February 10, 2022
Remember how the U.S. Supreme Court’s 2019 ruling in Lamps Plus, Inc v Varela was supposed to be lights out for classwide arbitration?
Well, it looks like reports of the demise of class arbitration may have been at least slightly exaggerated, after a decision this week from the American Arbitration Association in an antitrust case brought by the Akwesasne Mohawk Casino Resort against gaming machine companies Scientific Games Corp and Bally Technologies Inc.
The casino alleges that the companies are monopolizing the market for automatic card-shuffling machines, using anticompetitive tactics to gain control and then inflating prices for casinos. Its contract with the gaming machine companies did not specifically prohibit or permit classwide arbitration.
But AAA arbitrator John Wilkinson ruled that the “exceedingly broad language” of the arbitration clause – which mandates arbitration of “any and all controversies, disputes or claims of any nature arising directly or indirectly out of or in connection with this agreement” — encompassed classwide claims.
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Mohawk casino counsel Michael Eisenkraft and Manuel John Dominguez of Cohen Milstein Sellers & Toll told me that the AAA arbitrator’s holding on ambiguity was the key to evading Lamps Plus precedent barring classwide arbitration.
“If it’s ambiguous, you’re handcuffed,” Dominguez said. “What we wanted to argue was that the contract was not ambiguous.”
Cohen Milstein got involved in the Mohawk casino’s case after the Supreme Court’s Lamps Plus ruling, Eisenkraft said, so the firm was well aware of the risk that classwide arbitration might not be allowed. And if the arbitrator had found that classwide claims were barred, he said, it might not have been economically feasible for an individual casino to arbitrate a claim, given the high cost of antitrust litigation. But Cohen Milstein believed that because the Mohawk casino’s arbitration clause called for arbitration of “any and all” claims, including claims indirectly related to its own, the clause was worded broadly enough to include classwide claims.
AAA’s Wilkinson agreed. The arbitration agreement that the Supreme Court examined in Lamps Plus, he noted, was tailored for individual employees, using such specific terms as “I,” “me” and “my.” Those are critical words in the interpretation of the scope of arbitration contracts, Wilkinson said. “The absence of such limiting, binary language is of utmost significance,” the arbitrator said.
“The lesson,” said casino counsel Eisenkraft, “is that ‘everything’ means everything. If you want to cut something out, you have to say so.” This contract, he added, was signed in 2015, after classwide arbitration had become an issue at the Supreme Court. It was common by then for arbitration contracts to include a specific waiver of classwide claims, Eisenkraft said, but the Mohawk casino’s provision was silent on that issue.
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Assuming that Wilkinson’s classwide arbitration decision is not overturned in court, it’s going to be interesting to see how the case plays out. Eisenkraft and Dominguez said they are not sure how many other casinos signed arbitration agreements like their client’s contract with Scientific Gaming and Bally, though they estimate there will be hundreds of class members.
Read Classwide Arbitration Is Not Dead Yet, as Casino Antitrust Decision Shows.