Wyatt Employment Law Report

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Supreme Court Affirms Arbitrator’s Holding That Contract Permitted Class Relief

The U.S. Supreme Court on June 10, 2013, issued its decision in Oxford Health Plans v. Sutter, 569 U.S. ___, No. 12-135 (2013), holding unanimously that once an arbitrator decides that a contract permits a class arbitration proceeding, the parties are bound by that decision under the Federal Arbitration Act’s very narrow scope of judicial review. In this commercial arbitration case involving a healthcare provider’s claim against a medical plan, Justice Kagan, speaking for the Court, stated, in part:

“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 (2000) (quoting Steelworkers v. Enterprise Wheel & Car Corp., 363 U. S. 593, 599 (1960); Paperworkers v. Misco, Inc., 484 U. S. 29, 38 (1987)…. 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 (quoting Misco, 484 U. S., at 38). 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.”

Significantly, the cases relied upon by the Court in this commercial arbitration case were prior labor and employment law decisions.