A federal court in Illinois recently granted defendant Pizza Hut’s motion to compel arbitration of an employment dispute, and this opinion discusses two different issues where courts are divided. Chatman v. Pizza Hut, No. 12 C 10209 (N.D. Ill. May 23, 2013).
The case started out as a class action lawsuit filed by a Pizza Hut employee in state court for violations of Illinois wage laws. Pizza Hut removed the case to federal court and asked the federal court to compel arbitration of the plaintiff’s claim on an individual basis and stay the court proceedings.
Issue #1 where courts are divided:
The case was referred to a magistrate judge to rule on all non-dispositive motions. The opinion explained that district courts were divided on the issue of whether motions to compel arbitration and stay litigation are dispositive or non-dispositive. The First Circuit, which is the only federal appeals court to rule on this issue, has held that such motions are non-dispositive. Finding the First Circuit’s decision to be persuasive, the magistrate continued to rule on Pizza Hut’s motion to compel arbitration.
Issue #2 where courts are divided:
The arbitration clause at issue was a “silent” clause not addressing class actions; it did not contain a class action waiver. The magistrate found that caselaw was unsettled regarding the following issue: whether a court or an arbitrator should decide whether an arbitration agreement allows for class arbitration. The magistrate noted that the Supreme Court’s Bazzle ruling from 2003 was heavily divided and did not result in a majority opinion on this issue, and the magistrate also cited several district courts which have divided on this issue. The magistrate believed that this question of who decides whether an agreement allows for class arbitration was an issue of procedural arbitrability, which is for an arbitrator to resolve. As a result, the magistrate issued an order compelling arbitration, and the issue of whether the arbitration agreement allows for class arbitration would be for the arbitrator to resolve.