DISH Network, L.L.C. and Echosphere, L.L.C. v. Matthew Ray

Matthew Ray’s (“Ray”) cessation of employment with DISH Network (DISH) in 2015 caused Ray to file a lawsuit in the U.S. District Court for the District of Colorado.  In Ray’s lawsuit, “[he] asserted claims under the Fair Labor Standards Act, Colorado’s Wage Claim Act, and the Colorado Minimum Wage Act, as well as a common law claim for breach of contract.”  DISH demanded that Ray arbitrate his claims pursuant to the arbitration agreement that Ray signed in connection with his employment.  Upon their demand, Ray dismissed his case and filed a case with the American Arbitration Association in which he asserted four identical claims.  The arbitrator concluded that he had jurisdiction to determine whether the arbitration agreement between DISH and Ray permitted a collective or class arbitration.  Further, the arbitrator concluded that the arbitration agreement allowed for class or collective arbitration. DISH appealed the arbitrator’s conclusions to the court, seeking to vacate the decision.

The District Court first had to decide whether the arbitrator had jurisdiction to decide the arbitrability of a class and collective action under the arbitration agreement between Ray and DISH.  Although the court noted that normally the question of arbitrability is for the court and not the arbitrator to decide, by incorporating the AAA Commercial Arbitration Rules in the arbitration agreement in this case, the parties have evidenced a clear and unmistakable intent to allow the arbitrator to decide questions of arbitrability.  Accordingly, the court found that the arbitrator did not exceed his powers in concluding that he had the jurisdiction to determine whether the agreement allowed for collective or class arbitration.

The court then proceeded to consider the second issue – whether the arbitrator arrived at the correct decision when ruling that the parties clearly and unmistakably indicated their intent to allow for class and collective action under the arbitration agreement.

The arbitrator decided that three key features of the arbitration agreement allowed for collective or class arbitration, as follows: (1) a broad, inclusive specification of the scope of arbitrable controversies, including claims under the FLSA, that expressly authorizes collective actions; (2) a listing of six enumerated exceptions to arbitrable controversies, which did not include class or collective actions; and (3) a paragraph stating that the arbitration agreement does not limit any statutory remedy to which Ray would be entitled under the law.  On the other hand, the arbitrator identified three features of the agreement to support a denial of class or collective arbitration: (1) its failure to specify whether class or collective arbitration was permitted; (2) its suggestions that bilateral arbitration, rather than collective or class arbitration, was preferred; and (3) its requirement for confidentiality, which is directly averse to the AAA Rules for class arbitrations.  The arbitrator found that the three factors in favor of supporting class or collective arbitration outweighed the factors against such a decision.

In perhaps the most notable part of the opinion, the court discussed whether the arbitrator’s decision was consistent with the 2010 U.S. Supreme Court decision in Stolt-Nielsen v. AnimalFeeds, 558 U.S. 662.  DISH argued that under Stolt-Nielsen, when the contract is silent on the issue of class arbitration, a party simply may not be compelled under the Federal Arbitration Act to submit to class arbitration.  The arbitrator disagreed, noting that unlike the situation in Stolt-Nielsen where the parties have stipulated that the contract was silent on the issue of class arbitration, in the present case the parties have not made such a stipulation. Thus, the issue was available for the arbitrator to decide.

It what might seem to be a remarkable passage at the end of the discussion regarding Stolt-Nielsen, the court noted that, “even if the arbitrator’s analysis was at odds with [Stolt-Nielsen], this error in interpreting and applying the law does not provide a basis for vacating this portion of the Award in any event.” While in the abstract, this proposition seems uncontroversial (i.e., courts should not reverse an arbitrator’s decision just because the court disagrees with the decision) in this context, the proposition would seem to make the arbitrator’s decision infallible.  The arbitrator’s finding (that in the absence of a stipulation on the issue of class arbitrations, the arbitrator can order class arbitration) is based on the arbitrator’s interpretation of Stolt-Nielsen.  However, because a reviewing court cannot overrule the arbitrator based on a disagreement with the substance of the award, a court will not be able to reverse the arbitrator in this case even if the court believes that the arbitrator was wrong in deciding the issue that provided the arbitrator the ability to decide the case in the first place.

This summary was prepared for ArbitrationInfo.com by Jonathan Doss, a third year student at the University of Missouri School of Law.