Originally from World Arbitration And Mediation Review (WAMR)

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CLASS ACTIONS AND ARBITRATION

MURKY WATERS:
STOLT-NIELSEN S.A. V. ANIMALFEEDS
INTERNATIONAL CORP.

William G. Whitehill*

I. INTRODUCTION

Class action litigation is a near-exclusive American
phenomenon. It is a new and up to now rapidly expanding
development. On April 27, 2010, the United States Supreme Court
released its long-awaited opinion in Stolt-Nielsen v. AnimalFeeds
International Corp.,1 which some surmise is the high tide mark
from which class arbitrations in the United States will recede.2
Other commentators’ conclusions are more reserved.3 At this
point, it is too early to tell. What is clear from the opinion,
however, is that the Supreme Court (1) apparently re-opened at
least one important question that many thought the Court
resolved in Green Tree Financial Corp. v. Bazzle4 and (2) left many
other questions unanswered. This article explores each of these
questions in turn.

At a minimum, Stolt-Nielsen means that courts and arbitrators
cannot impose class arbitration on unsuspecting parties when
their arbitration agreement is unambiguously silent about
whether they consented to that procedure. That is, courts and
arbitrators may not impose class arbitration as a default when
there is no basis under traditional contract principles for finding
an objectively agreed upon consent to class arbitration. That does
not mean, however, that courts or arbitrators are prohibited from
finding an agreement to engage in class arbitration in a less than
clear agreement where traditional contract principles arguably
support that conclusion. In addition, that result could be difficult
to set aside with judicial review if the initial decision construing
the arbitration clause is made by arbitrators. Moreover, in Stolt-
Nielsen, the Supreme Court left tantalizingly undecided the issue
of whether, post- Hall Street Associates, LLC v. Mattel, Inc,5
"manifest disregard of the law" remains in any form a ground for
vacating an arbitration award. Depending on the nature of the
underlying contract, the most likely method for avoiding class
arbitration is to include non-joinder and non-class action clauses
in the arbitration agreement and to preserve court jurisdiction
over decisions as to whether the arbitration clause permits class
arbitration ("clause construction") and which parties qualify as
members of the class ("class certification"), together referred to
as "gateway decisions."