SECOND CIRCUIT REVERSES DISTRICT COURT ON APPLICATION OF STOLT-NIELSEN
Recently, a group of retail sales employees appealed to the Second Circuit an order vacating an arbitration award on the ground that the arbitrator had exceeded her authority in light of the Supreme Court’s decision in Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 130 S. Ct. 1758 (2010). The Second Circuit reversed the judgment of the district court, concluding that the district court simply substituted its own interpretation of the parties’ arbitration agreement rather than examining whether the arbitrator had exceeded her authority under Supreme Court precedent. The Second Circuit explained that the district court failed to undertake the appropriate inquiry – whether the arbitrator had the authority to reach the issue at all, not whether the arbitrator decided the issue correctly. The Court noted that the district court had concluded that under Stolt-Nielsen, the arbitrator had improperly ruled that the parties’ arbitration agreement did not prohibit class arbitration. Because this analysis failed to consider the pertinent issue (as noted above), the Second Circuit reversed the judgment of the district court vacating the award and remanded the case with instruction to confirm the award. Jock v. Sterling Jewelers, Inc., No. 10-3247 (2d Cir. July 1, 2011).
This post written by John Black.
