By S. I. Strong, Manley O. Hudson Professor of Law, University of Missouri (Columbia)*

The US Supreme Court will shortly be ruling on the circuit split involving waivers of class/collective arbitration in the context of collective bargaining agreements and the National Labor Relations Act (see the consolidated cases of Ernst & Young, LLP v. Morris, 137 S. Ct. 809 (2017); Epic Systems Corp. v. Lewis, 137 S. Ct. 809 (2017); and National Labor Relations Board v. Murphy Oil USA, Inc., 137 S. Ct. 809 (2017)).  However, one judge in the Western District of Wisconsin has decided to uphold an arbitral award rendered in this particular setting, despite the imminent decision from the U.S. Supreme Court.  Herrington v. Waterstone Mortgage Corp. (W.D. Wis. 12/4/17)

In so doing, the district court focused on the fact that the claimant had waited a long time for this decision already and on the fact that the court believed that the Supreme Court’s decision would not necessarily clarify the issues.  In particular, the court noted that

In concluding that plaintiff should be permitted to proceed with arbitration on a collective basis, the arbitrator noted that this court had held that the class waiver provision was invalid under the National Labor Relations Act and that he was bound by that decision.  However, the arbitrator also noted that the arbitration clause in the employment agreement was ambiguous: although it contained a waiver clause, it also stated that arbitration should proceed “in accordance with the rules of the American Arbitration Association,” which permits class arbitration.  The arbitrator noted that defendant “at the very least created an ambiguity, which must be construed against [defendant,] the party who drafted the Agreement.”  The arbitrator also noted plaintiff’s argument that the language of the so-called “waiver” clause should actually be read as permitting class or collective arbitration, rather than prohibiting it, though the arbitrator chose not to resolve that dispute.  In other words, the arbitrator’s discussion suggests that he believed there were independent bases for permitting collective arbitration, aside from this court’s previous decision. Thus, it is far from clear that the Supreme Court’s decision in the Morris cases would cause the arbitrator to change his decision to permit collective arbitration. (citations omitted).

This language suggests that there might be grounds for large-scale arbitration to continue even after the consolidated cases are decided.  However, we will have to wait until that decision is rendered to know for sure.

The decision is interesting for several other reasons, including the discussion of whether and to what extent the arbitrator (a former judge) slept during the hearing.  Ultimately the court decided that even if the judge had fallen asleep, the respondent had not proven any injury had occurred.

The decision can be found here.

*Professor Strong teaches at the University of Missouri School of Law and is the author of Class, Mass, and Collective Arbitration in National and International Law (Oxford University Press, 2013)