Oxford Health Plans LLC v. Sutter

• Decision Date: 10 June 2013
• Docket Number: No. 12–135.,12–135.
• Citation: 569 U.S. 564,186 L.Ed.2d 113,133 S.Ct. 2064
• Parties: OXFORD HEALTH PLANS LLC, Petitioner v. John Ivan SUTTER.
• Court: U.S. Supreme Court

569 U.S. 564

133 S.Ct. 2064

186 L.Ed.2d 113

OXFORD HEALTH PLANS LLC, Petitioner

v.John Ivan SUTTER.

No. 12–135.

Supreme Court of the United States

Argued March 25, 2013.

Decided June 10, 2013.

Seth P. Waxman, Washington, DC, for Petitioner.

Eric D. Katz, for Respondent.

Matthew M. Shors, Brian W. Kemper, United Health Group Incorporated, Minnetonka, MN, P. Christine Deruelle, Weil, Gotshal & Manges LLP, Miami, FL, Adam N. Saravay, McCarter & English, LLP, Newark, NJ, Seth P. Waxman, Counsel of Record, Edward C. DuMont, Paul R.Q. Wolfson, Joshua M. Salzman, Daniel T. Deacon, Wilmer Cutler Pickering Hale and Dorr LLP, Washington, DC, for Petitioner.

Eric Schnapper, Seattle, WA, Eric D. Katz, Counsel of Record, Mazie Slater Katz & Freeman, LLC, Roseland, NJ, for Respondent.

Justice KAGAN delivered the opinion of the Court.

Class arbitration is a matter of consent: An arbitrator may employ class procedures only if the parties have authorized them. See Stolt–Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 684, 130 S.Ct. 1758, 176 L.Ed.2d 605 (2010). In this case, an arbitrator found that the parties' contract provided for class arbitration. The question presented is whether in doing so he "exceeded [his] powers" under § 10(a)(4) of the Federal Arbitration Act (FAA or Act), 9 U.S.C. § 1 et seq. We conclude that the arbitrator's decision survives the limited judicial review § 10(a)(4) allows.

I

Respondent John Sutter, a pediatrician, entered into a contract with petitioner Oxford Health Plans, a health insurance company. Sutter agreed to provide medical care to members of Oxford's network, and Oxford agreed to pay for those services at prescribed rates. Several years later, Sutter filed suit against Oxford in New Jersey Superior Court on behalf of himself and a proposed class of other New Jersey physicians under contract with Oxford. The complaint alleged that Oxford had failed to make full and prompt payment to the doctors, in violation of their agreements and various state laws.

Oxford moved to compel arbitration of Sutter's claims, relying on the following clause in their contract:

"No civil action concerning any dispute arising under this Agreement shall be instituted before any court, and all such disputes shall be submitted to final and binding arbitration in New Jersey, pursuant to the rules of the American Arbitration Association with one arbitrator." App. 15–16.

The state court granted Oxford's motion, thus referring the suit to arbitration.

The parties agreed that the arbitrator should decide whether their contract authorized class arbitration, and he determined that it did. Noting that the question turned on "construction of the parties' agreement," the arbitrator focused on the text of the arbitration clause quoted above. Id., at 30. He reasoned that the clause sent to arbitration "the same universal class of disputes" that it barred the parties from bringing "as civil actions" in court: The "intent of the clause" was "to vest in the arbitration process everything that is prohibited from the court process." Id., at 31. And a class action, the arbitrator continued, "is plainly one of the possible forms of civil action that could be brought in a court" absent the agreement. Ibid. Accordingly, he concluded that "on its face, the arbitration clause ... expresses the parties' intent that class arbitration can be maintained." Id., at 32.

Oxford filed a motion in federal court to vacate the arbitrator's decision on the ground that he had "exceeded [his] powers" under § 10(a)(4) of the FAA. The District Court denied the motion, and the Court of Appeals for the Third Circuit affirmed. See 05–CV–2198, 2005 WL 6795061 (D.N.J., Oct. 31, 2005), aff'd, 227 Fed.Appx. 135 (2007).

While the arbitration proceeded, this Court held in Stolt–Nielsen 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." 559 U.S., at 684, 130 S.Ct. 1758. The parties in Stolt–Nielsen had stipulated that they had never reached an agreement on class arbitration. Relying on § 10(a)(4), we vacated the arbitrators' decision approving class proceedings because, in the absence of such an agreement, the arbitrators had "simply ... imposed [their] own view of sound policy." Id., at 672, 130 S.Ct. 1758.

Oxford immediately asked the arbitrator to reconsider his decision on class arbitration in light of Stolt–Nielsen . The arbitrator issued a new opinion holding that Stolt–Nielsen had no effect on the case because this agreement authorized class arbitration. Unlike in Stolt–Nielsen, the arbitrator explained, the parties here disputed the meaning of their contract; he had therefore been required "to construe the arbitration clause in the ordinary way to glean the parties' intent." App. 72. And in performing that task, the arbitrator continued, he had "found that the arbitration clause unambiguously evinced an intention to allow class arbitration." Id., at 70. The arbitrator concluded by reconfirming his reasons for so construing the clause.

Oxford then returned to federal court, renewing its effort to vacate the arbitrator's decision under § 10(a)(4). Once again, the District Court denied the motion, and the Third Circuit affirmed. The Court of Appeals first underscored the limited scope of judicial review that § 10(a)(4) allows: So long as an arbitrator "makes a good faith attempt" to interpret a contract, "even serious errors of law or fact will not subject his award to vacatur." 675 F.3d 215, 220 (2012). Oxford could not prevail under that standard, the court held, because the arbitrator had "endeavored to give effect to the parties' intent" and "articulate[d] a contractual basis for his decision." Id., at 223–224. Oxford's objections to the ruling were "simply dressed-up arguments that the arbitrator interpreted its agreement erroneously." Id., at 224.

We granted certiorari, 568 U.S. ––––, 133 S.Ct. 786, 184 L.Ed.2d 526 (2012), to address a circuit split on whether § 10(a)(4) allows a court to vacate an arbitral award in similar circumstances.¹ Holding that it does not, we affirm the Court of Appeals.

II

Under the FAA, courts may vacate an arbitrator's decision "only in very unusual circumstances." First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 942, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). That limited judicial review, we have explained, "maintain[s] arbitration's essential virtue of resolving disputes straightaway." Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576, 588, 128 S.Ct. 1396, 170 L.Ed.2d 254 (2008). If parties could take "full-bore legal and evidentiary appeals," arbitration would become "merely a prelude to a more cumbersome and time-consuming judicial review process." Ibid.

Here, Oxford invokes § 10(a)(4) of the Act, which authorizes a federal court to set aside an arbitral award "where the arbitrator[ ] exceeded [his] powers." A party seeking relief under that provision bears a heavy burden. "It is not enough ... to show that the [arbitrator] committed an error—or even a serious error." Stolt–Nielsen, 559 U.S., at 671, 130 S.Ct. 1758. Because the parties "bargained for the arbitrator's construction of their agreement," an arbitral decision "even arguably construing or applying the contract" must stand, regardless of a court's view of its (de)merits. Eastern Associated Coal Corp. v. Mine Workers, 531 U.S. 57, 62, 121 S.Ct. 462, 148 L.Ed.2d 354 (2000) (quoting Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 599, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960) ; Paperworkers v. Misco, Inc., 484 U.S. 29, 38, 108 S.Ct. 364, 98 L.Ed.2d 286 (1987) ; internal quotation marks omitted). 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. Eastern Associated Coal, 531 U.S., at 62, 121 S.Ct. 462 (quoting Misco, 484 U.S., at 38, 108 S.Ct. 364). 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.²

And we have already all but answered that question just by summarizing the arbitrator's decisions, see supra, at 2071 – 2072; they are, through and through, interpretations of the parties' agreement. The arbitrator's first ruling recited the "question of construction" the parties had submitted to him: "whether [their] Agreement allows for class action arbitration." App. 29–30. To resolve that matter, the arbitrator focused on the arbitration clause's text, analyzing (whether correctly or not makes no difference) the scope of both what it barred from court and what it sent to arbitration. The arbitrator concluded, based on that textual exegesis, that the clause "on its face ... expresses the parties' intent that class action arbitration can be maintained." Id., at 32. When Oxford requested reconsideration in light of Stolt–Nielsen, the arbitrator explained that his prior decision was "concerned solely with the parties' intent as evidenced by the words of the arbitration clause itself." App. 69. He then ran through his textual analysis again, and reiterated his conclusion: "[T]he text of the clause itself authorizes" class arbitration. Id., at 73. Twice, then, the arbitrator did what the parties had asked: He considered their contract and decided whether it reflected an agreement to permit class proceedings. That suffices to show that the arbitrator did not " exceed[ ] [his] powers." § 10(a)(4).

Oxford's contrary view relies principally on Stolt–Nielsen . As noted earlier, we found there that an arbitration panel exceeded its powers under § 10(a)(4) when it ordered a party to submit to class arbitration. See supra, at 2072. Oxford takes that decision to mean that "even the ‘high hurdle’ of Section 10(a)(4) review is overcome when an...