Rex Heinke Participates in Daily Journal Podcast on California Supreme Court Arbitration Ruling

For its Weekly Appellate Report podcast, Daily Journal spoke again with Rex Heinke, co-head of Akin Gump’s Supreme Court and appellate practice. The topic this week was class arbitration after Sandquist v. Lebo Automotive, in which the California Supreme Court ruled who should decide whether class claims may be arbitrated – a court or an arbitrator? In this case, the court said it should be the arbitrator.

Heinke began by discussing why this case was so important, explaining that employers are generally concerned with this issue because an arbitrator’s decision “is virtually unreviewable” and cannot ordinarily be reversed on appeal. In contrast, a decision by a judge will be subject to review.

Heinke said the decision is favorable to plaintiffs who want class-wide arbitration to be decided by arbitrators “because it basically creates a default rule that, unless the agreement expressly says ‘no arbitration of class-wide issues,’ then ordinarily that issue is going to go to the arbitrator.” He added that employers generally favor individual arbitration because it’s quick, efficient and not expensive.

As for how other courts have decided this issue, Heinke noted that every federal circuit court has come down on the opposite side from the California Supreme Court. He added that the question of who decides the question at hand comes down to what you think the role of the courts and arbitrators is.

Responding to a question about whether he was surprised to see a 4-3 decision in this case, Heinke said he wouldn’t read anything into it other than “it’s an issue that’s divided the courts considerably. I don’t think it portends that the California Supreme Court is going to have more 4-3 decisions.”

Heinke summarized the case as being “another step in that continuing disagreement over how arbitration should work.” He also predicted that, while this issue would ordinarily be a “prime candidate” to be heard by the U.S. Supreme Court, given the vacancy on the Court and its current 4-4 ideological split on many issues, it may not take up the issue at this stage.

Finally, Heinke gave some advice to employment lawyers writing arbitration agreements, suggesting they use “clear and express” language as to who is to decide whether there will be class-wide arbitration.