A Michigan federal court upheld an arbitration panel's clause construction arbitration award, issued in the context of a putative class arbitration. The Court determined that whether an arbitration agreement forbids class arbitration, or not, is a matter for the arbitrator, not the court, to decide.

In Dealer Computer Services, Inc. v. Champion Ford, No. 07-13174, 2008 WL 205249 (D. Mich. Jan. 24, 2008), Champion Ford and 50 other members of the Ford Dealer Development Program filed a demand for class arbitration against Dealer Computer seeking to arbitrate the underlying dispute as a class rather than individually.

The AAA arbitration panel determined that Champion Ford and the other dealers could proceed as a class. Dealer Computer filed a motion to vacate the clause construction award. Dealer Computer argued that the court, rather than the arbitrators, should decide whether Champion Ford's arbitration was allowed to proceed as a class.

An issue of arbitrability, such as whether the parties agreed to arbitrate at all, is an issue for the court to decide. However, Dealer Computer sought review of the form of the arbitration. The Court determined that this issue is to be decided by the arbitrator. When the parties have broadly agreed to arbitrate all disputes, the question whether the agreement forbids class arbitration is for the arbitrator to decide.

Dealer Computer and Champion Ford broadly agreed to arbitrate all disputes. Therefore, their dispute about what the arbitration agreement meant and whether class arbitration is permitted, is a dispute arising out of and relating to the agreement. Therefore, it is a question for the arbitrator to decide. The Court determined that the arbitration panel was the proper authority to decide the question whether the parties' arbitration agreement forbids class arbitration.

Dealer Computer also argued that the Court should vacate the arbitration panel's construction clause award because the arbitrators exceeded their powers. The Court noted that it employs a highly deferential standard of review when considering a motion to vacate.

Arbitrators exceed their powers not when they merely interpret or apply the governing law incorrectly, but when the award is completely irrational or exhibits a manifest disregard for the law. Further the Court emphasized, "review of an arbitrator's award is governed by one of the most narrow standards of judicial review in all of American jurisprudence."

A comparative review of Dealer Computer's pleadings and the arbitration panel's opinion illustrate that Dealer Computer is merely re-litigating arguments that the arbitration panel considered and rejected. The Court noted that whether it agrees with the panel's interpretation or not is irrelevant. The Court determined that Dealer Computer failed to satisfy the high burden.