Jock v. Sterling Jewelers Inc.

• Decision Date: 18 November 2019
• Docket Number: August Term, 2017,Docket No. 18-153-cv
• Citation: 942 F.3d 617
• Parties: Laryssa JOCK, Christy Chadwick, Maria House, Denise Maddox, Lisa McConnell, Gloria Pagan, Judy Reed, Linda Rhodes, Nina Shahmirzadi, Leighla Smith, Marie Wolf, Dawn Souto-Coons, Plaintiffs-Counter-Defendants - Appellants, Jacquelyn Boyle, Lisa Follett, Khristina Rodriguez, Kelly Contreras, Plaintiffs-Counter-Defendants, v. STERLING JEWELERS INC., Defendant-Counter-Claimant - Appellee.
• Court: U.S. Court of Appeals — Second Circuit

942 F.3d 617

Laryssa JOCK, Christy Chadwick, Maria House, Denise Maddox, Lisa McConnell, Gloria Pagan, Judy Reed, Linda Rhodes, Nina Shahmirzadi, Leighla Smith, Marie Wolf, Dawn Souto-Coons, Plaintiffs-Counter-Defendants - Appellants,Jacquelyn Boyle, Lisa Follett, Khristina Rodriguez, Kelly Contreras, Plaintiffs-Counter-Defendants,

v.STERLING JEWELERS INC., Defendant-Counter-Claimant - Appellee.

Docket No. 18-153-cv

August Term, 2017

United States Court of Appeals, Second Circuit.

Argued: May 7, 2018

Decided: November 18, 2019

Joseph M. Sellers, Kalpana Kotagal, Shaylyn Cochran, Cohen Milstein Sellers & Toll PLLC, Washington, DC; Sam J. Smith, Loren B. Donnell, Burr & Smith LLP, St. Petersburgh, FL; Thomas A. Warren, Thomas A. Warren Law Offices, P.L., Tallahassee, FL; Jessica Ring Amunson, Benjamin M. Eidelson, Jenner & Block LLP, Washington, DC, for Plaintiffs-Counter-Defendants-Appellants.

Gerald L. Maatman, Jr., David Bennet Ross, Lorie E. Almon, Daniel B. Klein, Seyfarth Shaw LLP, New York, NY; Jeffrey S. Klein, Gregory Silbert, Weil, Gotshal & Manges LLP, New York, NY, for Defendant-Counter-Claimant-Appellee.

Before: Hall and Carney, Circuit Judges, and Koeltl, District Judge.^*

Hall, Circuit Judge:

This is an appeal from the District Court’s January 15, 2018 opinion and order vacating the arbitrator’s certification of a class of Defendant-Counter-Claimant-Appellee’s employees insofar as the class included employees who did not affirmatively opt in to the specific arbitration proceeding before the arbitrator. The District Court held that the arbitrator, Kathleen A. Roberts, exceeded her authority in purporting to bind those absent class members to class arbitration because the arbitrator erred in determining that the arbitration agreement permits class arbitration. We hold that the arbitrator’s determination that the agreement permits class arbitration binds the absent class members because, by signing the RESOLVE Agreement, they, no less than the parties, bargained for the arbitrator’s construction of that agreement with respect to class arbitrability. We therefore reverse the judgment of the District Court. The issue of whether the arbitrator exceeded her authority in certifying an opt-out, as opposed to a mandatory, class is not before us in this appeal, however. We therefore remand this case to the District Court to decide that issue in the first instance after allowing the parties an opportunity to present their renewed arguments with respect to that issue.

I.

Laryssa Jock ("Jock") and her co-Plaintiffs-Counter-Defendants-Appellants (collectively, "Appellants") are a group of current and former retail sales employees of Defendant-Counter-Claimant-Appellee Sterling Jewelers Inc. ("Sterling").¹ Jock filed the instant suit in 2008, alleging that she and other female employees were paid less than their male counterparts, on account of their gender, in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. , and the Equal Pay Act, 29 U.S.C. § 206(d).

All Sterling employees were required, as a condition of employment, to sign a "RESOLVE Program" agreement ("RESOLVE Agreement") mandating that they participate in arbitration. J. App. 129. Under the RESOLVE Agreement, employees "waiv[e] [their] right to obtain any legal or equitable relief ... through any government agency or court, and ... also waiv[e] [their] right to commence any court action. [They] may, however, seek and be awarded equal remedy through the RESOLVE Program." Id . The RESOLVE Agreement also provides that "[t]he Arbitrator shall have the power to award any types of legal or equitable relief that would be available in a court of competent jurisdiction[,]" and that any claim arising thereunder will be arbitrated "in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association." Id .

II.

This is the fourth time this case has come before this Court. See Jock v. Sterling Jewelers Inc. , 646 F.3d 113 (2d Cir. 2011) (" Jock I "); Jock v. Sterling Jewelers Inc. , 703 F. App'x 15 (2d Cir. 2017) (summary order) (" Jock II "); Jock v. Sterling Jewelers Inc. , 691 F. App'x 665 (2d Cir. 2017) (summary order) (" Jock III ").

In Jock I , the arbitrator issued an award in favor of the then-named plaintiffs, construing the RESOLVE Agreement to permit classwide arbitration. The District Court vacated that award, concluding that under Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp ., 559 U.S. 662, 130 S.Ct. 1758, 176 L.Ed.2d 605 (2010), "the arbitrator’s construction of the RESOLVE agreements as permitting class certification was in excess of her powers." Jock I , 646 F.3d at 118 (quoting Jock v. Sterling Jewelers, Inc. , 725 F. Supp. 2d 444, 448 (S.D.N.Y. 2010) ). We reversed, holding that the District Court impermissibly substituted its own legal analysis for that of the arbitrator instead of focusing its inquiry on whether the arbitrator was permitted to reach the question of class arbitrability that had been submitted to her by the parties. Id . at 123–24. We explained, furthermore, that the arbitrator had a colorable justification under the law to reach the decision she did. We distinguished Stolt-Nielsen on the ground that the parties in Stolt-Nielsen stipulated that their arbitration agreement contained "no agreement" on the issue of class arbitration, whereas the plaintiffs in this case merely conceded that there was no explicit agreement to permit class arbitration, thus leaving open the possibility of an "implied agreement to permit arbitration." Id . at 119, 124.

Following our decision in Jock I , the arbitrator issued a class certification determination that certified a class of approximately 44,000 women, comprising the then-254 plaintiffs as well as other individuals who had neither submitted claims nor opted in to the arbitration proceeding ("the absent class members"). The arbitrator certified the class only with respect to Appellants’ Title VII disparate impact claims for declaratory and injunctive relief.² The District Court denied Sterling’s motion to vacate the class determination award, reasoning that Sterling’s argument that the arbitrator had exceeded her powers in "purporting to bind absent class members who did not express their consent to be bound" was "foreclosed" by this Court’s holding in Jock I that "there is no question that the issue of whether the agreement permitted class arbitration was squarely presented to the arbitrator." Jock v. Sterling Jewelers, Inc. , 143 F. Supp. 3d 127, 128–29 (S.D.N.Y. 2015) (internal quotation marks omitted).

Sterling appealed from the District Court’s decision, and in Jock II this Court reversed and remanded, clarifying that Jock I "did not squarely address whether the arbitrator had the power to bind absent class members to class arbitration given that they, unlike the parties here, never consented to the arbitrator determining whether class arbitration was permissible under the agreement in the first place." 703 F. App'x at 17. The Jock II panel identified the question to be considered on remand, and one not considered in Oxford Health Plans LLC v. Sutter , 569 U.S. 564, 133 S.Ct. 2064, 186 L.Ed.2d 113 (2013), as "whether an arbitrator, who may decide ... whether an arbitration agreement provides for class procedures because the parties ‘squarely presented’ it for decision, may thereafter purport to bind non-parties to class procedures on this basis." 703 F. App'x at 18.³

On remand, the District Court vacated the arbitrator’s class determination ruling. The District Court’s reasoning was twofold. First, it determined that the RESOLVE Agreement did not give the arbitrator the authority to certify the class because the District Court "considered the question of whether the RESOLVE agreement authorizes class procedures in 2010 and decided that it does not." Sp. App. 6. Second, the fact that "the named plaintiffs and the defendant submitted the question of whether the RESOLVE Agreement allowed for class procedures to the Arbitrator" also did not give the arbitrator such authority. Id . at 7. The District Court reasoned that, even if the arbitrator’s "erroneous interpretation" of the RESOLVE Agreement could bind the 254 plaintiffs who had "authorized the arbitrator to make that determination" by submitting the question to her or opting into the proceeding, that erroneous interpretation could not bind absent class members. Id . at 8 (quoting Oxford Health , 569 U.S. at 574, 133 S.Ct. 2064 (Alito, J. , concurring)).

This appeal followed.

III.

"In considering a challenge to a district court’s decision to vacate a portion of an arbitration award, we review its legal rulings de novo and its findings of fact for clear error." ReliaStar Life Ins. Co. of New York v. EMC Nat’l Life Co. , 564 F.3d 81, 85 (2d Cir. 2009).

Courts are empowered to vacate arbitration awards only "where the arbitrator[ ] exceeded [his or her] powers, or so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made." 9 U.S.C. § 10(a)(4). This is an extremely deferential standard of review. See Stolt-Nielsen , 559 U.S. at 671, 130 S.Ct. 1758. When parties

bargain[ ] for [an] arbitrator’s construction of their agreement, an arbitral decision even arguably construing or applying the contract must stand, regardless of a court’s view of its (de)merits. Only if the arbitrator acts outside the scope of his contractually delegated authority—issuing an award that simply reflects his own notions of economic justice rather than drawing its essence from the contract—may a court overturn his determination.

Oxford Health , 569 U.S. at 569, 133 S.Ct. 2064 (internal quotation marks, citations, and alterations omitted); accord Stolt-Nielsen , 559 U.S. at 672, 130 S.Ct. 1758. The focus of our inquiry under Section 10(a)(4) is " ‘whether the arbitrator[ ] had the power, based on the parties’ submissions or the arbitration...