The Supreme Court of the United States Affirmed the Court of Appeals Decision to Not Overrule Arbitrators Decision to Permit Class Arbitration
On June 10, 2013, the Supreme Court of the United States unanimously affirmed the Third Circuits decision to deny the Defendants, Oxford Health Plans’, appeal to deny an arbitrators decision to approve class arbitration proceedings based upon a contract between the Defendant and Respondent.
Oxford Health Plans argued that the arbitrators decision should be vacated because he had “exceeded his powers” under §10(a)(4) of the Federal Arbitration Act (FAA or Act), 9 U. S. C. §1 et seq. by finding that the parties’ contract provided for class arbitration. After the lower courts denied this argument, the Supreme Court held in a separate case, Stolt-Nielsen S. A. v. Animal Feeds Int’l Corp., 559 U. S. 662, 684 (2010) that “a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.” As such, Defendants again argued that the Court should revisit their original claim and were eventually granted certiorari review.
In review, The Supreme Court of the United States rejected that anything changed regarding the status of the arbitrator’s decision to permit class arbitration in the Oxford Health Plans case despite any misinterpretations that might have taken place regarding their contract. The Court held that Oxford misread Stolt-Nielsen because the Court overturned the arbitral decision there because it lacked any contractual basis for ordering class procedures, not because it lacked, in Oxford’s terminology, a “sufficient” one. The parties in Stolt-Nielsen had entered into an unusual stipulation that they had never reached an agreement on class arbitration. See 559 U. S., at 668–669, 673. Here, in stark contrast, the arbitrator did construe the contract, and did find an agreement to permit class arbitration. So to overturn the arbitrator’s decision, this Court would have to find that he misapprehended the parties’ intent. But §10(a)(4) bars that course: It permits courts to vacate an arbitral decision only when the arbitrator strayed from his delegated task of interpreting a contract, not when he performed that task poorly.
In sum, Oxford chose arbitration, and as a result must live with that choice. Oxford agreed with Respondent, 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. Therefore because the arbitrator did not “exceed his powers,” the Supreme Court could not give Oxford Health Plans the relief it wanted and accordingly affirmed the judgment of the Court of Appeals.