Monday, September 28, 2020

Judge Barrett's Arbitration Decisions

BarrettLise Gelernter (Emeritus Professor & Visiting Scholar, Buffalo) sends this guest post about two arbitration decisions authored by SCOTUS nominee Amy Barrett: Wallace v. Grubhub Holdings, Inc., No. 19-1564 (7th Cir. 2020) and Herrington v. Waterstone Mortgage, No. 17-3609 (7th Cir. 2018):

On a substantive level unrelated to the confirmation of Judge Barrett, both decisions illustrate the intricacy of two of the many unanswered questions the Supreme Court has left concerning arbitration: 1) who falls under the exemption from the FAA for what the Court called "transportation workers"? and 2) which issues of "arbitrability" does a court or an arbitrator decide?

In the GrubHub case, Barrett, writing for the Seventh Circuit, said that "transportation workers" who are exempt from the FAA have to be in a class of workers involved in the interstate movement of goods, as is true of the seamen and railroad workers who are specifically exempted. Although it was not an issue in GrubHub, I think it should be pretty clear that the exemption also applies to transportation workers involved in the interstate movement of people as well as goods. Many of the seamen and railroad workers exempted specifically deal only or primarily with the interstate movement of people. Many airline workers considered to fall under the exemption for railroad workers (since both are covered by the Railway Labor Act) also deal primarily with moving people. There have been a few court decisions that say otherwise (including one that said Uber drivers who transport only passengers cannot fall under the FAA exemption), but I think they're dead wrong.

On the arbitrability issue, in the Herrington case, Judge Barrett walked a fine line between confirming prior 7th Circuit precedent that said an arbitrator has the authority to decide whether to consolidate a group of individual "bilateral" actions, and saying that only courts had the authority to decide the issue of whether an arbitration agreement permitted class and collective actions. Does it really make a difference if 1,000 Doordash drivers bring virtually identical individual arbitration claims that an arbitrator consolidates, or if those same 1,000 Doordash drivers bring a class or collective arbitration claim? I recognize there are some differences between those two scenarios, but I could see a different district or circuit court coming up with a different answer.

A lot of the confusion among the courts is that the Supreme Court left a mess when it, in my opinion, started to create more content for the FAA that it actually has (Circuit City, ATT Mobility v. Concepcion, etc.). Because the FAA does not really contain the substantive law that the Supreme Court majority has claimed it does, there are few clear answers to be found in the statute to the unanswered questions about arbitrator authority, FAA exemptions, invalidation of arbitration clauses or agreements and a myriad of other issues.


Arbitration, Beltway Developments | Permalink


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