Is the arbitration language in a university's enrollment agreement ambiguous with regard to a class action ban?
This is a class action case involving students enrolled in the nursing program at Salem International University. In February, 2012, the nursing program lost its accreditation and was ordered to be suspended. Respondents are students who were affected by this suspension.
In August, 2013, Respondents filed a case on a class wide basis alleging that Petitioner, Sale International University, was guilty of negligence, breach of contract, breach of the duty of good faith and fair dealing, and also violated provisions of the West Virginia Consumer Credit Protection Act, W.Va. Code 46A-1-101 et seq. Petitioner filed a motion to compel arbitration, citing language in the enrollment agreement requiring arbitration of any disputes. Respondents opposed the motion.
After briefing and oral argument, the trial court concluded that the arbitration provision was ambiguous regarding the arbitrability of class action cases. Even though there was language prohibiting the arbitrator from hearing claim on a classwide basis or from joining or consolidating claims, the court found that there was no language affirmatively waiving Respondent’s right to proceed via a class action. Accordingly, the court concluded that the arbitration provision was ambiguous.
According to Petitioner, West Virginia law authorizes the trial court to consider only two threshold issues: (1) whether a valid arbitration agreement was, in fact, made and (2) whether the claim being asserted is within the scope of the arbitration agreement. Petitioner argues that the trial court answered both of these questions affirmatively and, therefore, lacked jurisdiction to interpret the language of the agreement. In any event, says Petitioner, the trial court’s interpretation of the agreement is erroneous. The language clearly bars Respondents from proceeding by means of a class action and, instead, mandates arbitration.
Respondents argue that the language of the arbitration agreement is ambiguous--i.e., does it prevent Respondents from pursuing claims on a class action basis or does it simply prevent the arbitrator from hearing them? Under traditional rules of contract construction, this ambiguity must be resolved against Petitioner as the drafter of the contract. Even if there is no ambiguity, Respondents allege that the arbitration agreement is unenforceable because it is both substantively and procedurally unconscionable.
Arbitration cases dominated the spring term. There are three more arbitration cases set for argument in the fall term. This case appears on the Rule 20 docket, suggesting that the Supreme Court will be writing a new syllabus point. We should watch this case closely. It is possible we will see more explicit guidance on how trial courts should apply interpretive rules in the context of arbitration agreements.