Class Actions -- 2003



Green Tree Financial Corp. v. Bazzle   (U.S. Supreme Court)

Arbitration of class action suits

The Supreme Court 6/23/03 remanded this case, which concerns the issue of whether a court may graft class-action procedures onto an arbitration agreement covered by the Federal Arbitration Act ("FAA"), for further consideration. The Court found the language of the parties’ contract sufficiently unclear to preclude resolution of the issue. No provision clearly allowed or prohibited class arbitration, and the Court concluded that the contract’s requirement that disputes be resolved by "one arbitrator selected by us [Green Tree] with consent of you [Green Tree’s customer]" was not inconsistent with class arbitration because it did not require selection and consent of an arbitrator by every class member. By requiring the parties to submit "[a]ll disputes, claims, or controversies arising from or relating to this contract or the relationships which result from this contract" to an arbitrator, the Court found the parties’ contract also required the question of whether the contract allows class arbitration to be submitted to and decided by the arbitrator. The Court distinguished this question from "gateway matters" for court decision, such as "whether the parties have a valid arbitration agreement at all or whether a concededly binding arbitration clause applies to a certain type of controversy." This case is important to all businesses that include arbitration clauses in their contracts.