In a rare 4-3 decision, the Supreme Court today holds an arbitrator, rather than only a court, is allowed to decide whether an arbitration agreement permits a classwide arbitration. The majority’s opinion in Sandquist v. Lebo Automotive, Inc. — by Justice Kathryn Werdegar for herself and Chief Justice Tani Cantil-Sakauye and Justices Goodwin Liu and Mariano-Florentino Cuéllar — concludes that “[n]o universal one-size-fits-all rule allocates that question to one decision maker or the other in every case.” Rejecting an argument that only federal law resolves the issue, the court interprets the parties’ arbitration agreement under California law, finding that “the parties’ arbitration provisions allocate the decision on the availability of class arbitration to the arbitrator, rather than reserving it for a court” and that the Federal Arbitration Act does require a contrary conclusion.
Justice Leondra Kruger dissents. Writing for herself and Justices Ming Chin and Carol Corrigan, she states that, under the federal legislation as interpreted by the U.S. Supreme Court, “the availability of class arbitration under the parties’ agreement is a ‘gateway question of arbitrability’ that is presumptively for a court to decide.”
The Supreme Court affirms the Second District, Division Seven, Court of Appeal. The court disapproves a 2014 decision by the Fourth District, Division One, and a 2012 decision by the Second District, Division Three. It also concludes that one of its own opinions, issued in 1982, is no longer good law because of intervening U.S. Supreme Court case law.
There hasn’t been a 4-3 split for quite a while, not since People v. Grimes was decided in January 2015. (Some might count the August 2015 People v. Prunty opinion as a 4-3 decision, but we list it as a 5-2 division.) The court granted rehearing in Grimes, but rehearing in Sandquist is unlikely because it’s not a “transition” case.