William Kolasky, Arbitration of Antitrust Disputes, in 3 ISSUES IN COMPETITION LAW

AND POLICY 2405 (ABA Section of Antitrust Law 2008)

Chapter 96
_________________________

ARBITRATION OF ANTITRUST DISPUTES

William Kolasky

It is increasingly common for antitrust disputes to be resolved through arbitration rather

than litigation. Arbitration is a particularly appealing forum for disputes in an
international setting where there may be claims under the laws of multiple jurisdictions.
This chapter reviews the standards governing the arbitrability of antitrust disputes. It then
reviews the case law relating to the availability of class action remedies in arbitration. It
closes with a discussion of the extent to which the discovery needed to prove an antitrust
claim, especially from third parties, can be obtained in an arbitral forum.

1. Introduction
It is increasingly common for antitrust disputes, especially international ones, to be
resolved through arbitration rather than litigation. This trend is likely to accelerate in
the wake of the Second Circuit’s decision in JLM Industries v. Stolt-Nielsen SA,1 in
which the court held that antitrust damage claims arising from a multinational cartel in
the market for chemical parcel tanker transportation services were within the scope of a
broad arbitration clause. This chapter examines both the arbitrability of antitrust
disputes and some of the practical issues that confront practitioners faced with
arbitrating an antitrust claim.
Many businesses view arbitration as having several important advantages over
federal court litigation. Among other things, they believe arbitration allows disputes to
be resolved more quickly and less expensively than litigation and with less attendant
publicity. Arbitration can be less formal, discovery is generally more limited, and
evidentiary standards more relaxed. In arbitration, the parties also have more control
over the selection of the persons who will decide the dispute, as opposed to litigation
where they may fear a decision by a generalist judge or, worse yet, by a jury they
believe may have no understanding of complex business issues and may be biased in
favor of the victims of the defendant’s alleged misconduct.2
There can be additional advantages in an international setting. Arbitration can
provide a neutral forum for dispute resolution between companies of different
nationalities. Arbitration awards may also be easier to enforce than foreign court
judgments.3 The United States is a party to the 1958 New York Convention on the

Wilmer Cutler Pickering Hale & Dorr LLP. Justin C. Pfeiffer, a summer associate at the firm and a
student at the University of Michigan Law School, contributed to research and drafting.
1. 387 F.3d 163 (2d Cir. 2004).
2. See Donald I. Baker & Mark R. Stabile, Arbitration of Antitrust Claims: Opportunities and Hazards
for Corporate Counsel, 48 BUS. LAW. 395, 414-16 (1993); see also Thomas Campbell, Roxane Busey
& Peter Koch, Arbitrating Antitrust Claims—The Road Less Traveled, ANTITRUST, Fall 2004, at 8, 8.
3. See Hilton v. Guyot, 159 U.S. 113 (1895) (enforcement of foreign judgments is not automatic but
instead governed by the principles of comity).

2405
2406 ISSUES IN COMPETITION LAW AND POLICY

Recognition and Enforcement of Foreign Arbitral Awards, commonly referred to as the

New York Convention.4 The Convention requires national courts to recognize and
enforce foreign arbitral awards, subject to certain exceptions such as when the
“enforcement of the award would be contrary to the public policy of that country.”5 The
Convention also requires national courts to recognize the validity of arbitration
agreements and refer parties to arbitration when they have made a valid agreement. 6
More than 100 nations are signatories to the Convention.7
Arbitration may however suffer from some potentially serious shortcomings as a
device for resolving antitrust disputes. Third parties who are not signatories to the
contract cannot be compelled to join the proceedings. This may make it difficult to
recover from alleged coconspirators with whom the claimant does not do business or
may require a claimant to pursue its claims through multiple arbitrations rather than a
single consolidated action. The typically limited discovery available in arbitration
proceedings may impose disadvantages. A claimant may need broad-ranging discovery
or third-party discovery. The absence of a written opinion and the limited grounds for
challenging an award may also raise concerns in antitrust disputes, where the amounts at
issue often reach into the hundreds of millions of dollars.8
In the United States, there is a strong federal policy in favor of arbitration. The
Federal Arbitration Act (FAA), first enacted in 1925, provides that an arbitration
agreement “in any maritime transaction or a contract evidencing a transaction involving
commerce . . . shall be valid, irrevocable, and enforceable, save upon such grounds as
exist at law or in equity for the revocation of any contract.”9 The Supreme Court has
noted that this “liberal federal policy favoring arbitration agreements, manifested by this
provision and the Act as a whole, is at bottom a policy guaranteeing the enforcement of
private contractual arrangements.”10

2. Arbitrability of antitrust disputes

Prior to 1985, arbitration’s shortcomings caused most federal courts to hold
arbitration clauses unenforceable in antitrust cases under the American Safety doctrine
first articulated by the Second Circuit in American Safety Equipment Corp. v. J.P.
Maguire & Co.11 The American Safety doctrine relied on a 1953 Supreme Court
decision, Wilko v. Swan.12 There, the Supreme Court had held that claims brought under

4. New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 21 U.S.T.
2517, T.I.A.S. No. 6997, 330 U.N.T.S. 3 (done at New York June 10, 1958; entered into force June 7,
1959; for the United States Dec. 29, 1970).
5. Id. arts. 3 & 5; art. 5, ¶ 2(b).
6. Id. art. 2, ¶¶ 1, 3.
7. UN Commission on International Trade Law, Status 1958—Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, available at http://uncitral.org/uncitral/en/uncitral_texts/
arbitration/NYConvention_status.html.
8. See Campbell et al., supra note 2, at 8.
9. Act of Feb. 12, 1925, Pub. L. No. 68-401, ch. 213, § 2, 43 Stat. 883, 883 (codified at 9 U.S.C. § 2).
10. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625 (1985).
11. 391 F.2d 821 (2d Cir. 1968).
12. 346 U.S. 427 (1953).
 ARBITRATION OF ANTITRUST DISPUTES 2407

Section 12(2) of the Securities Act of 1933 were not subject to arbitration on public
policy grounds.13 The American Safety court held that the same was true for antitrust
disputes for several reasons. First, the Court viewed the use of arbitration to resolve
antitrust disputes as inconsistent with the role that private plaintiffs play as “private
attorneys general.”14 Second, the Court feared that contracts of adhesion would impose
arbitration clauses.15 Third, the Court believed that antitrust disputes involved complex
issues so that arbitration was an inappropriate forum.16 Finally, the Court argued that
“since commercial arbitrators are frequently men drawn for their business expertise, it
hardly seems proper for them to determine these issues of great public interest.”17
In 1985, the Supreme Court rejected the American Safety doctrine with respect to
international antitrust disputes. In Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,
Inc.,18 a Puerto-Rican automobile dealer challenged the distribution arrangements and
territorial restrictions in its agreement with Mitsubishi and CISA, the international
distribution arm for Chrysler. The sales agreement contained a broad arbitration clause
requiring arbitration in Japan before the Japanese General Arbitration Association.19
When Mitsubishi brought an action to compel arbitration under the sales agreement,
Soler counterclaimed against both Mitsubishi and CISA, asserting causes of action under
the Sherman Act.20 The district court compelled Soler to arbitrate all claims, including
the antitrust claim.21 The First Circuit reversed, applying the American Safety
doctrine.22
In reversing, the Supreme Court declared that “we are well past the time when
judicial suspicion of the desirability of arbitration and of the competence of arbitral
tribunals inhibited the development of arbitration as an alternative means of dispute
resolution.”23 The Court adopted a broad two-step approach for determining whether a
claim arising under a federal statute is arbitrable. The first step is for the court to
determine whether the parties entered into an arbitration agreement that would
encompass the statutory claim at issue.24 The second step is to determine whether the
text or legislative history of the statute demonstrates that Congress intended arbitration
to be precluded.25
The Court held that the arbitration clause in Mitsubishi passed both steps of the test
and was enforceable. In reaching this conclusion, the Court dismissed the concern that
permitting arbitration of antitrust claims would lead to contracts of adhesion, noting that

13. Id. at 435.

14. 391 F.2d at 826.
15. Id. at 827.
16. Id.
17. Id.
18. 473 U.S. 614 (1985).
19. Id. at 617.
20. Id. at 618-19.
21. Id. at 620-21.
22. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 723 F.2d 155 (1st Cir. 1983), aff’d in part
and rev’d in part, 473 U.S. 614 (1985).
23. Mitsubishi, 473 U.S. at 626-27.
24. Id.
25. Id. at 627-28.
2408 ISSUES IN COMPETITION LAW AND POLICY

the party resisting arbitration may directly attack the validity of the agreement. 26 The
Court also rejected the premise that antitrust disputes were too complex to be arbitrated,
holding that arbitration was sufficiently flexible to handle complex disputes.27 Finally,
the Court dismissed the concern that arbitrators drawn from the business community
would not be sufficiently impartial, noting that international arbitrators are frequently
drawn from both the legal and business communities.28
The holding of Mitsubishi itself was limited to international transactions, but
subsequent decisions have extended Mitsubishi to purely domestic disputes as well. In
1989, the Supreme Court, relying on Mitsubishi, explicitly overruled Wilko and held that
Securities Act claims were arbitrable even in domestic disputes.29 Two years later, the
Court cited Mitsubishi for the proposition that antitrust claims generally could be
arbitrated.30 Since these decisions, the lower courts have consistently declined to apply
the American Safety doctrine and a majority of circuits have now either abandoned the
doctrine explicitly or questioned whether it has any remaining validity.31

3. Scope of arbitration clauses

Arbitration “is a matter of consent, not coercion.”32 Therefore, after Mitsubishi, the
first issue for a court to resolve is whether the dispute falls within the scope of the
parties’ arbitration agreement. In JLM Industries v. Stolt-Nielsen SA,33 the Second
Circuit read an arbitration clause broadly to permit arbitration of a dispute arising from a
multinational cartel.
In JLM, a group of affiliated corporations that trade in chemicals brought a putative
class action alleging a conspiracy among chemical parcel tanker carriers to allocate
customers and to fix prices in violation of the Sherman Act, state antitrust laws, and the
Connecticut Unfair Trade Practices Act.34 The defendants moved to compel arbitration
of all of JLM’s claims pursuant to the terms of the standard form agreement among the
parties.35 The district court held it improper to compel arbitration because “JLM’s
[Sherman Act] claim in no way depends upon interpretation, construction, or
applications of any provision of the charter.”36
The Second Circuit reversed, holding that the alleged violation of Section 1 of the
Sherman Act fell within the scope of the arbitration clause. The JLM court noted that
federal courts strongly favor arbitration, particularly in the international context.37 The

26. Id. at 632 (citing Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967)).
27. Id. at 632-33.
28. Id. at 634.
29. Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477 (1989).
30. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991).
31. See Campbell et al., supra note 2, at 8-9, and cases cited therein.
32. Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989).
33. 387 F.3d 163 (2d Cir. 2004).
34. Id. at 167-68.
35. Id. at 168.
36. JLM Indus. v. Stolt-Nielsen SA, No. 3:03CV348 (DJS), slip op. (D. Conn. June 24, 2003), rev’d, 387
F.3d 163 (2d Cir. 2004).
37. JLM Indus., 387 F.3d at 171 (citing David L. Threlkeld & Co. v. Metallgesellschaft Ltd., 923 F.3d 245,
248 (2d Cir. 1991)).
 ARBITRATION OF ANTITRUST DISPUTES 2409

Supreme Court has held that “any doubts concerning the scope of the arbitrable issues
should be resolved in favor of arbitration.”38
In interpreting the scope of a broad arbitration clause, courts employ a “touch
matters” standard, which derives from Mitsubishi, to determine whether or not a
statutory claim is sufficiently related to the contract to compel arbitration.39 In JLM, the
Second Circuit held that “[i]f the allegations underlying the claims ‘touch matters’
covered by the parties’ . . . agreements, then those claims must be arbitrated, whatever
the legal labels attached to them.”40 In so holding, the court rejected an argument that
the claims fell outside the scope of the arbitration clause because they raised “factual
allegations which concern matters beyond the making of a particular contract between
the parties and the performance of its terms.”41 The Court noted that JLM would not
have suffered its alleged damages had it not entered into “nearly 80” contracts with the
defendant and that its claims were therefore sufficiently related to those contracts as to
be arbitrable.42
Even a broad arbitration clause has limits, of course. The Tenth Circuit refused to
compel arbitration of certain antitrust claims in Coors Brewing Co. v. Molson
Breweries.43 In 1985, Coors, an American corporation, entered into a licensing
agreement with Molson, a Canadian corporation, in which Coors gave Molson access to
trademarks and marketing information in return for Molson’s best efforts to distribute
Coors in Canada.44 In 1993, Miller entered into a partnership with Molson.45 Coors
challenged the partnership agreement both in arbitration for alleged violations of their
contract and in district court for antitrust violations.46 The Tenth Circuit compelled
arbitration on claims arising out of the licensing agreement but not on Coors’s antitrust
claims under Section 7 of the Clayton Act because those claims did not relate to the
licensing agreement.47

4. Class arbitration
Class actions are widely used by purchasers seeking damages under antitrust law.
An important question, therefore, is whether the class action mechanism is available
where parties have agreed to subject their dispute to arbitration. The Supreme Court
faced the issue in a nonantitrust case in the 2002-03 term in Green Tree Financial Corp.

38. Id. (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp. 460 U.S. 1, 24-25 (1983)).
39. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 622 n.9, 624 n.13 (1985).
40. JLM Indus., 387 F.3d at 172.
41. Id. at 175.
42. Id.
43. 51 F.3d 1511 (10th Cir. 1995); see also AlliedSignal, Inc. v. B.F. Goodrich Co., 183 F.3d 568, 573
(7th Cir. 1999) (holding that because B.F. Goodrich could fully comply with their agreement with
AlliedSignal and still cause AlliedSignal antitrust injury by charging uncompetitive prices,
AlliedSignal’s claims did not arise under the agreement and were not subject to arbitration).
44. 51 F.3d at 1512-13.
45. Id. at 1513.
46. Id.
47. Id. at 1517-18.
2410 ISSUES IN COMPETITION LAW AND POLICY

v. Bazzle.48 Bazzle held that the arbitrator, not the courts, should determine whether the
arbitration agreement allowed for class arbitration.49
Prior to Bazzle, nearly every circuit to consider the issue under the FAA had held that
class arbitration was not available unless the parties expressly agreed to it. The
reasoning leading to this result is well illustrated by the Seventh Circuit decision in
Champ v. Siegel Trading Co.50 The plaintiffs moved for class certification in an
arbitration action against the defendants, claiming violations of the Commodity
Exchange Act, the Racketeer Influenced and Corrupt Organizations Act, and various
state laws.51 The court held that the district court could not invoke Federal Rule of Civil
Procedure 81(a)(3) to certify a class for arbitration under Federal Rule of Civil
Procedure 23.52 The court in Champ did not want to substitute its “own notion of
fairness in place of the explicit terms of [the parties’] agreement,” as that “would
deprive them of the benefit of their bargain just as surely as if we refused to enforce
their decision to arbitrate.”53 The court held, therefore, that it should enforce “the type
of arbitration to which these parties agreed, which does not include arbitration on a class
basis.”54
The First Circuit and several state courts had reached a contrary conclusion under
state arbitration laws. In New England Energy, Inc. v. Keystone Shipping Co., the First
Circuit held that the FAA does not preempt state law and thus “state law may
supplement that Act on matters collateral to the agreement to arbitrate.”55 There was
also an applicable state law to use as a supplement: Massachusetts had enacted the

48. 539 U.S. 444 (2003).

49. Id. at 453.
50. 55 F.3d 269 (7th Cir. 1995); see also Dominium Austin Partners, L.L.C. v. Emerson, 248 F.3d 720,
728-29 (8th Cir. 2001) (holding that district court properly compelled individual arbitration where
clause made “no provision for an arbitration clause as a class”); Johnson v. W. Suburban Bank, 225
F.3d 366, 377 n.4 (3d Cir. 2000) (pursuing a class action in an arbitral forum “appears impossible . . .
unless the arbitration agreement contemplates such a procedure”); Government of U.K. v. Boeing Co.,
998 F.2d 68, 74 (2d Cir. 1993) (“district court cannot consolidate arbitration proceedings arising from
separate agreements to arbitrate, absent the parties’ agreement to allow such consolidation”); Am.
Centennial Ins. Co. v. Nat’l Cas. Co., 951 F.2d 107, 108 (6th Cir. 1991) (“a district court is without
power to consolidate arbitration proceedings, over the objection of a party to the arbitration agreement,
when the agreement is silent regarding consolidation”); Baesler v. Cont’l Grain Co., 900 F.2d 1193,
1195 (8th Cir. 1990) (“absent a provision in an arbitration agreement authorizing consolidation, a
district court is without power to consolidate arbitration proceedings”); Protective Life Ins. Corp. v.
Lincoln Nat’l Life Ins. Corp., 873 F.2d 281, 282 (11th Cir. 1989) (per curiam) (“the sole question for
the district court is whether there is a written agreement among the parties providing for consolidated
arbitration”); Del E. Webb Constr. v. Richardson Hosp. Auth., 823 F.2d 145, 150 (5th Cir. 1987)
(holding that a federal court’s role is to “determine only whether the contract provides for consolidated
arbitration”); Weyerhaeuser Co. v. W. Seas Shipping Co., 743 F.2d 635, 636 (9th Cir. 1984) (“It is
clear that the parties here did not consent to joint arbitration. There are two separate agreements. Each
agreement contains its own arbitration clause and each clause requires only arbitration between the
parties to the arbitration.”).
51. 55 F.3d at 271.
52. Id. at 276-77.
53. Id. at 275 (quoting Universal Reinsurance Corp. v. Allstate Ins. Co., 16 F.3d 125, 130 (7th Cir. 1994)).
54. Id. at 277.
55. 855 F.2d 1, 4 n.2 (1st Cir. 1988).
 ARBITRATION OF ANTITRUST DISPUTES 2411

Uniform Arbitration Act, which expressly authorizes consolidation, even where

contracts are silent on the matter.56
Some state courts likewise ordered class arbitration when the agreement was silent.
In Keating v. Superior Court of Alameda County, the California Supreme Court
remanded a case to the trial court for a determination of whether to order class
arbitration.57 The Court spoke favorably of class action, noting that it “eliminates the
possibility of repetitious litigation and provides small claimants with a method of
obtaining redress for claims which would otherwise be too small to warrant individual
litigation.”58 While the determination should be made on a case-by-case basis balancing
various factors regarding efficiency and equity,59 ordering class arbitration when there is
an “adhesion” contract “would call for considerably less intrusion upon the contractual
aspects of the relationship.”60 A California appellate court affirmed a class arbitration
order in Blue Cross of California v. Superior Court of Los Angeles County.61 Going
further than the Keating Court, the Blue Cross Court relied on language from the U.S.
Supreme Court that refused to apply FAA Section 4 to proceedings in state courts and a
state supreme court holding that Section 4 did not operate in California courts.62
Although the FAA would preempt a state procedural rule if the two were in direct
conflict, state procedure that supports the goals of the FAA are not preempted.63
In Bazzle, the Supreme Court did not overrule, invalidate, or even mention any of the
earlier federal appellate decisions holding that a consolidated or class arbitration cannot
be imposed on the parties where the arbitration agreement does not affirmatively
authorize it. Bazzle involved a contract between a commercial lender, Green Tree
Financial Corporation, and its customers, which included a broad arbitration
agreement.64 The South Carolina Supreme Court had held that the contracts were silent
in regards to class arbitration and as a matter of state law accordingly authorized it.65
The South Carolina Supreme Court also cited Keating and Blue Cross to support its
holding.66
Justice Stephen Breyer wrote the plurality opinion in which Justices Antonin Scalia,
David Souter, and Ruth Bader Ginsburg joined. Relying on Howsam v. Dean Witter
Reynolds, Inc., the Court simply held that when a contract provides for arbitration of
“any and all disputes,” the question of whether that contract allows class arbitration is
itself an arbitrable dispute.67 In his dissent, Chief Justice William Rehnquist argued that

56. MASS. GEN. LAWS ANN. ch. 251, § 2A.

57. 645 P.2d 1192, 1210 (Cal. 1982).
58. Id. at 1206.
59. Id. at 1210.
60. Id. at 1209.
61. 78 Cal. Rptr. 2d 779 (Cal. Ct. App. 2d Dist. 1998)
62. Id. at 790-91 (citing Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ, 489 U.S. 468,
476-77 (1989); Rosenthal v. Great W. Fin. Sec. Corp., 926 P.2d 1061 (Cal. 1996)).
63. Id. at 791-92.
64. 539 U.S. 444, 447 (2003).
65. Bazzle v. Green Tree Fin. Corp., 569 S.E.2d 349, 359-60 (S.C. 2002), vacated by 539 U.S. 444 (2003).
66. Id. at 360-61 (citing Blue Cross of Cal., 78 Cal. Rptr. 2d at 779; Keating v. Superior Court of Alameda
County, 645 P.2d 1192, 1210 (Cal. 1982)).
67. Bazzle, 539 U.S. at 452-53 (citing Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002)).
2412 ISSUES IN COMPETITION LAW AND POLICY

a court could determine whether an agreement permits class arbitration where it was
plain from the face of the contract that it did not permit class arbitration, as he argued
was the case in Bazzle.68
In response to Bazzle, the American Arbitration Association (AAA) has promulgated
its Rules for Class Arbitrations to govern proceedings brought as class arbitrations.69
The AAA rules require that in order for there to be a class arbitration, each class
member must have “entered into an agreement containing an arbitration clause which is
substantially similar to that signed by the class representative(s) and each of the other
class members.”70 Assuming this threshold requirement is met, the rules provide that
the arbitrator must first make a clause construction award determining whether or not
the arbitration agreement permits class arbitration. The rules specifically admonish
arbitrators not to consider the existence of the AAA rules as “a factor either in favor of
or against permitting the arbitration to proceed on a class basis.”71 Upon making the
award, the arbitrator is compelled to stay proceedings for at least 30 days to permit any
party to ask for judicial review. Proceedings can resume only once the court has
rendered a decision, the time expires, or all parties inform the arbitrator that they do not
intend to seek judicial review.72 If the arbitration agreement permits class arbitration,
the rules require the arbitrator to determine whether a class should be certified, applying
similar prerequisites required by Federal Rule of Civil Procedure 23.73 The rules require
the arbitrator to give a rationale for his decision, set out in the class certification award,
which is immediately subject to judicial appeal.74 If a class is certified, the rules set
forth procedures for notice to class members and opportunity to opt out, again modeled
after Rule 23.75 Under the AAA procedures, the usual presumption of privacy and
confidentiality does not apply in class arbitrations.76 The AAA maintains a Web site
that includes many of the relevant documents and information about each pending class
arbitration.77
The AAA rules allow for interlocutory appeals of both the clause construction award
and the class certification award.78 Section 9 of the FAA requires a court to confirm an
arbitrator’s award unless vacated, modified, or corrected per Sections 10 and/or 11.
Section 10 allows a court to vacate an award that was acquired by fraud, corruption,
misconduct, or partiality on the part of the arbitrator, or where the arbitrator exceeded
his powers. Section 11 allows a court to correct an award where there was a mistake in

68. Id. at 458-60.

69. American Arbitration Association, American Arbitration Association Policy on Class Arbitrations
(July 14, 2005), http://www.adr.org/ClassArbitrationPolicy.
70. Id.
71. American Arbitration Association, Supplementary Rules for Class Arbitrations, Rule 3 (¶ 2) (Oct. 8,
2003), http://www.adr.org/sp.asp?id=21936.
72. Id. Rule 3 (¶1).
73. Id. Rule 4(a).
74. Id. Rule 5.
75. Id. Rules 5(c) & 8(d).
76. Id. Rule 9(a).
77. Id. Rule 9(b); see also AAA Class Arbitration Docket, available at http://www.adr.org/
sp.asp?id=25562.
78. Id. Rules 3 (¶1) & 5(d).
 ARBITRATION OF ANTITRUST DISPUTES 2413

damage calculation, the arbitrator ruled on an issue not submitted for arbitration, or the
award was imperfect in form but not affecting the substance of the award. Under these
sections of the FAA, it would appear that any judicial review of a class award would be
quite limited, as is judicial review of any arbitration award.
Since the AAA rules were adopted, AAA panels have consistently found class
arbitration permissible in otherwise silent arbitration agreements, despite the pre-Bazzle
case law that overwhelmingly barred consolidation in those circumstances. These AAA
panel decisions have mostly involved small consumer and employment claims. To a
large degree, the arbitrators in these panels have gone beyond the plain language of the
agreements at issue and relied on an unstated policy of protecting small claims that
would not be prosecuted absent class proceedings.79 In effect, the arbitrators seem to be
following the trend in state courts finding it unconscionable to disallow class
proceedings where the claimants could not and would not prosecute their claims
individually. Other recent AAA decisions permitting class arbitration also rely on state
law.80 A significant subset of these decisions were brought under the Fair Labor
Standards Act. That act contains an independent federal right to collective action.81 To
date, none of these clause construction awards have been reviewed in a reported judicial
decision.
Courts have vacated three of these AAA panel decisions. In one case, the court
vacated the panel’s clause construction award because the panel erroneously relied on
the AAA rules as evidence that the parties intended to authorize class arbitration.82 In a
second case, the court found that the panel had disregarded substantial extrinsic
evidence that the parties did not intend to authorize class arbitration.83 And in a third
case, the court held that the arbitrator had exceeded his authority in ruling that the
parties’ agreement to bar class arbitration was unconscionable.84 In addition, in perhaps
the broadest reaching decision, Judge Jed Rakoff of the Southern District of New York
ruled in Stolt-Nielsen SA v. AnimalFeeds International Corp.85 that class arbitration is
not available under the arbitration clause used in most standard charter party
agreements. The clause in question was silent on the subject of class arbitration. The
court, therefore, relied on testimony showing that class arbitration would be contrary to
the custom and usage in the maritime trade since there had never been a class arbitration
in the nearly four decades that arbitration clause had been in use.
In the wake of Bazzle, and in light of these AAA panel rulings, many entities are now
expressly prohibiting class arbitration in their agreements. Courts have split on whether

79. See Erin Cole & Nick Kaufman v. Long John Silver’s Restaurant, http://www.adr.org/si.asp?id=1659.
80. See, e.g., DirecTV Inc. v. Cable Connection Inc., http://www.adr.org/si.asp?id=3643 (applying
California law).
81. See Stacey Smith v. TeleTech Holdings, Inc., http://www.adr.org/si.asp?id=3656.
82. Goldstein v. Ibase Consulting, Civ. No. 03-100, Oral Argument re Pending Motions (D. Conn. Aug. 2,
2004).
83. DirecTV Inc. v. Cable Connection Inc., No. BS095987, Ruling on Petition to Vacate Arbitration
Award (Cal. Super. Ct. Nov. 1, 2005), available at http://www.adr.org/si.asp?=3820.
84. Sports & Fitness Clubs of Am. v. Allen, No. BS093362, Notice of Ruling on Petition to Vacate Award
(Cal. Super. Ct. June 1, 2005).
85. 435 F. Supp. 389 (S.D.N.Y. 2006).
2414 ISSUES IN COMPETITION LAW AND POLICY

they will enforce such arbitration agreements. A recent decision of the California
Supreme Court refused to enforce an agreement that prohibits class arbitration.86 The
court held that class arbitrations on behalf of consumers are permitted under California
law even where expressly prohibited by an arbitration agreement. The court found
language prohibiting class actions in adhesion contracts used by large companies was
unconscionable as against small consumers. The Ninth Circuit took this approach and
invalidated a clause prohibiting class action proceedings in its arbitral forum in Ingle v.
Circuit City Store.87
Courts in the Fourth, Fifth, Sixth, Seventh, and Eleventh Circuits have come to the
opposite conclusion and enforced agreements prohibiting class arbitration. 88 In Iberia
Credit Bureau v. Cingular Wireless, LLC,89 the Fifth Circuit refused to hold an express
bar on class arbitration as unconscionable. The Iberia court noted that the Supreme
Court has explained “the fact that certain litigation devices may not be available in
arbitration is part and parcel of arbitration’s ability to offer simplicity, informality, and
expedition.”90 The Iberia court noted Ninth Circuit precedent, but it explained that the
differences in state law, particularly that the Louisiana Unfair Trade Practices Act did
not permit individuals to bring class actions, distinguished the cases.91

5. Discovery in arbitration
American antitrust practitioners are accustomed to expansive judicial discovery with
wide-ranging and extensive document production from both parties and nonparties.
Discovery in arbitration is much more limited. The AAA rules grant arbitrators the
authority to direct discovery but admonishes them that the rules do not “contemplate
full-blown, litigation like discovery.”92 The parties to an arbitration agreement,
nevertheless, have a great deal of latitude to provide for whatever rules to which they
agree. The Supreme Court has cautioned courts: “parties are generally free to structure
their arbitration agreements as they see fit.”93
Often, the greatest challenge is obtaining evidence from parties not bound by the
arbitration agreement. The FAA does not have an exact equivalent to Federal Rule of
Civil Procedure 45, which allows a nonparty to be deposed or compelled to produce
documents. The corresponding provision for arbitration is Section 7 of the FAA, which

86. See Discover Bank v. Superior Court of L.A. ex rel. Boehr (Boehr), 2005 Cal. LEXIS 6866, at *14
(“An adhesion contract is not a normal arbitration setting, however, and what is at stake is not some
abstract institutional interest but the interests of the affected parties.”); see also id. at *26 (“class
actions and arbitrations are, particularly in the consumer context, often inextricably linked to the
vindication of substantive rights”).
87. 328 F.3d 1165, 1175-76 (9th Cir. 2003); see also Ting v. AT&T, 319 F.3d 1126 (9th Cir. 2003).
88. Elizabeth M. Avery, Class Actions and the Future of Arbitrating Antitrust Disputes, ANTITRUST, Fall
2004, at 24, 27.
89. 379 F.3d 159 (5th Cir. 2004).
90. Id. at 173 (citing Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 31 (1991) (internal quotation
remarks omitted)).
91. Id. at 174.
92. American Arbitration Association, A Guide for Commercial Arbitrators, http://www.adr.org/
si.asp?id=2516.
93. Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ, 489 U.S. 468, 479 (1989).
 ARBITRATION OF ANTITRUST DISPUTES 2415

provides that third parties may be compelled by district courts to attend an arbitration
hearing and bring “any book, record, document, or paper which may be deemed material
as evidence in the case.”94 Enforcement powers are granted to the arbitrator, who may
invoke the district court to punish recalcitrance “in the same manner provided by law for
. . . neglect or refusal to attend in the courts of the United States.”95
Circuit courts are split on whether Section 7 of the FAA confers upon arbitrators the
power to order third-party production of evidence before the panel. The Eight Circuit
held that “implicit in an arbitration panel’s power to subpoena relevant documents for
production at a hearing is the power to order the production of relevant documents for
review by a party prior to the hearing.”96 However, the Third Circuit disagreed in Hay
Group v. E.B.S. Acquisition Corp.97 Otherwise, there would be “more incentive to
engage in fishing expeditions that undermine some of the advantages of the supposedly
shorter and cheaper system of arbitration.”98

6. Conclusion
Arbitration is likely to continue to increase in importance as a forum for resolving
antitrust disputes. The question is no longer whether arbitration agreements are
enforceable as to antitrust claims but instead the practicalities on how to arbitrate an
antitrust claim effectively. This chapter has identified some of the key issues, many of
which have yet to be resolved.

94. 9 U.S.C. § 7.
95. Id.
96. In re Sec. Life Ins. Co. of Am., 228 F.3d 865, 870-71 (8th Cir. 2000).
97. 360 F.3d 404 (3d Cir. 2004).
98. Id. at 409 (citing COMSAT Corp. v. NSF, 190 F.3d 269, 276 (4th Cir. 1999) (“The rational for
constraining an arbitrator’s subpoena power is clear. Parties to a private arbitration agreement forego
certain procedural rights attendant to formal litigation in return for a more efficient and cost-effective
resolution of their dispute. A hallmark of arbitration—and a necessary precursor to its efficient
operation—is a limited discovery process.”)).