United States District Court, S.D. New York
OPINION AND ORDER
current and former female employees of defendant Sterling
Jewelers Inc. ("Sterling"), filed this putative
class action on March 18, 2008 alleging that Sterling
discriminated against them in pay and promotion on the basis
of their gender. See Complaint, Dkt. 1.
Subsequently, plaintiffs moved to compel arbitration pursuant
to a dispute resolution agreement (the "RESOLVE
agreement"), see Dkt. 25, which motion this
Court granted by Order dated June 18, 2008, see Dkt.
52. There followed extensive proceedings before the
Arbitrator, this Court, and the Second Circuit Court of
Appeals, some of which are briefly summarized below and more
specific familiarity with which is here presumed.
before the Court is Sterling's motion to vacate a Class
Determination Award issued by the Arbitrator certifying, for
plaintiffs' Title VII disparate impact claims for
declaratory and injunctive relief, a class that, Sterling
estimates, includes over 70, 000 "absent" class
members, i.e., Sterling employees other than the
named plaintiffs and several hundred individuals who have
affirmatively opted in to the class proceedings before the
Arbitrator. See Dkts. 137-1-3. According to
Sterling, even though the Arbitrator is planning to permit
members of the certified class to opt out, the Arbitrator
exceeded her authority by purporting to bind this larger
group in any way as they never submitted to her authority or
presented to her the question of whether the RESOLVE
agreement permits class action arbitration. See
Defendant's Memorandum of Law in Support of its Renewed
Motion to Vacate the Arbitrator's Class Certification
Award ("Def. Mem.") at 5-7, Dkt. 163. Plaintiffs
oppose Sterling's motion, arguing that the Court must
defer to the Arbitrator's interpretation of the agreement
and her decision to certify this larger class. See
Opposition to Defendant's Renewed Motion to Vacate the
Arbitrator's Class Certification Award (VVP1.
Mem.") at 8-9, Dkt. 165.
mentioned, this is but the latest chapter in a rather
convoluted litigation. Briefly, in 2009, the Arbitrator
determined that the RESOLVE agreement permitted class
arbitration. Sterling moved to vacate that determination, and
by bottom-line Order dated August 31, 2009, the Court
initially denied Sterling's motion. See Dkt. 64;
Opinion and Order dated December 28, 2009, Dkt. 66. Sterling
timely appealed. See Dkt. 68. However, while Sterling's
appeal was pending, the Supreme Court issued an opinion in
Stolt-Nielsen S.A. v. Animal Feeds Int'l Corp.,
which reversed the Second Circuit's reversal of the
undersigned's decision holding that a class action
proceeding is not available in arbitration unless the
contracting parties so provide, Stolt-Nielsen SA v.
Animal feeds Int'l Corp., 435 F.Supp.2d 382, 384
(S.D.N.Y. 2006), rev'd, 548 F.3d 85 (2d Cir.
2008), rev'd and remanded sub
nom., 559 U.S. 662 (2010). Thereafter, Sterling
moved pursuant to Federal Rules of Civil Procedure 62.1 and
60(b) for relief from the December 28, 2009 Opinion and Order
(which had relied, inter alia, on the now reversed
Second Circuit decision in Stolt-Nielsen), and the
Second Circuit remanded the case to permit this Court to
address Sterling's motion.
August 6, 2010, this Court reversed its earlier decision and
granted Sterling's motion to vacate, see Order
dated August 6, 2010, Dkt. 87, finding in relevant part that
plaintiffs had "fail[ed] to identify any concrete basis
in the record for the arbitrator to conclude that the parties
manifested an intent to arbitrate class claims."
Memorandum Order dated July 27, 2010 at 10, Dkt. 85.
Plaintiffs timely appealed, see Dkt. 88, and a divided panel
of the Second Circuit reversed, with the majority finding
that (1) the parties had squarely presented the question of
whether the RESOLVE agreement allowed for class arbitration
to the arbitrator and (2) "whether the arbitrator was
right or wrong in her analysis, she had the authority to make
the decision, and the parties to the arbitration are bound by
it." Jock v. Sterling Jewelers Inc., 646 F.3d
113, 124-127 (2d Cir. 2011) ("Jock I").
years later, on February 2, 2015, the Arbitrator issued a
Class Determination Award, certifying, inter alia,
an approximately 70, 000-person class for plaintiffs'
Title VII disparate impact claims. See Dkts.
137-1-3. On March 3, Sterling moved to vacate that Award,
arguing that the Arbitrator exceeded her authority by
purporting to bind employees other than the named plaintiffs
and those who had affirmatively opted into the proceedings
before the Arbitrator. See Dkts. 135, 136. On
November 15, 2015, the Court denied Sterling's motion,
finding that vacatur was "foreclosed by earlier rulings
in this case." Opinion and Order at 4, Dkt. 144.
Specifically, given Jock I, which affirmed the
Arbitrator's prerogative to decide whether the RESOLVE
agreement permitted class action procedures, the Court
reasoned that there is "no basis for vacating the Class
Determination Award on the ground that the Arbitrator has now
exceeded her authority in purporting to bind absent class
once again, appealed. See Dkt. 145. On July 24,
2017, the Second Circuit vacated the November 2015 Opinion
and Order, holding that the "decision in Jock I
. . . did not squarely address whether the
arbitrator had the power to bind absent class members to
class arbitration given that they [the absent class members],
unlike the parties here, never consented to the arbitrator
determining whether class arbitration was permissible under
the agreement in [the] first place." Jock v.
Sterling Jewelers, Inc., 703 Fed.Appx. 15, 17 (2d Cir.
2017) ("Jock II") (emphasis added). The
panel further instructed the parties and this Court that the
issue "pertinent" on remand is: "whether an
arbitrator, who may decide . . . whether an arbitration
agreement provides for class procedures because the parties
'squarely presented' it for decision, may thereafter
purport to bind nonparties to class procedures on
this basis." Id. at 18.
reasons set forth below, the Court finds that the Arbitrator
may not so bind non-parties to class action
procedures where, as here, the Court has determined that the
arbitration agreement does not, in fact, permit class action
Federal Arbitration Act provides that a district court may
vacate an arbitration award where the arbitrator has exceeded
her powers. See 9 U.S.C. § 10(a). The
Court's "inquiry under § 10(a)(4) thus focuses
on whether the arbitrator had the power, based on the
parties' submissions or the arbitration agreement, to
reach a certain issue, not whether the arbitrator correctly
decided that issue." Westerbeke Corp. v. Daihatsu
Motor Co., Ltd., 304 F.3d 200, 220 (2d Cir. 2002)
(internal quotation omitted).
it is the law of the case that the Arbitrator does not have
the authority, based on the agreement, to certify a
70, 000-person class. The Court considered the question of
whether the RESOLVE agreement authorizes class procedures in
2010 and decided that it does not. See Memorandum
Order dated July 27, 2010, Dkt. 85. Thus, those individuals
who did not affirmatively opt in to the class proceeding here
did not agree to permit class procedures by virtue
of having signed RESOLVE agreements.
the remaining question here is whether the Arbitrator had the
authority to certify a 70, 000-person class because the named
plaintiffs and the defendant submitted the question of
whether the RESOLVE agreement allowed for class procedures to
a party has agreed to submit a dispute to an arbitrator is
"typically an 'issue for judicial
determination.'" Granite Rock Co. v. Int'l
Bhd. of Teamsters, 561 U.S. 287, 296 (2010) (quoting
Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79,
83 (2002)). Plaintiffs here see no difference between the
Arbitrator's authority to decide that the named
plaintiffs' RESOLVE agreements permitted class
procedures, brought by these plaintiffs on behalf of
themselves and all others who opted into the class, and the
Arbitrator's authority to decide that the absent class
members' RESOLVE agreements permitted class procedures
that would bind these individuals unless they opted out.
According to plaintiffs, the named and absent class members
"have all executed the same arbitration
agreement which the Arbitrator interpreted to permit the
aggregate litigation ... as long as the due process
requirements of Rule 23, tracked in AAA Supplementary Rule 4,
are satisfied." PI. Mem. at 9.
the seeming tension between Jock I and Jock
II, plaintiffs' position has some force. But
plaintiffs overlook the fact that, unlike the named
plaintiffs and defendants, these "absent members of the
plaintiff class [who have not chosen to opt-in to the class]
have not submitted themselves" to the Arbitrator's
authority "in any way." Oxford Health Plans LLC
v. Sutter, 569 U.S. 564, 574 (2013) (Alito, J.,
concurring); contrast Jock I, 646 F.3d at 124
(holding that the Arbitrator had authority to decide
"the issue of whether the agreement permitted class
arbitration" because it "was squarely presented to
the arbitrator" by the parties). Although absent class
members may have signed contracts with arbitration clauses
"materially identical to those signed by the plaintiff
who brought" suit, an "arbitrator's ...