"JPMorgan Loses Bid To Thwart Class Arbitration In Wage Suit" (PDF)
Law360, November 15, 2013

A California federal judge on Thursday rejected JPMorgan Chase & Co.'s attempt to stop two former appraisers from arbitrating wage-and-hour claims on a classwide basis, holding that it wasn't in the court's purview to decide whether their agreement authorized class proceedings.

U.S. District Judge Josephine L. Staton denied JPMorgan's motion to compel arbitration on an individual basis, relying on a 2003 plurality ruling by the U.S. Supreme Court in Green Tree v. Bazzle as "useful guidance" even though that opinion wasn't binding. 

Judge Staton noted that in the case at hand, neither side contested that the plaintiffs' claims were subject to arbitration.

"The only question, as in Bazzle, is the interpretive 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," Thursday's ruling said.

Former appraisers Kenneth Lee and Mark Thompson — along with David Agree, identified in court papers as a current Chase appraiser — said in Oct. 18 court papers that they already had agreed to refile their Fair Labor Standards Act collective action, California state law class claims and Private Attorneys General Act representative claims in arbitration.

Lee and Thompson filed their putative class and collective action in March, claiming JPMorgan misclassified appraisers as exempt from overtime pay requirements.

The Supreme Court hasn't yet decided whether the question of who — the court or the arbitrator — gets to interpret an arbitration agreement and decide whether class arbitration is permissible, Judge Staton noted.

The plurality in Bazzle agreed that determining whether certain arbitration agreements allowed class arbitration was for an arbitrator, not a court, Thursday's ruling said, but JPMorgan argued that the high court's 2010 Stolt-Nielsen decision rendered Bazzle unpersuasive, and that letting an arbitrator decide whether class arbitration was authorized run afoul of the Stolt-Nielsen decision.

But according to Judge Staton, Stolt-Nielsen tackled only the question of how to decide whether class arbitration is allowed, not who decides. The Stolt-Nielsen decision said parties can't be forced to submit to class arbitration unless there a contractual basis for agreeing they agreed to do so — demanding that courts and arbitrators be faithful to agreements' terms without weighing on their respective authority, Thursday's decision said. 

A recent Sixth Circuit decision — Reed Elsevier v. Crockett — found Bazzle unpersuasive and reasoned that since the Supreme Court had said that various features of class actions made them ill-suited for arbitration, that the question of the availability the class mechanism was one for the court, Thursday's ruling said. 

But Judge Staton aligned herself with the Third Circuit, which said in a 2011 ruling that the availability of class proceedings was a question for an arbitrator, and ruled that the high court had only pointed out those features to explain why the standard for determining if the parties had agreed to class arbitration was so tough.

"We're very pleased with the decision," Katrina Eiland of Goldstein Borgen Dardarian & Ho, an attorney for the plaintiffs, said Friday.

An attorney for JPMorgan could not be immediately reached for comment.

The plaintiffs are represented by David Borgen, Laura Ho and Katrina Eiland of Goldstein Borgen Dardarian & Ho, and Bryan Schwartz and William Weeks of Bryan Schwartz Law.

JPMorgan is represented by Daryl Landy, Sarah Drechsler and Alexander Grodan of Morgan Lewis & Bockius LLP.

The case is Kenneth J Lee et al. v. JPMorgan Chase and Co et al., case number 8:13-cv-00511, in the U.S. District Court for the Central District of California.