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FMG Law Blog Line

Supreme Court Upholds Arbitrator’s Class Ruling

Posted on: June 14th, 2013

By: Anthony Del Rio

This week, in Oxford Health Plans v. Sutter, the Supreme Court upheld the authority of an arbitrator to interpret an agreement to permit class arbitration.  While the Court expressed some doubt regarding whether the arbitrator made the correct decision, the Court unanimously agreed that “courts have no business overruling [an arbitrator] because their interpretation of the contract is different from [the arbitrator’s].”

In Sutter, Oxford Health entered into an employment agreement with Dr. Sutter that included an arbitration provision. Dr. Sutter filed a putative class action against Oxford Health, and Oxford Health moved to compel arbitration.  The agreement did not include an explicit class waiver, and the parties disputed whether the arbitration could proceed on a class basis.  The arbitrator ultimately ruled in favor of Dr. Sutter and interpreted the agreement to allow for class arbitration.  The arbitrator reasoned that the language “any civil action” included class actions.

The Court’s holding highlights the importance of expressly precluding class arbitrations in agreements.  An arbitration agreement is a very helpful tool employers can use to protect themselves, but their effectiveness can be undermined if the provisions are not properly drafted.

It should be noted that, in 2012, the NLRB adopted the position that class waivers were impermissible. However, the NLRB’s interpretation has been widely rejected by federal courts.

 

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