A federal district court in New York held that where an employment arbitration agreement provided that a court "may" decide procedural issues, the agreement gave the court discretion on whether or not to decide the procedural issues, such that the court was free to compel arbitration of such issues.

In Jock v. Sterling Jewelers, Inc., No. 08 CIV.2875(JSR), 2008 WL 2738098 (S.D.N.Y. July 15, 2008), Jock and other female employees of Sterling Jewelers brought a class action lawsuit and arbitration claim against Sterling, alleging sex discrimination.

Jock brought both a lawsuit and an arbitration claim because she was unsure if the arbitration agreement between Sterling and its employees was enforceable. The agreement provided that "where a party already has initiated a judicial proceeding, a court may decide procedural questions that grow out of the dispute and bear on the final disposition of the matter." (Emphasis added.)

Sterling refused to arbitrate, and instead filed an answer and counterclaims in the judicial proceeding, seeking a declaration that the court, not the arbitrator, would decide three procedural issues before referring the matter to arbitration. Jock moved to compel arbitration.

The Court granted Jock’s motion to compel arbitration. The Court held that where a contract refers all disputes to an arbitrator, procedural issues are typically for arbitrators, not courts, to decide. However, the Court did note that this contract provided that the Court "may" decide procedural issues that grow out of the dispute. Thus, the Court held that it was within its discretion whether or not to decide the procedural issues.

The Court rejected Sterling’s argument that Jock waived its right to arbitrate by initiating the lawsuit. The Court held that Jock had not engaged in the type of "protracted litigation that results in prejudice to the opposing party" that would result in a waiver of its right to arbitrate. Furthermore, the Court held that Jock’s decision to file a lawsuit was "perfectly reasonable" given the doubts surrounding the arbitration agreement’s enforceability.

The Court ultimately concluded that all three of the procedural issues were more appropriately decided by the arbitrator because they involved contract interpretation and some factual discovery, all of which "an arbitrator is better situated to address." Consequently, the Court compelled arbitration of all of the issues.