Oxford Health Plans, LLC v. Sutter

Whether an arbitrator acts within his powers under the Federal Arbitration Act or exceeds those powers when allowing class arbitration based solely on parties’ use of broad contractual language in an arbitration agreement.

In 2002 Respondent accused Petitioner of engaging in a practice of improperly denying, underpaying, and delaying reimbursement of physicians‘ claims for medical services. Respondent filed a complaint on behalf of himself and a class of health care providers. Petitioner moved to compel arbitration under a previously agreed upon arbitration agreement. A portion of that agreement read, “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 [at a specified location] pursuant to the Rules of the American Arbitration Association with one arbitrator.”

Both parties asked the arbitrator to decide whether the agreement allowed for class arbitration. The arbitrator reasoned that the phrase, "all such disputes" included class disputes and decided that the broad terms of the agreement expressed the parties' intent to authorize class arbitration "on its face."

Petitioner sought to vacate the award, but the district court affirmed the arbitration award. Petitioner appealed, citing the Court’s decision in Stolt-Neilsen S.A. v. AnimalFeeds International Corp., 130 S.Ct. 1758, that an arbitral panel exceeded its authority by allowing class arbitration when the parties had reached no agreement on the issue. The Court of Appeals for the Third Circuit affirmed holding that Stolt-Neilsen was not applicable because the parties did not intend to preclude class arbitration but only stipulated that there was “no agreement” on class arbitration.

The Supreme Court granted certiorari to resolve a circuit split on the question left open in Stolt-Nielsen as to whether parties can agree to authorize class-action arbitration.