By: Derek Hawkins//November 12, 2018//
7th Circuit Court of Appeals
Case Name: Pamela Herrington, et al. v. Waterstone Mortgage Corporation
Case No.: 17-3609
Officials: BAUER, BARRETT, and ST. EVE, Circuit Judges.
Focus: Statutory Interpretation – Collective Arbitration
Pamela Herrington filed class and collective actions against Waterstone Mortgage Corporation, her former employer, for wage and hour violations. The district court compelled arbitration pursuant to an agreement between Herrington and Waterstone, but it struck as unlawful a waiver clause that appeared to forbid class or collective arbitration of Herrington’s claims. The arbitrator conducted a collective arbitration over Waterstone’s objection and ultimately awarded more than $10 million in damages and fees to Herrington and 174 similarly situated employees.
A recent Supreme Court decision has now put this award in doubt. In Epic Systems Corp. v. Lewis, – U.S. –, 138 S. Ct. 1612 (2018), the Court upheld the validity of waiver provisions like the one in Herrington’s agreement with Waterstone. If imposing collective arbitration on Waterstone violated that waiver, we must instruct the district court to vacate the award, which would put Herrington back at square one. But Herrington does not concede that the collective arbitration violated the waiver. In an attempt to save her award, she insists that her agreement with Waterstone affirmatively permits class or collective arbitration of her claims despite the presence of a valid waiver indicating otherwise. While this argument is weak, someone must evaluate it—and we must decide who has that job. If the availability of class or collective arbitration is a threshold question of arbitrability, the district court has to decide it. Otherwise, it falls to the arbitrator.
For reasons we explain below, we conclude that the availability of class or collective arbitration is a threshold question of arbitrability. On remand, the district court, rather than the arbitrator, must evaluate Herrington’s contract with Waterstone to determine whether it permits class or collective arbitration.
Remanded