JPMorgan Loses Bid to Prohibit Class Arbitrations

A California federal judge denied JPMorgan’s motion to compel arbitration on an individual basis.  Two former JPMorgan employees filed a class action complaint alleging violations of state and federal labor laws on behalf of JPMorgan appraisers.  As part of their employment, plaintiffs entered into arbitration agreement providing that “Any and all disputes that involve or relate in any way to my employment (or termination of employment) with Washington Mutual shall be submitted to and resolved by final and binding arbitration.”  The agreements, however, did not contain express waivers of class, collective, or representative claims.

The issue before the court was whether the court or the arbitrator decides if plaintiffs can arbitrate on a class, collective, or representative basis.  U.S. District Judge Staton noted that neither side disputed that the claims were subject to arbitration.  The Court found “useful guidance” in the Supreme Court’s plurality opinion in Green Tree Financial Corp. v. Bazzle.  The Judge explained that the “only question, as in Bazzle, is the interpretative one of whether or not the agreements authorize Plaintiffs to pursue their claims on a class, collective, or representative basis.  That question concerns the procedural arbitration mechanisms available to Plaintiffs, and does not fall into the limited scope of this Court’s responsibilities in deciding a motion to compel arbitration.”

Although the Supreme Court has not yet ruled on whether it is up to the court or an arbitrator to decide whether class arbitration is permitted based on a review of an arbitration agreement, the Court found Bazzle to be persuasive and agreed with its determination that “whether certain arbitration agreements authorized class arbitration properly lay in the first instance with an arbitrator, not a court.”  Judge Staton supported her conclusion by pointing to the Third Circuit decision, Vilches v. The Travelers Companies, Inc., which relied on Bazzle and ruled that the availability of class proceedings was a question for the arbitrator.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.