opposing it. Regarding the permissibility of class arbitrations, the arbitrator found a closer case and proceeded to interpret the agreement against DISH as the drafter to permit class arbitration.
In reviewing DISH’s merits challenges, the court found that the arbitrator’s decision was entirely consistent with relevant Supreme Court and Colorado precedent. The court also noted that even if the arbitrator’s analysis was inconsistent with the relevant authority, errors in interpreting or applying the law do not constitute grounds for vacating an arbitration award. Furthermore, it found the decision to interpret the contract against DISH was appropriate, because other rules of contract interpretation failed.
Dish Network, L.L.C. v. Ray, Case No. 16-314 (USDC D. Colo. Dec. 28, 2016).
This post written by Thaddeus Ewald .
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