Opinion
Docket No. 323986.
03-03-2016
BIENENSTOCK & ASSOCIATES, INC. v. LOWRY.
Kienbaum Opperwall Hardy & Pelton, PLC, Birmingham (by Thomas G. Kienbaum, Elizabeth Hardy, and William B. Forrest III ), for plaintiffs. The Miller Law Firm, PC, Rochester (by Kevin F. O'Shea, David B. Viar, and Devon P. Allard ), for defendants.
Kienbaum Opperwall Hardy & Pelton, PLC, Birmingham (by Thomas G. Kienbaum, Elizabeth Hardy, and William B. Forrest III ), for plaintiffs.
The Miller Law Firm, PC, Rochester (by Kevin F. O'Shea, David B. Viar, and Devon P. Allard ), for defendants.
Before: STEPHENS, P.J., and CAVANAGH and MURRAY, JJ.
MURRAY, J.In this action for declaratory and injunctive relief, plaintiffs Lauren Bienenstock & Associates, Inc. (LBA), Lauren Bienenstock, and Samuel Bienenstock appeal as of right the order of the Oakland Circuit Court granting in part and denying in part their motion for summary disposition. The question presented is whether a trial court or an arbitrator has the authority under the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq., to determine whether multiple arbitration cases may be consolidated when the arbitration agreement is silent on that issue. We hold that the arbitrator is the one to decide that issue, and so we affirm the trial court's order denying plaintiffs' motion for summary disposition on that issue.
I. FACTS AND PROCEDURAL HISTORY
The factual backdrop to this proceeding arose from a dispute about compensation. All of the defendants worked as independent contractors for LBA at some point in the past. All but two of the defendants in the trial court, Monica Storm and Pamela Worthington, also known as Pamela Jackson, signed independent contractor agreements (ICA) with LBA for performing their work as licensed court reporters. Each of the ICAs signed by the 22 defendants contained the following clause:
Any dispute relating to this Agreement, or breach thereof, shall be settled by arbitration pursuant to the rules and regulations of the American Arbitration Association
(“AAA”). Either party requesting arbitration under this Agreement
shall make a demand on the other party by registered or certified mail, with a copy to the AAA's Southfield, Michigan office, which shall be the location of any arbitration hearing. The arbitration shall then take place as noticed by the AAA, and the outcome thereof shall be binding regardless of whether one of the parties fails or refuses to participate.
Initially, defendants filed a lawsuit against plaintiffs in the Macomb Circuit Court seeking what they believed was overdue compensation. However, as a result of the arbitration clause quoted above, plaintiffs moved for, and were granted, summary disposition with regard to 22 defendants in the case—all of whom had signed an ICA with an arbitration agreement—and were denied summary disposition with regard to the four other court reporters for whom no ICA could be found. The 22 defendants appealed that decision to this Court, arguing that because the ICAs were not valid or enforceable, they were not required to resolve their disputes by arbitration. We concluded otherwise. Lowry v. Lauren Bienenstock & Assoc., Inc., unpublished opinion per curiam of the Court of Appeals, issued December 23, 2014 (Docket No. 317516), 2014 WL 7338880.
The four remaining court reporters, however, voluntarily dismissed their claims without prejudice because they did not live or do business in Macomb County. They then refiled in the Oakland Circuit Court, with one additional court reporter, reasserting the same allegations.
In any event, while those two cases were pending, defendants (including the 22 individuals with a pending appeal) filed a demand for arbitration against plaintiffs with the American Arbitration Association (AAA). Because their ICAs provided that arbitration would be handled under AAA rules and regulations, and AAA rules permitted class arbitration under certain circumstances, defendants filed their arbitration as a class arbitration. Defendants defined the class as “[a]ll court reporters who currently provide, or formerly provided, court reporting services as independent contractors for [LBA] pursuant to a written [ICA] that included an arbitration provision.” Defendants asserted that the class numbered in the hundreds, they all shared a common transaction arising out of the same facts and applicable law, joinder of all claimants would be impracticable, and class arbitration was the most convenient and cost-effective way of disposing of the dispute.
Plaintiffs responded by filing the instant suit in the Oakland Circuit Court, requesting declaratory and injunctive relief regarding defendants' arbitration before the AAA. Specifically, plaintiffs requested that the trial court declare that defendants were not permitted to bring a class arbitration, and that it enjoin their current class arbitration from going forward. Plaintiffs asserted that federal caselaw under the FAA held that it was a court's duty to decide the “gateway issue” of whether class arbitration is permitted. That question was not, as asserted by defendants, for the arbitrator to decide. Relatedly, plaintiffs also asked for a declaration that defendants were only permitted to proceed with individual arbitration regarding their own individual claims, and that there should not be any consolidation. Soon after filing suit, plaintiffs moved for summary disposition of all their claims pursuant to MCR 2.116(C)(6) and (C)(10), asking the trial court to (1) find that it had the authority to determine whether class arbitration or consolidation was permitted, and (2) decide those issues in plaintiffs' favor.Defendants, of course, disagreed with plaintiffs' arguments. Instead, defendants countered, the arbitrator should determine whether class arbitration (and consolidation) is permitted, principally because the arbitration agreement specifically stated that it would be handled under AAA rules and regulations, and those rules permit class arbitration in certain circumstances and give the arbitrator the authority to decide consolidation issues. Noting that the cases relied on by plaintiffs held only that a trial court should decide whether class arbitration is permitted when the contract does not require otherwise, defendants pointed to the contract's specific reference to AAA rules, which state that the arbitrator is to make the decision, and argued that the arbitration provision required the trial court to defer to the arbitrator.
At the motion hearing, the trial court ruled from the bench. First, the trial court held that, pursuant to persuasive caselaw, in the face of contractual silence whether class arbitration is permitted is a gateway issue for the trial court to decide. The trial court also held that whether consolidation was permitted was a subsidiary question for the arbitrator to decide and denied plaintiffs' motion for summary disposition on that question.
The trial court subsequently denied plaintiffs' motion for reconsideration. In doing so, the trial court ruled that because the question of consolidation of claims that are undoubtedly arbitrable falls into the subsidiary question category, without specific instruction from the contract, it is an issue for the arbitrator to decide. Although the trial court noted the potential for disparate treatment between class arbitration and consolidation decisions and who can decide them, the court reasoned that a decision from the United States Court of Appeals for the Sixth Circuit, Reed Elsevier, Inc. v. Crockett, 734 F.3d 594, 597 (C.A.6, 2013), supported the principle that courts should decide the gateway issue of class arbitration. The court noted that no decision supported the theory that consolidation was also a gateway issue, and so it concluded that it was a subsidiary issue.
This appeal followed.
II. ANALYSIS
“This Court reviews decisions on motions for summary disposition de novo to determine if the moving party was entitled to judgment as a matter of law.” Alcona Co. v. Wolverine Environmental Prod., Inc., 233 Mich.App. 238, 245, 590 N.W.2d 586 (1998). A motion for summary disposition pursuant to MCR 2.116(C)(10) “tests the factual sufficiency of the complaint....” Joseph v. Auto Club Ins. Ass'n, 491 Mich. 200, 206, 815 N.W.2d 412 (2012). “In evaluating a motion for summary disposition brought under [MCR 2.116(C)(10) ], a trial court considers affidavits, pleadings, depositions, admissions, and other evidence submitted by the parties, MCR 2.116(G)(5), in the light most favorable to the party opposing the motion.”Maiden v. Rozwood, 461 Mich. 109, 120, 597 N.W.2d 817 (1999). Summary disposition is proper where there is no “genuine issue regarding any material fact.” Id.
A. GENERAL PRINCIPLES
As noted at the outset of this opinion, the only issue to be decided is whether a trial court judge or an arbitrator is the appropriate one to decide whether multiple arbitrations should be consolidated when the contract does not speak to the issue. The issue is governed by federal law, as there is no dispute that the FAA applies to these contracts. See
Amtower v. William C. Roney & Co. (On Remand), 232 Mich.App. 226, 232, 590 N.W.2d 580 (1998) (this Court must apply the FAA because “[s]tate courts are bound, under the Supremacy Clause, U.S. Const. art. VI, cl. 2, to enforce the FAA's substantive provisions” for contracts arising out of interstate commerce). With regard to issues involving federal law, this Court is bound by decisions of the United States Supreme Court, Abela v. General Motors Corp., 469 Mich. 603, 606, 677 N.W.2d 325 (2004), but is not bound by decisions of any lower federal courts, because “[a]lthough lower federal court decisions may be persuasive, they are not binding on state courts,” id. at 606–607, 677 N.W.2d 325.
“[A]rbitration is simply a matter of contract between the parties; it is a way to resolve those disputes—but only those disputes—that the parties have agreed to submit to arbitration.” First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). In other words, “ ‘arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.’ ” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002), quoting United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960). “In this endeavor, as with any other contract, the parties' intentions control.” Stolt–Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 682, 130 S.Ct. 1758, 176 L.Ed.2d 605 (2010) (quotation marks and citations omitted).
“Where ordinary contracts are at issue, it is up to the parties to determine whether a particular matter is primarily for arbitrators or for courts to decide.” BG Group PLC v. Republic of Argentina, 572 U.S. ––––, ––––, 134 S.Ct. 1198, 1206, 188 L.Ed.2d 220 (2014). However, “[i]f the contract is silent on the matter of who primarily is to decide ‘threshold’ questions about arbitration, courts determine the parties' intent with the help of presumptions.” Id. at ––––, 134 S.Ct. at 1206. One such presumption is that “[u]nless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator.” AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 649, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986). In Howsam, 537 U.S. at 83, 123 S.Ct. 588, the Supreme Court referred to the above exception as a “gateway question,” or a “ question of arbitrability” and held that it had a limited scope. Examples of gateway or arbitrability issues “include questions such as ‘whether the parties are bound by a given arbitration clause,’ or ‘whether an arbitration clause in a concededly binding contract applies to a particular type of controversy.’ ” BG Group, 572 U.S. at ––––, 134 S.Ct. at 1206, quoting Howsam, 537 U.S. at 84, 123 S.Ct. 588.
On the other hand, there are “ ‘procedural questions which grow out of the dispute and bear on its final disposition....’ ” Howsam, 537 U.S. at 84, 123 S.Ct. 588, quoting John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557, 84 S.Ct. 909, 11 L.Ed.2d 898 (1964). We presume (again, absent any relevant contract language) that procedural questions, sometimes referred to as subsidiary questions, are to be decided by the arbitrator, not the courts. Howsam, 537 U.S. at 85, 123 S.Ct. 588. In other words, “the parties intend arbitrators, not courts, to decide disputes about the meaning and application of particular procedural preconditions for the use of arbitration.” BG Group, 572 U.S. at ––––, 134 S.Ct. at 1207. Examples of procedural questions for the arbitrator to decide include “whether the first two steps of a grievance procedure were completed, where these steps are prerequisites to arbitration,” and “allegation[s] of waiver, delay, or a like defense to arbitrability.” Howsam, 537 U.S. at 84, 123 S.Ct. 588 (quotation marks and citations omitted; alteration in original). When the issue presented is close and “there is doubt” about whether an issue is a gateway question for the court or a procedural one for the arbitrator, “we should resolve that doubt in favor of arbitration.” Green Tree Financial Corp. v. Bazzle, 539 U.S. 444, 452, 123 S.Ct. 2402, 156 L.Ed.2d 414 (2003) (plurality decision; opinion by Breyer, J.) (quotation marks omitted), citing Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473 U.S. 614, 626, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985).
From these doctrinal definitions there are typically two situations where a court would be empowered to decide whether consolidation is permissible. First, if the contract between the parties explicitly states that a court should decide the issue, then the parties' intent would be plain, and a court would be required to follow that intention. See Stolt–Nielsen, 559 U.S. at 682, 130 S.Ct. 1758 (“In this endeavor, as with any other contract, the parties' intentions control.”) (quotation marks and citation omitted), and BG Group, 572 U.S. at ––––, 134 S.Ct. at 1206 (“[I]t is up to the parties to determine whether a particular matter is primarily for arbitrators or for courts to decide.”). Second, if the parties' intent is not discernable from the face of the contract, then a court must engage in presumptions regarding the parties' intent, BG Group, 572 U.S. at ––––, 134 S.Ct. at 1206, and should only decide an issue if it is a gateway issue involving whether a contract to arbitrate exists or whether a particular type of claim falls under the arbitration agreement. Howsam, 537 U.S. at 84, 123 S.Ct. 588.
B. APPLICATION OF GENERAL PRINCIPLES
Turning to the facts before us, the contract does not reveal an intent regarding consolidation, as the text of the arbitration clause makes no mention of consolidation or the potential combination of various parties. Rather, the contract merely grants broad power to the arbitrator to determine all disputes arising between the parties. With no mention of consolidation in the text of the contract, we must turn to the presumptions. BG Group, 572 U.S. at ––––, 134 S.Ct. at 1206–1207. In doing so, it is clear that the parties are subject to an arbitration agreement, and there is no suggestion that the underlying claim for overdue compensation falls outside the scope of the agreement. Consequently, the issue of who decides whether to consolidate arbitration claims does not fall within the general purview of a gateway issue, see id., and is instead a procedural or subsidiary issue for the arbitrator to decide. Stolt–Nielsen, 559 U.S. at 685, 130 S.Ct. 1758.
The United States Court of Appeals for the Seventh Circuit came to this same straight-forward conclusion in Employers Ins. Co. of Wausau v. Century Indemnity Co., 443 F.3d 573, 577 (C.A.7, 2006), where the court cogently explained:
We find based on Howsam that the question of whether an arbitration agreement forbids consolidated arbitration is a procedural one, which the arbitrator should resolve. It does not involve whether Wausau and Century are bound by an arbitration clause or whether the arbitration clause covers the Aqua–Chem policies. Instead, the consolidation question concerns grievance procedures—i.e., whether Century can be required to participate in one arbitration covering both the Agreements, or in an arbitration with other reinsurers.
Accord Harry Baker Smith Architects II, PLLC v. Sea Breeze I, LLC, 83 So.3d 395, 399 (Miss.App., 2011) (holding that because the parties agreed to arbitrate, and both placed the issue before the arbitrator, the issue of consolidation was for the arbitrator); Certain
Underwriters at Lloyd's London v. Westchester Fire Ins. Co., 489 F.3d 580, 587–588 (C.A.3, 2007) (holding that because the parties agreed to arbitrate the particular issue, any doubt about who should decide the consolidation issue was resolved in favor of the arbitrator); Shaw's Supermarkets, Inc. v. United Food and Commercial Workers Union, Local 791, 321 F.3d 251, 254 (C.A.1, 2003) (concluding that because each of the grievances were arbitrable, consolidation was a procedural issue for the arbitrator).
In addition, allowing an arbitrator to decide consolidation issues in light of a silent contract would in no way create a “risk of forcing parties to arbitrate a matter that they may well not have agreed to arbitrate,” Howsam, 537 U.S. at 83–84, 123 S.Ct. 588 (emphasis added), because the underlying claims indisputably fall under the agreed-on arbitration clause. And, in no way will the answer on consolidation “determine whether the underlying controversy will proceed to arbitration on the merits.” Id. at 83, 123 S.Ct. 588. Regardless of the outcome of this decision, each of the grievances will proceed to arbitration, with the answer on consolidation determining only what form that arbitration will take. Under the facts presented, the issue of consolidation is a procedural one.
As we noted, our conclusion is consistent with a significant number of federal decisions, each of which have held that whether to consolidate is for the arbitrator to decide when the contract is silent on the issue. Indeed, the decisions are almost uniform in this conclusion. See, e.g., Certain Underwriters, 489 F.3d at 588 ; Employers Ins. Co. of Wausau, 443 F.3d at 577 ; Shaw's Supermarkets, 321 F.3d at 254 ; and Blimpie Int'l, Inc. v. Blimpie of the Keys, 371 F.Supp.2d 469, 473 (S.D.N.Y., 2005). We therefore hold that in the face of contractual silence on the issue, whether multiple arbitrations should be consolidated is a question for the arbitrator.
To their credit, plaintiffs do not seek to hide from this line of cases. Instead, they argue that these cases were collectively based on an incorrect understanding of the precedential effect of Bazzle, or that the passage of time since Stolt–Nielsen was released has caused the plurality decision in Bazzle to be no longer persuasive. Proof of this, they argue, is that several federal courts of appeal have recently held that whether class arbitration can proceed is a gateway issue, which of course is contrary to the plurality decision in Bazzle. Plaintiffs are correct that Bazzle provided a foundation for many of these cases, but of equal—if not greater—import to these decisions was the majority opinion in Howsam. And Stolt–Nielsen did not alter how we look at this precise issue, at least not in the way plaintiffs suggest. We explain our conclusions below.
Bazzle was a plurality decision, and although plurality decisions generally have no precedential effect, there was a split amongst the circuits as to whether Bazzle contained a discernable holding. Compare Employers Ins. Co. of Wausau, 443 F.3d at 580 (concluding that there was not one), with Pedcor Mgmt. Co., Inc. Welfare Benefit Plan v. Nations Personnel of Texas, Inc., 343 F.3d 355, 358–359 (C.A.5, 2003) (finding that there was).
C. STOLT–NIELSEN DOES NOT ADDRESS THIS ISSUE
Determining the import of Stolt–Nielsen requires knowing its context in relation to Bazzle. In Bazzle, a plurality of the Court concluded that the question whether a contract allowed for class arbitration was not a gateway issue, and thus it was for the arbitrator, rather than the court, to decide. See Bazzle, 539 U.S. at 452–453, 123 S.Ct. 2402. After Bazzle was issued in 2003, many federal courts relied in part on it to hold that arbitrators were to decide the procedural question of whether an arbitration agreement allowed for class arbitration. See Pedcor Mgmt. Co., Inc. Welfare Benefit Plan v. Nations Personnel of Texas, Inc., 343 F.3d 355, 359–360 (C.A.5, 2003), and Johnson v. Long John Silver's Restaurants, Inc., 320 F.Supp.2d 656, 668 (M.D.Tenn., 2004), aff'd 414 F.3d 583 (C.A.6, 2005).
As we noted earlier, during this same post-Bazzle, pre-Stolt–Nielsen time period, courts were concluding that consolidation was also for the arbitrator to decide. See Certain Underwriters, 489 F.3d at 587–588 ; Employers Ins. Co. of Wausau, 443 F.3d at 577 ; Shaw's Supermarkets, 321 F.3d at 254 ; Blimpie Int'l, 371 F.Supp.2d at 473.
But then came Stolt–Nielsen, in which a majority of justices made clear that Bazzle was only a plurality decision, and thus did not contain a holding regarding anything, let alone deciding whether classwide arbitration was a gateway issue for the court to decide. Stolt–Nielsen, 559 U.S. at 679–680, 130 S.Ct. 1758. The Court made this point again in Oxford Health Plans LLC v. Sutter, ––– U.S. ––––, ––––, 133 S.Ct. 2064, 2068 n. 2, 186 L.Ed.2d 113 (2013), where a majority said that “[the] Court has not yet decided whether the availability of class arbitration” is a decision relegated to the court (thus a gateway issue) or the arbitrator (and thus a procedural, or subsidiary, issue). See also Reed Elsevier, 734 F.3d at 597–598 (recognizing that Bazzle contained no precedential rulings, and holding that based on Stolt–Nielsen, class arbitration was a gateway issue for the court).
As a result, who decides whether an agreement authorizes class arbitration “remains open at the Supreme Court level.” Price v. NCR Corp., 908 F.Supp.2d 935, 941 (N.D.Ill., 2012).
Plaintiffs argue that Stolt–Nielsen and Oxford Health Plans have diminished the importance of the Bazzle plurality's decision, and so in turn the cases decided before Stolt–Nielsen that addressed consolidation as a gateway issue with Bazzle as their foundation are suspect and should not be considered persuasive precedent. Stolt–Nielsen does not, however, affect this issue in the way plaintiffs perceive. As explained below, if anything Stolt–Nielsen implicitly disenfranchised courts from analogizing class arbitration issues to these involving consolidation.
The issue presented in Stolt–Nielsen, a post-arbitration case, was “whether imposing class arbitration on parties whose arbitration clauses are ‘silent’ on that issue is consistent with the Federal Arbitration Act (FAA).” Stolt–Nielsen, 559 U.S. at 666, 130 S.Ct. 1758. Accordingly, as some courts have noted, “Stolt–Nielsen concerns only how to decide whether an arbitration agreement authorizes class arbitration, not who decides. ” Lee v. JPMorgan Chase & Co., 982 F.Supp.2d 1109, 1113 (C.D.Cal., 2013). See also Blue Cross Blue Shield of Massachusetts, Inc. v. BCS Ins. Co., 671 F.3d 635, 638–639 (C.A.7, 2011) (noting that the only issue decided in Stolt–Nielsen was whether the arbitrators exceeded their authority in conducting a class arbitration, not who decides that issue in the first instance). That the Stolt–Nielsen Court did not address which entity—court or arbitrator—should decide whether an arbitration agreement permitted class arbitration, was more recently made clear in Oxford Health Plans, ––– U.S. at ––––, 133 S.Ct. at 2068 n. 2. The question we are faced with today has therefore not been decided by the United States Supreme Court, and thus Stolt–Nielsen does not require rejection of those post-Bazzle decisions holding that absent contract language addressing the issue, consolidation was for the arbitrator to decide. See Lee, 982 F.Supp.2d at 1113 (rejecting the argument that Stolt–Nielsen changed the legal landscape on gateway issues, since it did not involve one), and Blue
Cross Blue Shield of Massachusetts, 671 F.3d at 638–639 (holding that Stolt–Nielsen did not require it to modify its prior holding in Employers Ins. Co. of Wausau, 443 F.3d at 577, that whether to consolidate arbitration cases was not a gateway issue).
D. CLASS ARBITRATION DECISIONS
Having rejected plaintiffs' theory of the impact of Stolt–Nielsen, we now turn to whether the more recent class arbitration gateway decisions impact the consolidation issue. Although there can be no doubt that the “confusion of whether class arbitration is a gateway or subsidiary issue began with [the Bazzle and Stolt–Nielsen ] decisions,” Shakoor v. VXI Global Solutions, Inc., 2015–Ohio–2587, 35 N.E.3d 539, 545 (Ohio App., 2015), no real confusion exists; under these circumstances, consolidation is a subsidiary issue. This holds true because, despite this lack of clarity at the Supreme Court level, the simple fact is that most (if not all) federal courts have held—pre- and post-Stolt–Nielsen —that consolidation is a procedural issue properly left to the arbitrator. And this is not just a numbers game, where we look to the majority of decisions on an issue and simply follow them. Instead, in addition to recognizing (as we already have) the limited holding of Stolt–Nielsen, these courts also recognized (1) the significantly different and more complex considerations involved in determining whether class arbitration should proceed, compared to what is considered in consolidation issues, and (2) the procedural nature of consolidation issues.
Decisions like Reed Elsevier, which have concluded, contrary to Bazzle, that class arbitration is a gateway issue, do not support the argument that consolidation issues are as well. Indeed, much of what is contained in Stolt–Nielsen provides support for the conclusion that class arbitration issues involve unique and particularly complex matters and are placed in a completely different category from those involving consolidation. For example, the Court repeatedly emphasized the significant differences between a bilateral arbitration (one claimant under one contract) and classwide arbitration, classifying the differences as “fundamental.” Stolt–Nielsen, 559 U.S. at 686, 130 S.Ct. 1758. The California Court of Appeals, citing to Stolt–Nielsen, explained some of these critical differences:
For example, arbitration's putative benefits—i.e., “lower costs, greater efficiency and speed”—“are much less assured” in classwide arbitration, which, according to the court, “giv[es] reason to doubt the parties' mutual consent” to a classwide arbitration procedure. (Stolt–Nielsen, supra, at p. 685, 130 S.Ct. 1758 ; [AT&T Mobility LLC v. ] Concepcion, [563 U.S. 333, 131 S.Ct. 1740, 1751, 179 L.Ed.2d 742 (2011) ] [“the switch from bilateral to class arbitration sacrifices the principal advantage of arbitration—its informality—and makes the process slower, more costly, and more likely to generate procedural morass than final judgment”].) Further, “[c]onfidentiality becomes more difficult” in classwide arbitrations (Concepcion, supra, at p. 1750), a complication that “potentially frustrate[s] the parties' assumptions
when they agreed to arbitrate.” (Stolt–Nielsen, supra, at p. 686, 130 S.Ct. 1758.) [Garden Fresh Restaurant Corp. v. Superior Court, 231 Cal.App.4th 678, 686, 180 Cal.Rptr.3d 89 (2014) (some alterations in original).]
An equal, if not greater, concern has been the impact class arbitration can have on third parties, for a class arbitration award “no longer purports to bind just the parties to a single arbitration agreement, but adjudicates the rights of absent parties as well.” Stolt–Nielsen, 559 U.S. at 686, 130 S.Ct. 1758. No less significant are the notice and opt-out requirements and a quagmire of other complex issues that must be addressed in a class proceeding. See Opalinski v. Robert Half Int'l Inc., 761 F.3d 326, 332–335 (C.A.3, 2014), and Reed Elsevier, 734 F.3d at 598, both discussing how fundamental the differences are between class arbitration and bilateral arbitration. And because of the significant issues and differences involved in class arbitration versus bilateral arbitration, the Stolt–Nielsen Court held that an arbitrator exceeded his authority by forcing parties to proceed with class arbitration when no contractual language supported that type of proceeding. Stolt–Nielsen, 559 U.S. at 687, 130 S.Ct. 1758.
The concerns that surface with class arbitrations do not, for the most part, exist with consolidation. For one, consolidating arbitrations does not result in an arbitrator deciding the rights of absent third parties. Instead, cases that are already subject to arbitration are merely consolidated before the same arbitrator, who can then presumably promote greater efficiency when it comes to discovery or other pre-arbitration matters. The rules typically considered in deciding whether a class action should proceed—and what must be done if it does proceed—are much more complex, time-consuming, and expensive than the issues typically involved in deciding whether to consolidate. Compare MCR 2.505(A) with MCR 3.501. In other words, the significant concerns and issues raised by a request for class arbitration do not arise when individual cases are consolidated. This point was articulated quite well by the United States Court of Appeals for the Seventh Circuit, where Chief Judge Easterbrook wrote for the court in Blue Cross Blue Shield of Massachusetts, 671 F.3d at 640 :
Class actions always have been treated as special. One self-selected plaintiff represents others, who are entitled
to protection from the representative's misconduct or incompetence. Often this requires individual notice to class members, a procedure that may be more complex and costly than the adjudication itself. See Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974). As a practical matter the representative's small stake means that lawyers are in charge, which creates a further need for the adjudicator to protect the class. Finally, class actions can turn a small claim into a whopping one. Unsurprisingly, Fed.R.Civ.P. 23 imposes stringent requirements on class certification. Consolidation of suits that are going to proceed anyway poses none of these potential problems. That's why Fed.R.Civ.P. 42(a) leaves to a district judge's discretion—and without any of Rule 23's procedures and safeguards—the decision whether to consolidate multiple suits. Just as consolidation under Rule 42(a) does not change the fundamental nature of litigation, so consolidation of the plans' claims would not change the fundamental nature of arbitration.[ ]
MCR 2.505(A) contains the same criteria for consolidation of circuit court actions as are contained in Federal Rule of Civil Procedure 42.
Hence, decisions like Reed Elsevier, and other post-Stolt–Nielsen decisions holding that class arbitration is a gateway issue, address a different animal than we do when addressing a consolidation issue. And for that reason they provide no assistance to plaintiffs' position.
E. CONCLUSION
Finally, critical to our decision is remembering that gateway issues involve “questions such as ‘whether the parties are bound by a given arbitration clause,’ or ‘whether an arbitration clause in a concededly binding contract applies to a particular type of controversy.’ ” BG Group, 572 U.S. at ––––, 134 S.Ct. at 1206, quoting Howsam, 537 U.S. at 84, 123 S.Ct. 588. As we emphasized earlier, gateway arbitrability questions fall into a very narrow range of issues focusing on whether the parties agreed to arbitrate at all, or agreed to arbitrate a particular type of claim. Garden Fresh Restaurant, 231 Cal.App.4th at 684, 180 Cal.Rptr.3d 89, citing Howsam, 537 U.S. at 83, 123 S.Ct. 588. Though these may not be the only circumstances in which gateway issues may be found—as reflected by those cases concluding that a decision on class arbitration is a gateway issue—this fundamental underpinning to gateway issues makes it clear that the fact-intensive decision of consolidation is procedural.
For all these reasons, we conclude that the virtually unanimous opinions amongst the federal courts, prior to (and after) Stolt–Nielsen, holding that consolidation decisions are subsidiary ones left to the arbitrator to decide under the contract (when the contract does not provide for a different venue or otherwise address consolidation), remain persuasive authority, and nothing in the caselaw since then requires a different conclusion. We therefore agree with and follow the rationale of those cases and hold that, absent any contractual language addressing the issue, whether multiple arbitrations should be consolidated is a procedural or subsidiary issue for the arbitrator to decide.
We point out that in Bay Co. Bldg. Auth. v. Spence Bros., 140 Mich.App. 182, 188, 362 N.W.2d 739 (1984), we held that in the absence of contractual language addressing consolidation, it was for the arbitrator to decide the issue because it was a procedural, rather than a gateway, issue. But we do not rely on that case, nor do we need to address Michigan's Uniform Arbitration Act, MCL 691.1681 et seq. , because this issue is controlled by federal law. In re Salomon Inc. Shareholders' Derivative Litigation, 68 F.3d 554, 559 (C.A.2, 1995).
Affirmed. Defendants may tax costs, having prevailed in full. MCR 7.219(A).
STEPHENS, P.J., and CAVANAGH, J., concurred with MURRAY, J.