Oxford Health Plans LLC v. Sutter

Class arbitration is a matter of consent: An arbitrator may employ class procedures only if the parties have authorized them. See

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

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 arbitrator imposes

But Oxford misreads Stolt-Nielsen : We overturned the arbitral decision there because it lacked any contractual basis for ordering class procedures, not because it lacked, in Oxford's terminology, a "sufficient" one. The parties in Stolt-Nielsen had entered into an unusual stipulation that they had never reached an agreement on class arbitration. See 559 U.S., at 668-669, 673 , 130 S.Ct. 1758 . In that circumstance, we noted, the panel's decision was not-indeed, could not have been-"based on a determination regarding the parties' intent." Id., at 673, n. 4 , 130 S.Ct. 1758 ;

The remainder of Oxford's argument addresses merely the merits: The arbitrator, Oxford contends at length, badly misunderstood the contract's arbitration clause. See Brief for Petitioner 21-28. The key text, again, goes as follows: "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." App. 15-16. The arbitrator thought that clause sent to arbitration all "civil action[s]" barred from court, and viewed class actions as falling within that category. See supra, at 2071 - 2072. But Oxford points out that the provision submits to arbitration not any "civil action[s]," but instead any "dispute arising under" the agreement. And in any event, Oxford claims, a class action is not a form of "civil action," as the arbitrator thought, but merely a procedural device that may be available in a court. At bottom, Oxford maintains, this is a garden-variety arbitration clause, lacking any of the terms or features that would indicate an agreement to use class procedures.

We reject this argument because, and only because, it is not properly addressed to a court. Nothing we say in this opinion should be taken to reflect any agreement with the arbitrator's contract interpretation, or any quarrel with Oxford's contrary reading. All we say is that convincing a court of an arbitrator's error-even his grave error-is not enough. So long as the arbitrator was "arguably construing" the contract-which this one was-a court may not correct his mistakes under § 10(a)(4). Eastern Associated Coal, 531 U.S., at 62 , 121 S.Ct. 462 (internal quotation marks omitted). The potential for those mistakes is the price of agreeing to

But unlike petitioner, absent members of the plaintiff class never conceded that the contract authorizes the arbitrator to decide whether to conduct class arbitration. It doesn't. If we were reviewing the arbitrator's interpretation of the contract de novo, we would have little trouble concluding that he improperly inferred "[a]n implicit agreement to authorize class-action arbitration ... from the fact of the parties' agreement to arbitrate." Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662 , 685, 130 S.Ct. 1758 , 176 L.Ed.2d 605 (2010).

With no reason to think that the absent class members ever agreed to class arbitration, it is far from clear that they will be bound by the arbitrator's ultimate resolution of this dispute. Arbitration "is a matter of consent, not coercion," Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468 , 479, 109 S.Ct. 1248 , 103 L.Ed.2d 488 (1989), and the absent members of the plaintiff class have not submitted themselves to this arbitrator's authority in any way. It is true that they signed contracts with arbitration clauses materially identical to those signed by the plaintiff who brought this suit. But an arbitrator's erroneous interpretation of contracts that do not authorize class arbitration cannot bind someone who has not authorized the arbitrator to make that determination. As the Court explains, "[a]n arbitrator may employ class procedures only if the parties have authorized them." Ante, at 2066.

The distribution of opt-out notices does not cure this fundamental flaw in the class arbitration proceeding in this case. "[A]rbitration is simply a matter of contract between the parties," First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 , 943, 115 S.Ct. 1920 , 131 L.Ed.2d 985 (1995), and an offeree's silence does not normally modify the terms of a contract, 1 Restatement (Second) of Contracts § 69(1) (1979). Accordingly, at least where absent class

Class arbitrations that are vulnerable to collateral attack allow absent class members to unfairly claim the "benefit from a favorable judgment without subjecting themselves to the binding effect of an unfavorable one," American Pipe & Constr. Co. v. Utah, 414 U.S. 538 , 546-547, 94 S.Ct. 756 , 38 L.Ed.2d 713 (1974). In the absence of concessions like Oxford's, this possibility should give courts pause before concluding that the availability of class arbitration is a question the arbitrator should decide. But because that argument was not available to petitioner in light of its concession below, I join the opinion of the Court.

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 contrast with this case is stark. In Stolt-Nielsen, the arbitrators did not construe the parties' contract, and did not identify any agreement authorizing class proceedings. So in setting aside the arbitrators' decision, we found not that they had misinterpreted the contract, but that they had abandoned their interpretive role. Here, the arbitrator did construe the contract (focusing, per usual, on its language), and did find an agreement to permit class arbitration. So to overturn his decision, we would have to rely on a finding that he misapprehended the parties' intent. But § 10(a)(4)

In sum, Oxford chose arbitration, and it must now live with that choice. Oxford agreed with Sutter that an arbitrator should determine what their contract meant, including whether its terms approved class arbitration. The arbitrator did what the parties requested: He provided an interpretation of the contract resolving that disputed issue. His interpretation went against Oxford, maybe mistakenly so. But still, Oxford does not get to rerun the matter in a court. Under § 10(a)(4), the question for a judge is not whether the arbitrator construed the parties' contract correctly, but whether he construed it at all. Because he did, and therefore did not "exceed his powers," we cannot give Oxford the relief it wants. We accordingly affirm the judgment of the Court of Appeals.

It is so ordered.

Justice ALITO, with whom Justice THOMAS joins, concurring.

As the Court explains, "[c]lass arbitration is a matter of consent," ante, at 2066, and petitioner consented to the arbitrator's authority by conceding that he should decide in the first instance whether the contract authorizes class arbitration. The Court accordingly refuses to set aside the arbitrator's ruling because he was " 'arguably construing ... the contract' " when he allowed respondent to proceed on a classwide basis. Ante, at 2070 (quoting Eastern Associated Coal Corp. v. Mine Workers, 531 U.S. 57 , 62, 121 S.Ct. 462 , 148 L.Ed.2d 354 (2000) ). Today's result follows directly from petitioner's concession and the narrow judicial