Supreme Court decision in Oxford Health Plans LLC v Sutter

The Supreme Court has held that a court may not overturn an arbitrator’s construction of an agreement to permit class arbitration — even if it is erroneous. In Oxford Health Plans LLC v Sutter, a unanimous Supreme Court held that an arbitrator’s decision to allow class arbitration cannot be overturned if it was based on the construction of the agreement between the parties. In so holding, the Supreme Court noted that even an arbitrator’s interpretation that incorrectly assesses whether the parties intended to consent to class arbitration is not subject to judicial review. As Justice Kagan bluntly put it, ‘[t]he arbitrator’s construction holds, however good, bad or ugly’.

The court’s ruling also clarified the application of its 2010 opinion in Stolt-Nielsen v AnimalFeeds International. In that case, the Supreme Court determined that a party may not be compelled to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so. In today’s opinion, the court explained that the parties in Stolt-Nielsen had stipulated that they had not to come to an agreement on class arbitration. Thus, in finding that the agreement permitted arbitration, the arbitration panel in Stolt-Nielsen could not have been construing an agreement that concededly did not decide the issue. The parties in Oxford Health, in contrast, disagreed about whether their agreement permitted arbitration and asked the arbitrator to resolve that disagreement. The court held that this is an arbitrator’s function and not an abuse of power…

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