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Sixth Circuit Holds That Arbitrator, Not the District Court, Must Decide if Plaintiff’s Class Claims are Barred by Waiver in Arbitration Agreements

On June 18, 2013 by Schnader in Finance

By Christian Sheehan

On June 11, 2013, in Lowry v. JPMorgan Chase Bank, N.A., the Sixth Circuit held that an arbitrator, not the district court, must decide whether the plaintiff’s class claims were barred by a class-action waiver in the parties’ arbitration agreement. The Court explained that although questions of arbitrability are presumptively for a court to decide, the parties had clearly and unmistakably agreed that the arbitrator would resolve disputes about whether their claims were arbitrable. In addition, because the provision requiring an arbitrator to decide this threshold issue did not exclude class claims, the Court held that JPMorgan Chase’s argument that the plaintiff’s class claims were barred must be addressed in arbitration. The Court reached this conclusion despite the fact that it found the class-action waiver to be “unambiguous.” Lowry therefore is significant because it makes clear that even if an arbitration agreement contains a provision unambiguously barring class claims, if the parties agreed that the arbitrator would resolve disputes about arbitrability, the district court must submit all claims, including the seemingly barred class claims, to arbitration.

Lowry is noteworthy for the additional reason that it is the latest in a series of recent Circuit court decisions addressing the proper roles of courts and arbitrators in determining the effect of class-action waiver provisions in arbitration agreements. In In re American Express Merchants’ Litigation, 554 F.3d 300, 310-11 (2d Cir. 2009), vacated on other grounds by Am. Express Co. v. Italian Colors Rest., 130 S. Ct. 2401 (2010), and Puleo v. Chase Bank USA, N.A., 605 F.3d 172, 188 (3d Cir. 2010) (en banc), the Second and Third Circuits, respectively, held that challenges to the enforceability of such class-action waivers presented questions of arbitrability that should be resolved by a court, not an arbitrator. Lowry is not inconsistent with these decisions. Unlike in Lowry, the Third Circuit in Puleo held that the arbitration agreement did not clearly and unmistakably provide that the arbitrator would resolve questions of arbitrability. Thus, the default rule—that a court should decide arbitrability—applied. And, in American Express, neither party argued that the contract required questions of arbitrability to be decided by the arbitrator.