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A federal district court in Alabama has ruled that the question of arbitrator selection is a “gateway matter” that confers subject matter jurisdiction on the court. Accordingly, the Court retained jurisdiction over that issue, while dismissing for lack of jurisdiction a separate question regarding the permissibility of class-wide arbitration.
In Redman Home Builders Co. v. Lewis, No. CV-2-07-107, 2007 WL 3088579 (S.D. Ala. July 25, 2007), the Lewises purchased a Redman mobile home from Future Housing. Redman provided the Lewises with a one-year limited warranty, which contained an arbitration provision. Nine months later, a dispute arose regarding the condition of the manufactured home.
The Lewises filed an arbitration claim against Redman. They also filed a demand for class arbitration. The parties disagreed on which arbitrator should hear the dispute and whether the arbitration proceeding should proceed individually or on a class-wide basis. Afterward, Redman sought a court order compelling arbitration on an individual basis, while the Lewises moved to dismiss for lack of subject matter jurisdiction. In opposing dismissal, Redman argued that the selection of the arbitrator was a “gateway issue” giving the Court subject matter jurisdiction.
The Court held that the issue over the selection of an arbitrator pursuant to a valid arbitration agreement was a “gateway matter” for the court because “it concerns fundamentally who will decide the parties’ dispute, not merely what kind of arbitration proceedings the parties agreed to.”
Additionally, the parties would not expect an arbitrator to decide the gateway matter as to how to select an arbitrator. Otherwise, the arbitrator would find himself in the precarious position of deciding whether he has authority to decide the dispute.
However, in accordance with Supreme Court precedent, the Court concluded that the permissibility of class-wide arbitration was a question for the arbitrator rather than the court.
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