Six years ago, in Green Tree Financial Corp. v. Bazzle,1 the U.S. Supreme Court, seemingly opened the door to a significantly new phenomenon in arbitration—classwide arbitration—by holding that under the Federal Arbitration Act (FAA), the arbitrator, not the court, decides in the first instance whether the arbitration agreement authorizes or forbids classwide arbitration. The lower court had ruled in Green Tree that the agreement was “silent” on the question and that state law authorized classwide arbitration in such circumstances. This was error, according to Justice Stephen Breyer, writing for himself and three colleagues, because the FAA required arbitral interpretation of whether the agreement authorized, or, as Green Tree argued, forbade such proceedings.
Soon after Green Tree, the American Arbitration Association (AAA) and other leading provider organizations established special “claim construction” procedures to enable arbitrators to decide “whether the applicable arbitration clause permits the arbitration to proceed on behalf of or against a class….”2 On June 15, 2009, the Supreme Court granted review in a case from the U.S. Court of Appeals for the Second Circuit, Stolt-Nielsen S.A. v. AnimalFeeds International Corp.,3 to decide whether the FAA itself prohibits imposition of class arbitration where an arbitration agreement is otherwise silent on the question.
Procedural History
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