The arbitrator ruled that the fee-for-service arbitration clause authorized class action arbitration. Following that ruling – and while the arbitration was still pending, the Supreme Court ruled in Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U. S. 662 (2010), “that an arbitrator may employ class procedures only if the parties have authorized them” in the arbitration agreement. Asked to reconsider his ruling, the arbitrator re-affirmed that the contact authorized class action arbitrations. Unlike the Stolt-Nielsen case where the parties had stipulated that the contract did not contemplate class arbitrations and the arbitrator there had simply imposed his view of sound public policy and exceeded his contractual authority to merely interpret the contract, the arbitrator in Sutter limited his opinion to his legal interpretation of the contract. Even if the Sutter arbitrator committed serious errors of law or fact, that is not a basis to vacate an arbitration ruling under the FAA. “Only if ‘the arbitrator act[s] outside the scope of his contractually delegated authority’—issuing an award that ‘simply reflect[s] [his] own notions of [economic] justice’ rather than ‘draw[ing] its essence from the contract’—may a court overturn his determination. . . . So the sole question for us is whether the arbitrator (even arguably) interpreted the parties’ contract, not whether he got its meaning right or wrong.” In other words, "[t]he arbitrator’s construction holds, however good, bad, or ugly.” Otherwise, if courts could review the legal correctness of every arbitration decision, arbitration would cease to be a more expedient alternative to regular civil litigation.
a different issue if Oxford had argued below that the availability of class arbitration is a so-called “question of arbitrability.” Those questions—which “include certain gateway matters, such as whether parties have a valid arbitration agreement at all or whether a concededly binding arbitration clause applies to a certain type of controversy”—are presumptively for courts to decide. . . . A court may therefore review an arbitrator’s determination of such a matter de novo absent “clear[] and unmistakabl[e]” evidence that the parties wanted an arbitrator to resolve the dispute. . . . Stolt-Nielsen made clear that this Court has not yet decided whether the availability of class arbitration is a question of arbitrability. . . . . But this case gives us no opportunity to do so because Oxford agreed that the arbitrator should determine whether its contract with Sutter authorized class procedures.
The insurance company moved to compel arbitration after the
physician filed his complaint in state court.
The court enforced the arbitration clause. All the contract provides is that an
arbitrator will decide the dispute. Therefore,
the parties cannot return to court merely because they disagree with the
arbitrator.
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.
NOTICE:
This summary is designed merely to inform and alert you of recent legal
developments. It does not constitute legal advice and does not apply to any
particular situation because different facts could lead to different results.
Information here can change or be amended without notice. Readers should not
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