Eleventh Circuit: Let The Arbitrator Decide Whether Agreement Permits Arbitration Of Class Claims

Author:Mr Gustavo J. Membiela and Beth Coplowitz
Profession:Andrews Kurth Kenyon LLP
 
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What Happened

The Eleventh Circuit held in Spirit Airlines, Inc. v. Maizes, No. 17-14415, 2018 WL 3866335, at *1 (11th Cir. Aug. 15, 2018) that an arbitrator, rather than the district court, must decide whether the arbitration agreement allows for arbitration of class claims.

The Takeaway

Before parties enter into arbitration agreements they should consider who they want to decide questions of arbitrability and carefully examine the rules they choose because there may be provisions that could lead to unintended consequences relating to arbitrability and procedural issues.

Procedural Background

On April 12, 2017, Steven Maizes and three other class representatives filed a claim in arbitration against Spirit Airlines, Inc., on behalf of a class of consumers based on Spirit's alleged violations of its $9 Fare Club Agreement. On May 30, 2017, Spirit filed suit against the class representatives in federal court in the Southern District of Florida, seeking a declaration that the agreement's arbitration clause does not authorize class arbitration claims. The relevant language of the agreement's arbitration clause states: "Any dispute arising between Members and Spirit will be resolved by submission to arbitration in Broward County, State of Florida in accordance with the rules of the American Arbitration Association then in effect." Id. (emphasis in original).

Spirit moved for a preliminary injunction to stop the arbitration of class claims. The class representatives then moved to dismiss Spirit's lawsuit, arguing that the federal court lacked subject matter jurisdiction. The district court denied Spirit's motion for a preliminary injunction and dismissed the case for lack of jurisdiction. It held that the agreement's choice of AAA rules incorporated Rule 3 of the Supplementary Rules for Class Actions, which designates the arbitrator to decide whether the arbitration agreement permits class arbitration.

Spirit appealed and argued that the agreement's choice of AAA arbitration rules does not amount to clear and unmistakable evidence of the parties' intent to have an arbitrator decide whether the agreement permits class arbitration. Spirit further argued that there should be a higher burden for showing clear and unmistakable evidence for questions of class arbitrability than for ordinary questions of arbitrability.

The Court's Analysis

The Eleventh Circuit began its analysis by stating that lower courts should "never assume the parties agreed to...

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