Chesapeake Appalachia LLC v. Scout Petroleum, LLC, U.S. 3rd Circuit Court of Appeals, January 5, 2016, 2016 U.S. App. LEXIS 42

Whether or not arbitration may be undertaken on a class-wide basis is a question to be decided by the court, not the arbitrator, absent clear language referring such question to the arbitrator.

Scout instituted a class action arbitration against Chesapeake due to each lease containing an arbitration clause. Scout contended that it and members of the class had been substantially underpaid royalties from production from the northeastern Pennsylvania. The court stated that the availability of arbitration is a “question of arbitrability” to be decided by the courts unless the parties’ arbitration agreement provides otherwise “clearly and unmistakably.” While the arbitration agreements specified that arbitration would be done pursuant to American Arbitration Association rules (which provide for class action arbitration), such leases were silent on the question of the arbitration of class actions. The court held that a reference to such rules was insufficient so the district court, not the arbitrator, was to make the decision.