Oxford Health Plans LLC v. Sutter

(Slip Opinion) OCTOBER TERM, 2012 1

Syllabus

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is

being done in connection with this case, at the time the opinion is issued.

The syllabus constitutes no part of the opinion of the Court but has been

prepared by the Reporter of Decisions for the convenience of the reader.

See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

OXFORD HEALTH PLANS LLC v. SUTTER

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE THIRD CIRCUIT

No. 12–135. Argued March 25, 2013—Decided June 10, 2013

Respondent Sutter, a pediatrician, provided medical services to peti-

tioner Oxford Health Plans’ insureds under a fee-for-services contract

that required binding arbitration of contractual disputes. He none-

theless filed a proposed class action in New Jersey Superior Court, al-

leging that Oxford failed to fully and promptly pay him and other

physicians with similar Oxford contracts. On Oxford’s motion, the

court compelled arbitration. The parties agreed that the arbitrator

should decide whether their contract authorized class arbitration,

and he concluded that it did. Oxford filed a motion in federal court to

vacate the arbitrator’s decision, claiming that he had “exceeded [his]

powers” under §10(a)(4) of the Federal Arbitration Act (FAA), 9

U. S. C. §1 et. seq. The District Court denied the motion, and the

Third Circuit affirmed.

After this Court decided Stolt-Nielsen S. A. v. AnimalFeeds Int’l

Corp., 559 U. S. 662—holding that an arbitrator may employ class

procedures only if the parties have authorized them—the arbitrator

reaffirmed his conclusion that the contract approves class arbitration.

Oxford renewed its motion to vacate that decision under §10(a)(4).

The District Court denied the motion, and the Third Circuit affirmed.

Held: The arbitrator’s decision survives the limited judicial review al-

lowed by §10(a)(4). Pp. 4−9.

(a) A party seeking relief under §10(a)(4) bears a heavy burden. “It

is not enough . . . to show that the [arbitrator] committed an error—

or even a serious error.” Stolt-Nielsen, 559 U. S., at 671. Because the

parties “bargained for the arbitrator’s construction of their agree-

ment,” 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.

2 OXFORD HEALTH PLANS LLC v. SUTTER

Syllabus

Thus, the sole question on judicial review is whether the arbitrator

interpreted the parties’ contract, not whether he construed it correct-

ly. Here, the arbitrator twice did what the parties asked: He consid-

ered their contract and decided whether it reflected an agreement to

permit class proceedings. That suffices to show that he did not ex-

ceed his powers under §10(a)(4). Pp. 4−6.

(b) Stolt-Neilsen does not support Oxford’s contrary view. There,

the parties stipulated that they had not reached an agreement on

class arbitration, so the arbitrators did not construe the contract, and

did not identify any agreement authorizing class proceedings. This

Court thus found not that they had misinterpreted the contract but

that they had abandoned their interpretive role. Here, in stark con-

trast, the arbitrator did construe the contract, and did find an

agreement to permit class arbitration. So to overturn his decision,

this Court would have to find that he misapprehended the parties’ in-

tent. But §10(a)(4) bars that course: It permits courts to vacate an

arbitral decision only when the arbitrator strayed from his delegated

task of interpreting a contract, not when he performed that task

poorly. Oxford’s remaining arguments go to the merits of the arbitra-

tor’s contract interpretation and are thus irrelevant under §10(a)(4).

Pp. 6−9.

675 F. 3d 215, affirmed.

KAGAN, J., delivered the opinion for a unanimous Court. ALITO, J.,

filed a concurring opinion, in which THOMAS, J., joined.

Cite as: 569 U. S. ____ (2013) 1

Opinion of the Court

NOTICE: This opinion is subject to formal revision before publication in the

preliminary print of the United States Reports. Readers are requested to

notify the Reporter of Decisions, Supreme Court of the United States, Wash-

ington, D. C. 20543, of any typographical or other formal errors, in order

that corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES

_________________

No. 12–135

_________________

OXFORD HEALTH PLANS LLC, PETITIONER v.

JOHN IVAN SUTTER

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE THIRD CIRCUIT

[June 10, 2013]

JUSTICE KAGAN delivered the opinion of the Court.

Class arbitration is a matter of consent: An arbitrator

may employ class procedures only if the parties have au-

thorized them. See Stolt-Nielsen S. A. v. AnimalFeeds

Int’l Corp., 559 U. S. 662, 684 (2010). In this case, an

arbitrator found that the parties’ contract provided for

class arbitration. The question presented is whether in

doing so he “exceeded [his] powers” under §10(a)(4) of the

Federal Arbitration Act (FAA or Act), 9 U. S. C. §1 et seq.

We conclude that the arbitrator’s decision survives the

limited judicial review §10(a)(4) allows.

I

Respondent John Sutter, a pediatrician, entered into a

contract with petitioner Oxford Health Plans, a health in-

surance company. Sutter agreed to provide medical care

to members of Oxford’s network, and Oxford agreed to pay

for those services at prescribed rates. Several years later,

Sutter filed suit against Oxford in New Jersey Superior

Court on behalf of himself and a proposed class of other

New Jersey physicians under contract with Oxford. The

complaint alleged that Oxford had failed to make full and

2 OXFORD HEALTH PLANS LLC v. SUTTER

Opinion of the Court

prompt payment to the doctors, in violation of their agree-

ments and various state laws.

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 same universal class of disputes” that it

barred the parties from bringing “as civil actions” in court:

The “intent of the clause” was “to vest in the arbitration

process everything that is prohibited from the court pro-

cess.” Id., at 31. And a class action, the arbitrator contin-

ued, “is plainly one of the possible forms of civil action that

could be brought in a court” absent the agreement. Ibid.

Accordingly, he concluded that “on its face, the arbitration

clause . . . expresses the parties’ intent that class arbitra-

tion can be maintained.” Id., at 32.

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 NJ, Oct. 31, 2005), aff ’d, 227 Fed. Appx. 135

(2007).

Cite as: 569 U. S. ____ (2013) 3

Opinion of the Court

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. 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.

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 mean-

ing 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 unambiguously evinced an intention

to allow class arbitration.” Id., at 70. The arbitrator con-

cluded by reconfirming his reasons for so construing the

clause.

Oxford then returned to federal court, renewing its

effort to vacate the arbitrator’s decision under §10(a)(4).

Once again, the District Court denied the motion, and the

Third Circuit affirmed. The Court of Appeals first under-

scored the limited scope of judicial review that §10(a)(4)

allows: So long as an arbitrator “makes a good faith at-

tempt” to interpret a contract, “even serious errors of law

or fact will not subject his award to vacatur.” 675 F. 3d

215, 220 (2012). Oxford could not prevail under that

standard, the court held, because the arbitrator had “en-

deavored to give effect to the parties’ intent” and “articu-

4 OXFORD HEALTH PLANS LLC v. SUTTER

Opinion of the Court

late[d] a contractual basis for his decision.” Id., at

223–224. Oxford’s objections to the ruling were “simply

dressed-up arguments that the arbitrator interpreted its

agreement erroneously.” Id., at 224.

We granted certiorari, 568 U. S. ___ (2012), to address

a circuit split on whether §10(a)(4) allows a court to vacate

an arbitral award in similar circumstances.1 Holding that

it does not, we affirm the Court of Appeals.

II

Under the FAA, courts may vacate an arbitrator’s deci-

sion “only in very unusual circumstances.” First Options

of Chicago, Inc. v. Kaplan, 514 U. S. 938, 942 (1995).

That limited judicial review, we have explained, “main-

tain[s] arbitration’s essential virtue of resolving disputes

straightaway.” Hall Street Associates, L. L. C. v. Mattel,

Inc., 552 U. S. 576, 588 (2008). If parties could take

“full-bore legal and evidentiary appeals,” arbitration would

become “merely a prelude to a more cumbersome and time-

consuming judicial review process.” Ibid.

Here, Oxford invokes §10(a)(4) of the Act, which author-

izes a federal court to set aside an arbitral award “where

the arbitrator[] exceeded [his] powers.” A party seeking

relief under that provision bears a heavy burden. “It is

not enough . . . to show that the [arbitrator] committed an

error—or even a serious error.” Stolt-Nielsen, 559 U. S.,

at 671. Because the parties “bargained for the arbitra-

tor’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. East-

ern Associated Coal Corp. v. Mine Workers, 531 U. S. 57,

62 (2000) (quoting Steelworkers v. Enterprise Wheel & Car

——————

1 Compare675 F. 3d 215 (CA3 2012) (case below) (vacatur not proper),

and Jock v. Sterling Jewelers Inc., 646 F. 3d 113 (CA2 2011) (same),

with Reed v. Florida Metropolitan Univ., Inc., 681 F. 3d 630 (CA5 2012)

(vacatur proper).

Cite as: 569 U. S. ____ (2013) 5

Opinion of the Court

Corp., 363 U. S. 593, 599 (1960); Paperworkers v. Misco,

Inc., 484 U. S. 29, 38 (1987); internal quotation marks

omitted). 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 con-

tract”—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 arbitra-

tor (even arguably) interpreted the parties’ contract, not

whether he got its meaning right or wrong.2

And we have already all but answered that question just

by summarizing the arbitrator’s decisions, see supra, at 2–

3; they are, through and through, interpretations of the

parties’ agreement. The arbitrator’s first ruling recited

the “question of construction” the parties had submitted

to him: “whether [their] Agreement allows for class action

arbitration.” App. 29–30. To resolve that matter, the

arbitrator focused on the arbitration clause’s text, analyz-

——————

2 We would face a different issue if Oxford had argued below that the

availability of class arbitration is a so-called “question of arbitrability.”

Those questions—which “include certain gateway matters, such as

whether parties have a valid arbitration agreement at all or whether

a concededly binding arbitration clause applies to a certain type of

controversy”—are presumptively for courts to decide. Green Tree

Financial Corp. v. Bazzle, 539 U. S. 444, 452 (2003) (plurality opinion).

A court may therefore review an arbitrator’s determination of such a

matter de novo absent “clear[] and unmistakabl[e]” evidence that the

parties wanted an arbitrator to resolve the dispute. AT&T Technolo-

gies, Inc. v. Communications Workers, 475 U. S. 643, 649 (1986). Stolt-

Nielsen made clear that this Court has not yet decided whether the

availability of class arbitration is a question of arbitrability. See 559

U. S., at 680. But this case gives us no opportunity to do so because

Oxford agreed that the arbitrator should determine whether its con-

tract with Sutter authorized class procedures. See Brief for Petitioner

38, n. 9 (conceding this point). Indeed, Oxford submitted that issue to

the arbitrator not once, but twice—and the second time after Stolt-

Nielsen flagged that it might be a question of arbitrability.

6 OXFORD HEALTH PLANS LLC v. SUTTER

Opinion of the Court

ing (whether correctly or not makes no difference) the

scope of both what it barred from court and what it sent

to arbitration. The arbitrator concluded, based on that

textual exegesis, that the clause “on its face . . . expresses

the parties’ intent that class action arbitration can be

maintained.” Id., at 32. When Oxford requested reconsid-

eration in light of Stolt-Nielsen, the arbitrator explained

that his prior decision was “concerned solely with the par-

ties’ intent as evidenced by the words of the arbitration

clause itself.” App. 69. He then ran through his textual

analysis again, and reiterated his conclusion: “[T]he text of

the clause itself authorizes” class arbitration. Id., at 73.

Twice, then, the arbitrator did what the parties had asked:

He considered their contract and decided whether it re-

flected an agreement to permit class proceedings. That

suffices to show that the arbitrator did not “exceed[ ] [his]

powers.” §10(a)(4).

Oxford’s contrary view relies principally on Stolt-

Nielsen. As noted earlier, we found there that an arbitra-

tion panel exceeded its powers under §10(a)(4) when it

ordered a party to submit to class arbitration. See supra,

at 3. Oxford takes that decision to mean that “even the

‘high hurdle’ of Section 10(a)(4) review is overcome when

an arbitrator imposes class arbitration without a sufficient

contractual basis.” Reply Brief 5 (quoting Stolt-Nielsen,

559 U. S., at 671). Under Stolt-Nielson, Oxford asserts, a

court may thus vacate “as ultra vires” an arbitral decision

like this one for misconstruing a contract to approve class

proceedings. Reply Brief 7.

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. In that circumstance, we

Cite as: 569 U. S. ____ (2013) 7

Opinion of the Court

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; see id., at 676 (“Th[e]

stipulation left no room for an inquiry regarding the par-

ties’ intent”). Nor, we continued, did the panel attempt to

ascertain whether federal or state law established a “de-

fault rule” to take effect absent an agreement. Id., at 673.

Instead, “the panel simply imposed its own conception of

sound policy” when it ordered class proceedings. Id., at

675. But “the task of an arbitrator,” we stated, “is to

interpret and enforce a contract, not to make public policy.”

Id., at 672. In “impos[ing] its own policy choice,” the

panel “thus exceeded its powers.” Id., at 677.

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 proceed-

ings. 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 par-

ties’ intent. But §10(a)(4) bars that course: It permits

courts to vacate an arbitral decision only when the arbi-

trator strayed from his delegated task of interpreting a

contract, not when he performed that task poorly. Stolt-

Nielsen and this case thus fall on opposite sides of the line

that §10(a)(4) draws to delimit judicial review of arbitral

decisions.

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,

8 OXFORD HEALTH PLANS LLC v. SUTTER

Opinion of the Court

and all such disputes shall be submitted to final and bind-

ing 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 2. 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 arbi-

tration 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 constru-

ing” 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 (internal quotation marks omitted).

The potential for those mistakes is the price of agreeing

to arbitration. As we have held before, we hold again: “It

is the arbitrator’s construction [of the contract] which was

bargained for; and so far as the arbitrator’s decision con-

cerns construction of the contract, the courts have no

business overruling him because their interpretation of

the contract is different from his.” Enterprise Wheel, 363

U. S. at 599. The arbitrator’s construction holds, however

good, bad, or ugly.

In sum, Oxford chose arbitration, and it must now live

with that choice. Oxford agreed with Sutter that an arbi-

trator should determine what their contract meant, in-

cluding whether its terms approved class arbitration. The

Cite as: 569 U. S. ____ (2013) 9

Opinion of the Court

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.

Cite as: 569 U. S. ____ (2013) 1

ALITO, J., concurring

SUPREME COURT OF THE UNITED STATES

_________________

No. 12–135

_________________

OXFORD HEALTH PLANS LLC, PETITIONER v.

JOHN IVAN SUTTER

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE THIRD CIRCUIT

[June 10, 2013]

JUSTICE ALITO, with whom JUSTICE THOMAS joins,

concurring.

As the Court explains, “[c]lass arbitration is a matter of

consent,” ante, at 1, and petitioner consented to the arbi-

trator’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 8 (quoting Eastern Associated

Coal Corp. v. Mine Workers, 531 U. S. 57, 62 (2000)).

Today’s result follows directly from petitioner’s concession

and the narrow judicial review that federal law allows in

arbitration cases. See 9 U. S. C. §10(a).

But unlike petitioner, absent members of the plaintiff

class never conceded that the contract authorizes the ar-

bitrator to decide whether to conduct class arbitration.

It doesn’t. If we were reviewing the arbitrator’s interpre-

tation 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 (2010).

With no reason to think that the absent class members

2 OXFORD HEALTH PLANS LLC v. SUTTER

ALITO, J., concurring

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 Trus-

tees of Leland Stanford Junior Univ., 489 U. S. 468, 479

(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 arbi-

tration clauses materially identical to those signed by the

plaintiff who brought this suit. But an arbitrator’s erro-

neous interpretation of contracts that do not authorize

class arbitration cannot bind someone who has not author-

ized the arbitrator to make that determination. As the

Court explains, “[a]n arbitrator may employ class proce-

dures only if the parties have authorized them.” Ante,

at 1.

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 (1995), and an offeree’s silence

does not normally modify the terms of a contract, 1 Re-

statement (Second) of Contracts §69(1) (1979). Accord-

ingly, at least where absent class members have not been

required to opt in, it is difficult to see how an arbitrator’s

decision to conduct class proceedings could bind absent

class members who have not authorized the arbitrator to

decide on a classwide basis which arbitration procedures

are to be used.

Class arbitrations that are vulnerable to collateral at-

tack 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 (1974). In the absence of concessions like Oxford’s,

this possibility should give courts pause before concluding

Cite as: 569 U. S. ____ (2013) 3

ALITO, J., concurring

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.