Date of this Version
Vermont Law Review, Vol. 34:3, pp. 493-527.
Judge Posner once stated that the federal courts do not have the ability to conduct judicial review every time the arbitrator "sneezes."' Judge Posner further opined, however, that although the courts do not have jurisdiction to review every ruling made by an arbitrator, he could not articulate any more specific rule as to when the federal courts do have jurisdiction. Of course, this concept has caused some great difficulties for parties who would like to have the ability to have additional review, particularly as class action arbitration procedures have explicitly contemplated judicial review at times other than after the final resolution of the merits of the dispute. Because the contemplated review occurs at times during the middle of the arbitration procedure, this Article refers to such appeals as "interlocutory" appeals.
The use of the class action procedure in arbitration, particularly in the consumer context, has gained significant acceptance since the United States Supreme Court, in its 2003 decision in Green Tree Financial Corp. v. Bazzle, did not specifically prohibit the use of the procedure. Immediately following Bazzle, the dispute resolution provider American Arbitration Association (AAA)4 created a complex set of rules governing class action arbitrations, drawing from the Federal Rules of Civil Procedure. The American Arbitration Association Rules (AAA Rules) break the arbitration process into distinct phases, not unlike the phases in class action litigation, including phases in which the arbitrator assigned determines whether a class procedure is possible and whether a class should be certified. After both of these determinations, the AAA Rules allow the parties to seek judicial review or other relief prior to continuing the arbitration process
Although the AAA Rules contemplate judicial review of "interlocutory" rulings by the arbitrator, questions remain as to whether the federal courts have any jurisdiction to hear these less-than-final "awards." These cases are now starting to work through the judicial system, and many courts are simply reviewing the "awards" without any reference to the jurisdiction of the reviewing court. Other courts have addressed the jurisdictional issue, focusing on constitutional ripeness doctrines-and these decisions across the nation are somewhat contradictory. Historically, cases dealing with the federal courts' jurisdiction over interlocutory appeals held that only the final awards can be reviewed by courts. More recent opinions, however, have allowed judicial review of interlocutory appeals under a variety of theories. With respect to interlocutory appeals in class action arbitrations, some courts examine their jurisdiction under the "ripeness" doctrine, while most courts take jurisdiction for granted and simply hear the appeal. This Article suggests that the federal district courts do not actually have jurisdiction to hear such interlocutory appeals because they do not constitute "awards" as that term was intended under the Federal Arbitration Act.
Part I of this Article describes the Bazzle decision and its impact on the class action arbitration industry, including the formulation of the class action arbitration rules. Part II of this Article describes how courts have dealt with interlocutory appeals-both in general and in the class action context in specific. Ultimately, this Article argues that such "awards" are not the type of "awards" contemplated by the Act and that federal jurisdiction does not lie until the entire class action procedure has been resolved on the merits. Although this position appears harsh, there may be an opportunity for parties to use appellate arbitrators to review these interlocutory decisions (under a contracted standard of review) in the absence of federal court jurisdiction. The use of appellate arbitration as an alternative form of judicial review is discussed in Part III.