Supreme Court rules arbitrator did not exceed authority in allowing class arbitration
Supreme Court rules arbitrator did not exceed authority in allowing class arbitration
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[JURIST] The US Supreme Court [official website] ruled [opinion, PDF] unanimously Monday in Oxford Health Plans LLC v. Sutter [SCOTUSblog backgrounder] that an arbitrator did not exceed his powers under §10(a)(4) of the Federal Arbitration Act (FAA) [text] when he found that the parties’ contract provided for class arbitration. Respondent John Sutter, a pediatrician, entered into a contract with petitioner Oxford Health Plans, a health insurance company. When Sutter brought suit against Oxford on behalf of himself and several others, Oxford moved to compel arbitration of Sutter’s individual claims. The parties agreed that the arbitrator should decide whether their contract authorized class arbitration, and he determined that it did. Oxford moved to vacate the arbitrator’s decision, arguing that he had exceeded his authority under §10(a)(4). In an opinion by Justice Elena Kagan, the Supreme Court disagreed:

In sum, Oxford chose arbitration, and it must now live with that choice. Oxford agreed with Sutter that an arbitrator should determine what their contract meant, including whether its terms approved class arbitration. The arbitrator did what the parties requested: He provided an interpretation of the contract resolving that disputed issue. His interpretation went against Oxford, maybe mistakenly so. But still, Oxford does not get to rerun the matter in a court. Under §10(a)(4), the question for a judge is not whether the arbitrator construed the parties’ contract correctly, but whether he construed it at all. Because he did, and therefore did not “exceed his powers,” we cannot give Oxford the relief it wants.

The ruling affirms the decision [text] of the US Court of Appeals for the Third Circuit. Justice Samuel Alito filed a concurring opinion, joined by Justice Clarence Thomas.

The court heard oral arguments [JURIST report] in the case in March. Oxford had argued that the Supreme Court’s 2010 decision in Stolt-Nielsen S.A. v. Animalfeeds Int’l Corp. [opinion] required the court to vacate the award authorizing class arbitration. In Stolt-Nielson the court held [JURIST report] that that imposing class arbitration on parties when that issue is silent in the parties’ arbitration clauses is inconsistent with the FAA.