In Jock v. Sterling Jewelers Inc., the Second Circuit reversed a district court decision vacating an arbitral award that determined the arbitrator could properly rule on a class certification motion that would allow Jock ("Plaintiff") and similarly situated plaintiffs to arbitrate discrimination claims against Sterling Jewelers ("Defendant"). The Second Circuit reasoned that the district court improperly applied the Federal Arbitration Act's ("FAA") Section 10(a)(4) grounds for vacatur; the district court ruled that the arbitrator improperly interpreted the law rather than undertaking the proper inquiry, which was whether the arbitrator had authority to rule under both the arbitral agreement and governing law. The court reasoned that the Supreme Court's ruling in Stolt-Nielsen v. AnumalFeeds Int'l Corp. did not prohibit arbitrators from finding an implicit agreement allowing for class arbitration. The court stated that FAA section 10 - notably section 10(a)(4) - should be interpreted narrowly in order to promote the recourse to arbitration and the enforcement of arbitral awards. Challenges to arbitral awards brought under Section 10(a)(4) should only be upheld where the arbitrator "consider[s] issues beyond those the parties have submitted for her consideration, or reach[s] issues clearly prohibited by law or by the terms of the parties' agreement." Reviewing courts should not engage in a review that asks whether the arbitrator correctly interpreted the law or reached the right result. Finally, the court held that the Defendant's interpretation of Stolt-Nielsen as requiring the explicit reference to class arbitration was unpersuasive. The court interpreted Stolt-Nielsen to prohibit class arbitration only where the parties have agreed that the arbitral agreement is silent on the class arbitration issue. The dissent would have required a more express reference to class arbitration to allow the arbitrator to rule on class certification. This decision may settle the proper inquiry when considering motions for vacatur under FAA Section 10. But this clarity may come at the proce of confusion regarding the ability of arbitrators to consider motions for class arbitration.
Dustin Morgan, Are Arbitrators Right Even When They Are Wrong?: Second Circuit Upholds Arbitral Ruling Allowing Implicit Reference to Class Arbitration, 4 251 (2012).