SC Lawyer, March 2004, #2. Class-wide arbitration after Green Tree.

AuthorBy Michael G. Sullivan and A. Camden Lewis

South Carolina Lawyer

2004.

SC Lawyer, March 2004, #2.

Class-wide arbitration after Green Tree

South Carolina LawyerMarch 2004Class-wide arbitration after Green TreeBy Michael G. Sullivan and A. Camden LewisOn a writ of certiorari, the U.S. Supreme Court recently reviewed a pair of decisions by the Supreme Court of South Carolina which had 1) affirmed a trial court's decision to allow class-wide arbitration in a case where there was no express prohibition against it in the parties' contract and 2) upheld the decision of an arbitrator to allow class-wide arbitration in a case with a similar arbitration provision. The U.S. Supreme Court vacated these decisions and remanded the consolidated cases with the instruction that, in the first instance, it was for the arbitrators, not the Court, to determine if class-wide arbitration was available.

All plurality decisions have about them a kind of suspect authenticity, rather like an unsigned Picasso. The recent Green Tree Financial Corporation, nka Conseco Finance Corp. v. Lynn W. Bazzle, 123 S.Ct. 2402 (2003), decision by the U.S. Supreme Court is no exception. It is important to note that these cases were vacated on the very narrow grounds that the wrong decision maker (the court) decided the availability of class-wide arbitration. Left undisturbed, however, was the Supreme Court of South Carolina's analysis of the interpretation of contracts, and that ultimately is what we as practitioners must look to for guidance. Given the increasing prevalence of arbitration provisions, it is important to understand the impact of these decisions on the availability of class-wide arbitration.

If the contract between the parties broadly assigns the duty of contract interpretation to the arbitrators, then they and not the courts must fulfill that duty. This is the first commandment of Green Tree.

Second, is a contract "silent" on the issue of class-wide arbitration merely because there is no express prohibition of class actions? This seems to be the view of the Supreme Court of South Carolina, yet arbitrators are sure to glean these contracts for signs of the parties' contrary intent. Such attempts at divination by arbitrators are unlikely to be upheld by the courts. The Supreme Court of South Carolina clearly does not favor agreements limiting the availability of class-wide arbitration. It would appear that, if there is no express prohibition against class-wide arbitration, the most likely outcome is that the contract will be held to be ambiguous, and those ambiguities will be resolved against the drafter. This appears to be especially true in the case of contracts of adhesion where the weaker party did not negotiate away the availability of class-wide arbitration.

Third, even if a contract contains an express prohibition against class-wide arbitration, the Supreme Court of South Carolina has signaled its intention to ignore...

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