WERDEGAR, J. —
Plaintiff Timothy Sandquist and the various defendants here are parties to an arbitration agreement. A salient question is whether that agreement permits or prohibits arbitration on a classwide basis. Here we must answer a question one step removed — who decides whether the agreement permits or prohibits classwide arbitration, a court or the arbitrator? The question has divided the many state and federal courts to consider it.
We conclude no universal rule allocates this decision in all cases to either arbitrators or courts. Rather, who decides is in the first instance a matter of agreement, with the parties' agreement subject to interpretation under state contract law. Under state law, these parties' arbitration agreement allocates the decision to the arbitrator. Under federal arbitration law, no contrary presumption requires a different result, so the issue remains one for the arbitrator. Because the Court of Appeal arrived at a similar answer, we affirm.
The material facts are not in dispute. In 2000, plaintiff Timothy Sandquist was hired by defendants (collectively, Lebo or Lebo Automotive) to work as a salesperson at an automotive dealership.
In 2012, Sandquist, who is African-American, sued Lebo Automotive. The operative complaint alleges Sandquist and other non-Caucasian employees were subjected to racial discrimination, harassment, and retaliation. The complaint seeks to bring claims on behalf of "a class of current and former
Lebo Automotive moved to compel individual arbitration based on the arbitration agreements signed by Sandquist on his first day of work. (See Code Civ. Proc., § 1281.2.) Finding the agreements enforceable and not unconscionable and the instant dispute within their scope, the trial court granted the motion. The court also interpreted Stolt-Nielsen S. A. v. AnimalFeeds Int'l Corp. (2010) 559 U.S. 662 [176 L.Ed.2d 605, 130 S.Ct. 1758] and Kinecta Alternative Financial Solutions, Inc. v. Superior Court (2012) 205 Cal.App.4th 506 [140 Cal.Rptr.3d 347] as requiring the court to decide whether class arbitration was available. Because in the trial court's view the agreements did not permit class arbitration, it struck the class allegations under Code of Civil Procedure section 436. Although the trial court granted Sandquist leave to amend and time to find a substitute class representative, when he advised the court every employee at the dealership was subject to the same arbitration agreements, it dismissed the class claims with prejudice.
On appeal, the Court of Appeal reversed in part. It declined to address Sandquist's claim that the arbitration agreements were unconscionable because that ruling was not appealable (State Farm Fire & Casualty v. Hardin (1989) 211 Cal.App.3d 501, 505-506 [259 Cal.Rptr. 433]), but it considered his challenge to the dismissal of class allegations under the death knell doctrine (see In re Baycol Cases I & II (2011) 51 Cal.4th 751, 762 [122 Cal.Rptr.3d 153, 248 P.3d 681]). Disagreeing with the trial court's conclusion that existing precedent compelled the court to determine whether class arbitration was available, the Court of Appeal found the issue an open and unsettled one. It examined cases on each side of the existing divide and concluded the availability of class proceedings under an arbitration agreement is a question of contract interpretation for the arbitrator to decide in the first instance.
Lebo Automotive petitioned for review, contending the Court of Appeal's decision contributed to an existing state and federal split over who should decide whether an arbitration agreement permits class arbitration. We granted review.
The United States Supreme Court's treatment of the issue confirms the parties' agreement as the mandatory starting point. In Green Tree Financial Corp. v. Bazzle (2003) 539 U.S. 444 [156 L.Ed.2d 414, 123 S.Ct. 2402] (Green Tree), the plurality and the principal dissent, although disagreeing about the ultimate "who decides" question, both agreed about where the analysis should begin. (See id. at p. 451 (plur. opn. of Breyer, J.) [concluding the question should be for the arbitrator because "[u]nder the terms of the parties' contracts, the question — whether the agreement forbids class arbitration — is for the arbitrator to decide"]; id. at p. 456 (dis. opn. of Rehnquist, C. J.) [agreeing that "the decision of what to submit to the arbitrator is a matter of contractual agreement by the parties"].) Similarly, in Stolt-Nielsen S. A. v. AnimalFeeds Int'l Corp., supra, 559 U.S. at page 680 and Oxford Health Plans LLC v. Sutter (2013) 569 U.S. ___, ___, fn. 2 [186 L.Ed.2d 113, 119, fn. 2, 133 S.Ct. 2064, 2068, fn. 2], the Supreme Court accepted — because the parties had so agreed — that an arbitrator should decide in the first instance whether class arbitration was available.
The parties do not disagree as to which state's law applies: California. The arbitration clauses were entered into in California, govern an employment relationship between a California resident and a company with its sole place of business in California, and invoke various provisions of California law throughout.
Lebo Automotive had Sandquist sign three different form agreements. Each contains an arbitration clause. The language in each clause defining the scope of arbitrable matters varies slightly, but is materially the same.
The clause in the "Applicant's Statement & Agreement" provides in part: "I and the Company both agree that any claim, dispute, and/or controversy (including, but not limited to, any claims of discrimination and harassment, whether they be based on the California Fair Employment and Housing Act, as well as all other applicable state or federal laws or regulations) which would otherwise require or allow resort to any court or other governmental dispute resolution forum between myself and the Company (or its owners, directors, officers, managers, employees, agents, and parties affiliated with its employee benefit and health plans) arising from, related to, or having any relationship or connection whatsoever with my seeking employment with, employment by, or other association with the Company, whether based on tort, contract, statutory, or equitable law, or otherwise, (with the sole exception of claims arising under the National Labor Relations Act which are
The clause in the "Mandatory Arbitration Agreement" provides: "I agree that any claim, dispute, and/or controversy (including, but not limited to any claims of discrimination and harassment) which would otherwise require or allow resort to any court or other governmental dispute resolution forum, between me and the Company (or its owners, directors, officers, managers, employees[,] agents, and parties affiliated with its employee benefits and health plans) arising from, related to, or having any relationship or connection whatsoever with my seeking employment with, employment by, or other association with, the Company, whether based on tort, contract, statutory, or equitable law, or otherwise, shall be submitted to and determined exclusively by binding arbitration...."
Finally, the clause in the "Employee Acknowledgement and Agreement" provides: "I agree that any claim, or dispute, or controversy (including, but not limited to, any and all claims of discrimination and harassment) which would otherwise require or allow resort to any court or other governmental dispute resolution forum between myself and the Company (or its owners, directors, officers, managers, employees, agents, and parties affiliated with its employee benefit and health plans) arising from, related to, or having any relationship or connection whatsoever with my seeking employment with, employment by, or other association with the Company, whether based on tort, contract, statutory, or equitable law, or otherwise, (with the sole exception of claims arising under the National Labor Relations Act which are brought before the National Labor Relations Board, claims for medical and disability benefits under the California Workers Compensation Act, and Employment Development Department claims), shall be submitted to and determine[d] exclusively by binding arbitration...."
All three arbitration provisions share the same basic structure and much of the same language. All three contain two inclusive clauses that define the range of disputes that must be "submitted to and determined exclusively by binding arbitration." Two of the three add an exclusive clause that sets out a specific, limited set of disputes, otherwise covered by the clause's inclusive language, that are nevertheless withdrawn from the arbitrator's purview.
First, the provisions extend to "any claim, dispute, and/or controversy (including, but not limited to any [and all] claims of discrimination and harassment) which would otherwise require or allow resort to any court or other governmental dispute resolution forum, between [me/myself] and the
Second, the provisions extend to all claims "arising from, related to, or having any relationship or connection whatsoever with my seeking employment with, employment by, or other association with the Company, whether based on tort, contract, statutory, or equitable law, or otherwise." (Italics added.) The underlying claims in the first amended complaint assert that Lebo Automotive harassed and discriminated against Sandquist on the basis of race in the course of his employment, created a hostile work environment, and ultimately constructively discharged him. They plainly arise from Sandquist's employment with Lebo Automotive. The procedural question those claims present — whether Sandquist may pursue his claims on a class basis — directly arises from his underlying claims. Given that the provisions are intended to sweep in disputes "having any relationship or connection whatsoever" with Sandquist's employment, that the issue before us arises from a lawsuit over Sandquist's employment would appear enough to satisfy this nexus requirement.
Finally, both the Applicant's Statement & Agreement and the Employee Acknowledgement and Agreement (although not the Mandatory Arbitration Agreement) contain an additional clause identifying specific disputes otherwise within the broad inclusive clauses of the arbitration provisions but intended not to be arbitrable. Every dispute within those inclusive clauses is for the arbitrator, "with the sole exception of claims arising under the National Labor Relations Act which are brought before the National Labor Relations Board, claims for medical and disability benefits under the California Workers' Compensation Act, and Employment Development Department claims." The drafter of these agreements might well have specified other matters not for the arbitrator, such as the availability of class arbitration at issue here, but did not.
This general principle of contract interpretation applies equally to the construction of arbitration provisions. (Mastrobuono v. Shearson Lehman Hutton, Inc., supra, 514 U.S. at pp. 62-63; Victoria v. Superior Court (1985) 40 Cal.3d 734, 739 [222 Cal.Rptr. 1, 710 P.2d 833]; 24 Hour Fitness, Inc. v. Superior Court, supra, 66 Cal.App.4th at p. 1215.) Where the drafter of a form contract has prepared an arbitration provision whose application to a particular dispute is uncertain, ordinary contract principles require that the provision be construed against the drafter's interpretation and in favor of the nondrafter's interpretation. (Victoria, at pp. 745-747.)
Lebo Automotive argues that as a matter of state law these arbitration provisions should presumptively be read to allocate the class arbitration availability question to a court, absent any explicit commitment of the dispute to an arbitrator. Lebo rests this argument on our recent decision in City of Los Angeles v. Superior Court (2013) 56 Cal.4th 1086 [158 Cal.Rptr.3d 1, 302 P.3d 194]. We agree that the arbitration provisions, though most fairly read as allocating the class arbitration question to an arbitrator, do not explicitly do so. But we disagree that City of Los Angeles establishes any state law presumption that would in these circumstances require submission of the question to a court.
As Lebo Automotive asserts, City of Los Angeles confirms the strong presumption that courts should determine the jurisdiction of arbitrators. (See City of Los Angeles v. Superior Court, supra, 56 Cal.4th at p. 1096; Code Civ. Proc., § 1281.2 [on a petition to compel arbitration, "the court" should order arbitration "if it determines that an agreement to arbitrate the controversy exists"].) That is what we, a court, are tasked with doing here; consistent with the presumption, we are engaged in deciding whether a decision on the availability of class arbitration is for a court or an arbitrator.
The United States Supreme Court has directly addressed the "who decides" issue only once, in Green Tree, supra, 539 U.S. 444. The Green Tree parties' agreement submitted to the arbitrator "`[a]ll disputes, claims, or controversies arising from or relating to this contract or the relationships which result from this contract.'" (Id. at p. 451 (plur. opn. of Breyer, J.).) The plurality interpreted this language as allocating the class arbitration availability question to the arbitrator. (Id. at p. 452.) Furthermore, the same four justices explained, nothing in the FAA subjects the "who decides" question to any contrary pro-court presumption. (Green Tree, at pp. 452-453.) Accordingly, the plurality concluded "this matter of contract interpretation should be for the arbitrator, not the courts, to decide." (Id. at p. 453.)
The Supreme Court has interpreted the FAA as imposing two distinct presumptions, depending on the subject matter. "On the one hand, courts presume that the parties intend courts, not arbitrators, to decide ... disputes about `arbitrability,'" e.g., whether there is an enforceable arbitration agreement or whether it applies to the dispute at hand. (BG Group PLC v. Republic
Once gateway questions of arbitrability have been settled, however, the FAA switches presumptions for issues affecting the manner in which an arbitration is to be conducted. "Thus `"procedural" questions which grow out of the dispute and bear on its final disposition' are presumptively not for the judge, but for an arbitrator, to decide." (Howsam v. Dean Witter Reynolds, Inc., supra, 537 U.S. at p. 84.) The pro-court presumption has only a "limited scope" (id. at p. 83), while the range of questions not qualifying as threshold gateway inquiries is correspondingly broad; for example, even a challenge to the enforceability of the entire contract in which an arbitration clause appears is presumptively for the arbitrator, not the court. (Buckeye Check Cashing, Inc. v. Cardegna (2006) 546 U.S. 440, 446 [163 L.Ed.2d 1038, 126 S.Ct. 1204].)
As the Green Tree plurality recognized, the availability or unavailability of class arbitration has nothing to do with whether the parties agreed to arbitrate, either in general or with respect to a specific dispute. Instead, the question is of the "what kind of proceeding" sort that arises subsequent to the gateway issue of whether to have an arbitral proceeding at all. (See AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 348-351 [179 L.Ed.2d 742, 131 S.Ct. 1740] [describing in detail how the shift to class arbitration involves a change in arbitral procedures].) Once the threshold matter of whether to arbitrate has been decided, assigning (presumptively, at least) any further questions turning on contract interpretation to the arbitrator is neither circular nor otherwise problematic. (See Employers Ins. of Wausau v. Century Indemnity (7th Cir. 2006) 443 F.3d 573, 578 [once it is established the parties have agreed to arbitrate a given dispute, questions about "the kind of arbitration proceeding" they have agreed to are "a matter of contract interpretation, which the arbitrator is well qualified to address"]; Shaw's Supermarkets v. United Food, Local 791 (1st Cir. 2003) 321 F.3d 251, 254 [once arbitrability is decided, propriety of consolidating multiple arbitrations "is a procedural matter for the arbitrator"].)
Notably, the principal Green Tree dissent did not disagree with the plurality on this point; that is, it did not contend that the availability of class arbitration is the sort of question that universally should be subject to a pro-court presumption.
In support of the opposite conclusion, Lebo Automotive relies on other recent appellate decisions that have concluded the availability of classwide arbitration is a "gateway question" for the court: Reed Elsevier, Inc. v. Crockett (6th Cir. 2013) 734 F.3d 594, 597 (Reed Elsevier), Opalinski v. Robert Half Internat. Inc. (3d Cir. 2014) 761 F.3d 326, 334 (Opalinski), and Garden Fresh Restaurant Corp. v. Superior Court (2014) 231 Cal.App.4th 678, 687 [180 Cal.Rptr.3d 89].
At oral argument, Lebo emphasized the higher stakes class arbitration may entail and the limited nature of appellate review (see AT&T Mobility LLC v. Concepcion, supra, 563 U.S. at pp. 348, 350; Reed Elsevier, supra, 734 F.3d at p. 598), and urged these features might reduce the likelihood that defendants, at least, would expect the availability of class arbitration to be resolved by an arbitrator. But every question resolved by an arbitrator is subject to limited review; forsaking broad appellate review is a routine part of the trade-off involved in opting for arbitration. (Mitsubishi Motors v. Soler Chrysler-Plymouth, supra, 473 U.S. at p. 628.) Nothing about the class arbitration availability question, among all the many questions that might be resolved by an arbitrator, supports presuming under federal law that parties otherwise eager to move dispute resolution out of the courtroom uniformly hold an unexpressed expectation, based on concerns about limited review, that the class availability question should be reserved for the courts. As for an increase in stakes, the procedural shift from multiple bilateral arbitrations to a single class arbitration does nothing to alter a defendant's potential aggregate liability. (Shady Grove Orthopedic Associates, P. A. v. Allstate Ins. Co. (2010) 559 U.S. 393, 408 [176 L.Ed.2d 311, 130 S.Ct. 1431] (plur. opn. of Scalia, J.).) To the extent the question whether such a shift is permitted by the parties' agreement may nevertheless be viewed as of exceeding importance, nothing in the FAA evinces a congressional purpose to keep higher stakes decisions from arbitrators, or to presume parties otherwise favorably disposed to arbitration would prefer that course.
Garden Fresh Restaurant applies the same problematic logic as Reed Elsevier, reasoning from United States Supreme Court cases addressing the significance of the availability of classwide arbitration that the issue is one parties would prefer to keep from arbitrators absent express contrary agreement. (Garden Fresh Restaurant Corp. v. Superior Court, supra, 231 Cal.App.4th at pp. 686-687, discussing AT&T Mobility LLC v. Concepcion, supra, 563 U.S. at pp. 348-351 and Stolt-Nielsen S. A. v. AnimalFeeds Int'l Corp., supra, 559 U.S. at pp. 686-687; cf. Lee v. JPMorgan Chase & Co. (C.D.Cal. 2013) 982 F.Supp.2d 1109, 1113-1114 [explaining how the Supreme Court's class arbitration discussions in Concepcion and Stolt-Nielsen
The third case, Opalinski, offers slightly different reasoning. It observes that parties have the right to choose with whom they arbitrate, and courts typically resolve whether and how that right has been exercised. (Opalinski, supra, 761 F.3d at pp. 332-333, citing Stolt-Nielsen S. A. v. AnimalFeeds Int'l Corp., supra, 559 U.S. at pp. 683, 686.) The determination that an agreement allows for class arbitration has the potential to add many additional parties to the arbitration, and thus "affects whose claims may be arbitrated." (Opalinski, at p. 332.) Absent class members similarly have a right to determine with whom they arbitrate, and might not be bound absent an opt-in procedure evincing consent to have an arbitrator resolve their claims in a class proceeding. (Id. at p. 333, citing Oxford Health Plans LLC v. Sutter, supra, 569 U.S. at p. ___ [186 L.Ed.2d at p. 123, 133 S.Ct. at pp. 2071-2072] (conc. opn. of Alito, J.).) Consequently, Opalinski argues, the issue of class arbitration availability must be resolved first by a court.
So, too, with the rights of would-be class members. Any potential binding arbitration award will arise only after the Lebo form arbitration agreement they too signed has been determined valid, and will govern only a dispute the trial court has found to be within the scope of that agreement. To the extent a would-be absent class member may believe he or she has unique defenses to enforcement of the arbitration agreement, the major arbitration entities provide clear notice and opt-out rights. (JAMS, Class Action Procedures, supra, rule 4; American Arbitration Assn., Supplementary Rules for Class Arbitration, supra, rule 5(b), (c).) Those same rules also require consideration of the full panoply of Federal Rules of Civil Procedure, rule 23 (28 U.S.C.) requirements before any class is certified. (JAMS, Class Action Procedures, supra, rule 3; American Arbitration Assn., Supplementary Rules for Class Arbitration, supra, rule 4.) There is no reason to assume a non-JAMS, non-American Arbitration Association arbitrator would refuse to afford similar protections — and if the arbitrator did refuse, the resulting award would doubtless not be binding. (See AT&T Mobility LLC v. Concepcion, supra, 563 U.S. at p. 349 ["For a class-action money judgment to bind absentees in litigation, class representatives must at all times adequately represent absent class members, and absent members must be afforded notice, an opportunity to be heard, and a right to opt out of the class. [Citation.] At least this amount of process would presumably be required for absent parties to be bound by the results of arbitration."].) Given prehearing notice, an absent class member can decide for him- or herself whether to abide by the prior court ruling that the arbitration agreement is enforceable and applicable, or opt out and take his or her chances in a separate proceeding. In neither instance will the absent class member be subjected to arbitration without consent or the opportunity to have a court assess the validity of his or her agreement to arbitrate.
As justification for reaching the merits of the availability of class arbitration, the trial court relied on Stolt-Nielsen S. A. v. AnimalFeeds Int'l Corp., supra, 559 U.S. 662 and Kinecta Alternative Financial Solutions, Inc. v. Superior Court, supra, 205 Cal.App.4th 506. But neither case has any bearing on the threshold issue, whether a court or arbitrator should address that question. Stolt-Nielsen expressly does not address it. (Stolt-Nielsen, at p. 680.) Nor does Kinecta address the issue; instead, it simply assumes a court should decide the question, without referring to the parties' agreement to determine what allocation that agreement makes. (Kinecta, at pp. 517-519.)
In the alternative, Lebo Automotive argues that any error by the trial court in taking for itself the interpretation of the parties' arbitration agreement on matters of classwide arbitration was harmless because the trial court's interpretation of the contract was substantively correct. Lebo argues that the Court of Appeal erred by ordering reversal without first deciding for itself what the parties' contract calls for, and that we likewise should examine the parties' agreement and decide whether it provides for classwide arbitration.
Lebo Automotive argues that state law requires harmless error review in all cases before reversal will follow. (Cal. Const., art. VI, § 13; Code Civ. Proc., § 475.) Not so; some errors are reversible per se. The error here falls within that class requiring automatic reversal because its effects are "`unmeasurable'" and "`def[y] analysis by "harmless-error" standards.'" (People v. Blackburn (2015) 61 Cal.4th 1113, 1135 [191 Cal.Rptr.3d 458, 354 P.3d 268]; see People v. Collins (2001) 26 Cal.4th 297, 311 [109 Cal.Rptr.2d 836, 27 P.3d 726]; Martin v. County of Los Angeles (1996) 51 Cal.App.4th 688, 698 [59 Cal.Rptr.2d 303].) We cannot say whether an arbitrator would have decided the issue the same or differently. Indeed, to deny remand by insisting an arbitrator would surely have agreed with the trial court's view or our view of the merits of class availability is to recommit the very error complained of — deprivation of a decision by a contractually agreed-upon decision maker. The denial of the parties' right to their agreed-upon decision maker is thus the sort of miscarriage of justice that requires reversal without further harmless error analysis.
For the foregoing reasons, we affirm the Court of Appeal.
Cantil-Sakauye, C. J., Liu, J., and Cuéllar, J., concurred.
KRUGER, J., Dissenting. —
"Class arbitration is a matter of consent: An arbitrator may employ class procedures only if the parties have authorized them." (Oxford Health Plans LLC v. Sutter (2013) 569 U.S. ___, ___ [186 L.Ed.2d 113, 133 S.Ct. 2064, 2066] (Oxford Health).) In this case, the trial court held that the parties' agreement did not authorize class arbitration. Plaintiff Timothy Sandquist argues that the arbitrator, rather than the court, should have made that determination. The focus of my disagreement with the majority involves the question of federal law at the center of this case: Whether, under the Federal Arbitration Act (9 U.S.C. § 1 et seq.; FAA), the availability of class arbitration under the parties' agreement is a "gateway
In Green Tree Financial Corp. v. Bazzle (2003) 539 U.S. 444, 451-452 [156 L.Ed.2d 414, 123 S.Ct. 2402] (Green Tree), a plurality of the United States Supreme Court took the view that the classwide arbitrability question is a procedural matter, rather than a gateway question of arbitrability. The majority of this court today draws on the reasoning of the plurality opinion to reach the same conclusion. But in more recent years, the United States Supreme Court has not only disavowed any notion that Green Tree decided the issue, it has also, as another court put it, "given every indication, short of an outright holding, that classwide arbitrability is a gateway question rather than a subsidiary one." (Reed Elsevier, Inc. v. Crockett (6th Cir. 2013) 734 F.3d 594, 598 (Reed Elsevier), cert. denied (2014) 572 U.S. ___ [189 L.Ed.2d 173, 134 S.Ct. 2991].) In light of these post-Green Tree developments, every federal court of appeals to consider the issue on the merits has concluded — in contrast to the majority's holding today — that whether an arbitration agreement permits class arbitration is presumptively a question for the court, rather than the arbitrator. (See pp. 266-267, post.) Because I, too, read the high court's cases as indicating that classwide arbitrability is a gateway question for purposes of the FAA, I would affirm the trial court's decision in this case, and respectfully part company with my colleagues in the majority.
"While the interpretation of an arbitration agreement is generally a matter of state law, [citations], the FAA imposes certain rules of fundamental importance, including the basic precept that arbitration `is a matter of consent, not coercion,' [citation]." (Stolt-Nielsen S. A. v. AnimalFeeds Int'l Corp. (2010) 559 U.S. 662, 681 [176 L.Ed.2d 605, 130 S.Ct. 1758] (Stolt-Nielsen).) Once a court has determined that the parties have agreed to submit a dispute to arbitration, the law presumes that the parties have also agreed to allow the arbitrator to decide subsidiary questions concerning arbitration procedure, resolving any doubts in favor of the "`liberal federal policy favoring arbitration agreements.'" (Howsam v. Dean Witter Reynolds, Inc. (2002) 537 U.S. 79, 83 [154 L.Ed.2d 491, 123 S.Ct. 588] (Howsam).) But the law makes an exception to this rule for what the United States Supreme Court refers to as "`question[s] of arbitrability'" (ibid.), which "include certain gateway matters, such as whether the parties have a valid arbitration agreement at all or whether a concededly binding arbitration clause applies to a certain type of controversy" (Green Tree, supra, 539 U.S. at p. 452). Courts will not assume that the parties agreed to arbitrate such gateway matters "unless there is `clea[r] and unmistakabl[e]' evidence" to that effect. (First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944 [131 L.Ed.2d
In accordance with these principles, the resolution of a "`question of arbitrability'" is reviewable by courts de novo. (Oxford Health, supra, 569 U.S. at p. ___, fn. 2 [186 L.Ed.2d at p. 119, fn. 2, 133 S.Ct. at p. 2068, fn. 2].) By contrast, under the FAA, decisions assigned to an arbitrator are reviewable for "misconduct rather than mistake." (AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 350-351 [179 L.Ed.2d 742, 131 S.Ct. 1740] (Concepcion).) When an arbitrator has been given the authority to decide whether a party's agreement provides for class arbitration, his or her decision generally will stand "regardless of a court's view of its (de)merits." (Oxford Health, supra, 569 U.S. at p. ___ [186 L.Ed.2d 113, 133 S.Ct. at p. 2068]; see 9 U.S.C. § 10.)
In Green Tree, a plurality of the United States Supreme Court reasoned that whether an arbitration agreement authorizes class arbitration does not fall into this category of gateway questions of arbitrability because "the question is not whether the parties wanted a judge or an arbitrator to decide whether they agreed to arbitrate a matter," but "what kind of arbitration proceeding the parties agreed to." (Green Tree, supra, 539 U.S. at p. 452.) This view did not garner a majority, as the high court has since emphasized. (See Stolt-Nielsen, supra, 559 U.S. at pp. 678-679, 680; accord, Oxford Health, supra, 569 U.S. at p. ___, fn. 2 [186 L.Ed.2d at p. 119, fn. 2, 133 S.Ct. at p. 2068, fn. 2].) And although the United States Supreme Court has not had occasion to revisit the question of who decides classwide arbitrability, subsequent decisions of the court have undermined Green Tree's premise that questions of classwide arbitrability merely concern the "`procedural mode'" available for the presentation of the plaintiff's claims. (Stolt-Nielsen, supra, 559 U.S. at p. 687.)
In Stolt-Nielsen, the court considered whether an arbitration panel erred in ordering class arbitration when the parties' agreement was "`silent'" on the question and the parties had stipulated that they had never reached an agreement on the issue. (Stolt-Nielsen, supra, 559 U.S. at pp. 666, 668-669.)
The court described the "fundamental" differences between bilateral and class arbitration — and has later expounded on them — in two ways that are particularly relevant here. (Stolt-Nielsen, supra, 559 U.S. at p. 686.) First, as the court described it, the switch from bilateral to class arbitration is one that strikes at the heart of the bargain the parties make when they agree to "forgo the procedural rigor and appellate review of the courts" in favor of the "lower costs" and "greater efficiency" of private dispute resolution. (Id. at p. 685.) For one thing, the court pointed out, class arbitration dramatically increases the risks to defendants: "[T]he commercial stakes of class-action arbitration are comparable to those of class-action litigation, [citation], even though the scope of judicial review is much more limited, [citation]." (Id. at pp. 686-687.) And for another, as the court later elaborated in Concepcion, "the switch from bilateral to class arbitration sacrifices the principal advantage of arbitration — its informality — and makes the process slower, more costly, and more likely to generate procedural morass than final judgment." (Concepcion, supra, 563 U.S. at p. 348; see 14 Penn Plaza LLC v. Pyett (2009) 556 U.S. 247, 269 [173 L.Ed.2d 398, 129 S.Ct. 1456] ["[T]he relative informality of arbitration is one of the chief reasons that parties select arbitration."].) Thus, "the relative benefits of class-action arbitration are much less assured, giving reason to doubt the parties' mutual consent to resolve disputes through class[ ] arbitration." (Stolt-Nielsen, at pp. 685-686.) In support of the point, the court made express reference to its "questions of arbitrability" jurisprudence, citing First Options for the proposition that "`one can understand why courts might hesitate to interpret silence or ambiguity on the "who should decide arbitrability" point as giving the arbitrators that power, for doing so might too often force unwilling parties to arbitrate' contrary to their expectations." (Id. at p. 686, quoting First Options, supra, 514 U.S. at p. 945.)
For these reasons, among others, the court in Stolt-Nielsen rejected the idea that the availability of class arbitration is purely a matter of procedure. If that were so, the court explained, "there would be no need to consider the parties' intent with respect to class arbitration" because procedural questions of that sort are "committ[ed] ... presumptively to the arbitrator's discretion." (Stolt-Nielsen, supra, 559 U.S. at p. 687, citing Howsam, supra, 537 U.S. at p. 84.) But, in the court's estimation, "the differences between bilateral and class-action arbitration are too great for arbitrators to presume, consistent with their limited powers under the FAA, that the parties' mere silence on the issue of class-action arbitration constitutes consent to resolve their disputes in class proceedings." (Stolt-Nielsen, at p. 687, fn. omitted.)
Later, in Concepcion, the court cited much the same set of considerations in holding that "the FAA prohibits States from conditioning the enforceability of certain arbitration agreements on the availability of class[ ] arbitration procedures." (Concepcion, supra, 563 U.S. at p. 336.) Class arbitration, the court reasoned, necessarily results in slower dispositions and higher costs. (Id. at p. 348.) Moreover, because class arbitration implicates the rights of absent parties, due process "requires procedural formality." (Id. at p. 349 ["For a class-action money judgment to bind absentees in litigation, class representatives must at all times adequately represent absent class members, and absent members must be afforded notice, an opportunity to be heard, and a right to opt out of the class. [Citation.] At least this amount of process would presumably be required for absent parties to be bound by the results of arbitration."].) The court thought it "unlikely" that in passing the FAA in 1925 Congress meant to entrust arbitrators "with ensuring that third parties' due process rights are satisfied," particularly since "class arbitration is a `relatively recent development.'" (Id. at pp. 349-350.) And finally, the court reiterated that "class arbitration greatly increases risks to defendants.... The absence of multilayered review makes it more likely that errors will go uncorrected. Defendants are willing to accept the costs of these errors in [classical] arbitration, since their impact is limited to the size of individual disputes, and presumably outweighed by savings from avoiding the courts.
None of this, to be sure, amounts to a holding that the availability of class arbitration is presumptively a decision for a court, rather than an arbitrator. As the majority correctly notes (maj. opn., ante, at p. 260), that particular question was not before the court in Stolt-Nielsen, since the parties in that case had expressly assigned the determination to the arbitration panel (see Stolt-Nielsen, supra, 559 U.S. at p. 680). And certainly no such question was before the court in Concepcion, in which the parties' agreement expressly disallowed class arbitration. (Concepcion, supra, 563 U.S. at p. 336.) But the import of the decisions seems fairly inescapable. If, because of the fundamental differences between bilateral and class arbitration, the court is unwilling to treat classwide arbitrability as a mere procedural matter — and thus unwilling to presume that parties' "silence on the issue of class-action arbitration constitutes consent to resolve their disputes in class proceedings" (Stolt-Nielsen, 559 U.S. at p. 687, fn. omitted) — it seems rather unlikely that the court would be willing to presume that the parties have consented to allow an arbitrator to make an essentially unreviewable determination to the same effect. That is particularly true because, as the court has emphasized, the decision is one that does not affect the named plaintiff and defendant alone, but implicates whether other, absent plaintiffs will also be required to submit their claims to arbitration.
Given these recent developments in the high court's jurisprudence, it is unsurprising that, at least to date, every federal court of appeals to consider the issue on the merits has held that the availability of class arbitration is a question of arbitrability for a court, rather than an arbitrator, "`unless the parties clearly and unmistakably provide otherwise.'" (Dell Webb Communities, Inc. v. Carlson (4th Cir. 2016) 817 F.3d 867, 873-877; Opalinski v. Robert Half Internat. (3d Cir. 2014) 761 F.3d 326, 330, cert. denied (2015) 575 U.S. ___ [191 L.Ed.2d 558, 135 S.Ct. 1530]; Reed Elsevier, supra, 734 F.3d at pp. 597-599; but cf. Robinson v. J & K Administrative Management Services, Inc. (5th Cir. 2016) 817 F.3d 193, 197 [acknowledging Stolt-Nielsen, but concluding the panel was bound by the "rule of orderliness" to apply pre-Stolt-Nielsen circuit precedent following the plurality opinion in Green Tree].) As these courts have explained, the high court's characterization of class arbitration in Stolt-Nielsen and Concepcion is difficult to reconcile with a view that would instead treat classwide arbitrability as
The majority criticizes these decisions for confusing two separate issues: the importance of the classwide arbitrability question, on the one hand, with the parties' expectations about who will resolve it, on the other. (Maj. opn., ante, at pp. 255-256.) The majority is correct, of course, that not every question that is "important" to the parties is necessarily a gateway question that is presumptively reserved for judicial determination. So, for example, in the First Circuit case on which the majority relies, the parties may have cared very much indeed about whether the claim at issue was time-barred under applicable arbitration rules, but the caring alone does not render the interpretation of the time limit rule a question of arbitrability for the court to decide. (PaineWebber Inc. v. Elahi (1st Cir. 1996) 87 F.3d 589, 599; accord, Howsam, supra, 537 U.S. at p. 85.) But Stolt-Nielsen rests on the premise that classwide arbitrability is a qualitatively different kind of question from a question about the proper interpretation of a timing rule because it so radically changes the nature of the bargain the parties strike when they agree to submit their disputes to arbitration. If, as the high court says, the nature of these changes "giv[es] reason to doubt the parties' mutual consent to resolve disputes through class[ ] arbitration" from their general agreement to arbitrate (Stolt-Nielsen, supra, 559 U.S. at pp. 685-686), it is not much of a leap to conclude that these changes also provide reason to doubt the parties' consent to permit an arbitrator to decide, in his or her essentially unreviewable judgment, whether the parties' silence or ambiguous contract language constitutes consent to class arbitration.
The majority also dismisses the cases' concerns about permitting an arbitrator to bring absent plaintiffs into the dispute, noting that "[e]ven if an arbitrator were to conclude class arbitration is permitted, the arbitration would bring in only parties to the same form of arbitration agreement a court has already determined to be valid, and the same type of dispute a court has already determined to be within the scope of that agreement." (Maj. opn., ante, at p. 257.) But as the majority elsewhere acknowledges, there is no requirement or guarantee that a court will ever make such a determination. (Id. at p. 247.) If the named plaintiff chooses not to contest the validity of the agreement or its application to a given dispute, then no court would have occasion to consider whether absent class members had also given their consent to arbitrate. It may be, as the majority suggests, that the answer is simply that arbitrators must provide absent plaintiffs with an adequate opportunity to opt out, or the arbitral award will not be binding on them. (Id. at p. 258; but see Oxford Health, supra, 569 U.S. at p. ___ [186 L.Ed.2d 113, 133 S.Ct. at p. 2071] (conc. opn. of Alito, J.) [arguing that an arbitral award cannot be binding unless absent class members have been required to opt in,
It may well be that further developments in the United States Supreme Court will shed new light on the issue before us. But unless and until the court revisits the issue, I would follow where the court has led. Because the majority today charts a different path, I must respectfully dissent.
Chin, J., and Corrigan, J., concurred.