John Sutter v. Oxford Health Plans , 675 F.3d 215 ( 2012 )

PRECEDENTIAL
IN THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 11-1773
_____________
JOHN IVAN SUTTER, M.D.
v.
OXFORD HEALTH PLANS LLC,
Appellant
_____________
On Appeal from the District Court
for the District of New Jersey
(No. 05-cv-2198)
District Judge: Honorable Garrett E. Brown
_____________
Argued November 17, 2011
Before: FUENTES, CHAGARES, Circuit Judges, and
POGUE, Judge*
*
Hon. Donald C. Pogue, Chief Judge, United States Court of
International Trade, sitting by designation.
(Opinion Filed: April 3, 2012)
Marc De Leeuw, Esq.
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
P. Christine Deruelle, Esq. [ARGUED]
Edward Soto, Esq.
Weil, Gotshal & Manges
1395 Brickell Avenue
Suite 1200
Miami, FL 33131
Adam N. Saravay, Esq.
McCarter & English
100 Mulberry Street
Four Gateway Center, 14th Floor
Newark, NJ 07102
Counsel for Appellants
Eric D. Katz, Esq. [ARGUED]
Mazie, Slater, Katz & Freeman
103 Eisenhower Parkway
Roseland, NJ 07068
Counsel for Appellee
2
OPINION OF THE COURT
FUENTES, Circuit Judge:
Oxford Health Plans, LLC, and Dr. Ivan Sutter are
parties to a Primary Care Physician Agreement, drafted by
Oxford, which contains a broad arbitration clause. Neither
the arbitration clause nor any other provision of the
agreement makes express reference to class arbitration.
Nevertheless, when a dispute arose regarding Oxford‟s
alleged failure to make prompt and accurate reimbursement
payments to participating physicians, an arbitrator construed
the broad text of the clause to authorize class arbitration.
Oxford contends that the Supreme Court‟s decision in Stolt-
Nielsen S.A. v. AnimalFeeds International Corp., 130 S. Ct.
1758 (2010), requires vacatur of the award authorizing class
arbitration. We disagree, and we will affirm the Order of the
District Court denying Oxford‟s motion to vacate the award.
I
By their 1998 Primary Care Physician Agreement (the
“Agreement”), the parties agreed that Sutter would provide
primary care health services to members of Oxford‟s
managed care network in exchange for compensation at
predetermined reimbursement rates. They also agreed to
arbitrate their disputes under the Agreement by a clause that
states:
No civil action concerning any dispute arising
under this Agreement shall be instituted before
3
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. 55).
A dispute arose in April 2002, when Sutter accused
Oxford of engaging in a practice of improperly denying,
underpaying, and delaying reimbursement of physicians‟
claims for the provision of medical services. Sutter filed a
complaint on behalf of himself and a class of health care
providers against Oxford and other health insurers in New
Jersey Superior Court, alleging breach of contract and other
violations of New Jersey law. Oxford moved to compel
arbitration of Sutter‟s claims against it under the Agreement.
Sutter opposed the motion, arguing that referral of the class
claims to individual arbitration would violate New Jersey
public policy. He urged the Superior Court either to refuse to
enforce the clause or to certify the class before sending the
claims to arbitration. In October 2002, the Superior Court
granted Oxford‟s motion to compel arbitration and ordered
that all procedural issues, including those of class
certification, be resolved by the arbitrator.
The parties commenced arbitration before William
L.D. Barrett and submitted to him the question of whether the
arbitration clause in their Agreement allows for class
arbitration. By memorandum and order dated September 23,
2003, he determined that it does. Framing the question as one
of contract construction, the arbitrator turned first to the text
of the arbitration clause. He described the clause as “much
4
broader even than the usual broad arbitration clause;” it was
“unique in [his] experience and seem[ed] to be drafted to be
as broad as can be.” (App. 47). The arbitrator thus
determined that the clause‟s first phrase, “No civil action
concerning any dispute arising under this Agreement shall be
instituted before any court,” embraces all conceivable court
actions, including class actions. Because the clause‟s second
phrase sends “all such disputes” to arbitration, he reasoned
that class disputes must also be arbitrated. Thus, the
arbitrator concluded that the clause expressed the parties‟
intent to authorize class arbitration “on its face.” (App. 48).
He observed that an express carve-out for class arbitration
would be required to negate this reading of the clause. He
mused, however, that it would be bizarre for the parties to
have intended to make class action impossible in any forum.
Since he found the clause unambiguous, the arbitrator did not
reach Sutter‟s argument that any ambiguity in the clause
should be construed against its drafter, Oxford. The arbitrator
subsequently incorporated this clause construction into his
Partial Final Class Determination Award, dated March 24,
2005.
In April 2005, Oxford filed a motion to vacate the
award in the District Court, arguing that the arbitrator had
exceeded his powers and manifestly disregarded the law by
ordering class arbitration. The District Court denied Oxford‟s
motion in October 2005, and a panel of this Court affirmed in
February 2007. Sutter v. Oxford Health Plans, LLC, No. 05-
CV-2198, 2005 U.S. Dist. LEXIS 25792 (D.N.J. Oct. 31,
2005), aff’d 227 F. App‟x 135 (3d Cir. 2007). The arbitration
thereafter proceeded on a classwide basis.
5
This action represents Oxford‟s second foray into
federal court to vacate the award authorizing class arbitration
as in excess of the arbitrator‟s powers. Since Oxford‟s first
unsuccessful attempt at vacatur, the Supreme Court decided
Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 130
S. Ct. 1758 (2010), in which it held that an arbitral panel had
exceeded its authority by allowing class arbitration when the
parties had reached no agreement on the issue. See id. at
1775. Oxford contends that Stolt-Nielsen controls this case
and compels the conclusion that the arbitrator‟s construction
of the clause was in excess of his powers. Oxford first moved
the arbitrator for reconsideration of his clause construction
award, but the arbitrator distinguished Stolt-Nielsen and
reaffirmed his construction of the parties‟ clause. Oxford
then moved the District Court to vacate the arbitrator‟s most
recent award or, in the alternative, to reconsider its own 2005
decision denying vacatur. The District Court denied Oxford‟s
motion and granted Sutter‟s cross-motion to confirm the
award. Sutter v. Oxford Health Plans, LLC, Nos. 05-CV-
2198, 10-CV-4903, 2011 U.S. Dist. LEXIS 17123 (D.N.J.
Feb. 22, 2011). Oxford appeals.
II
The District Court exercised diversity jurisdiction over
this matter pursuant to 28 U.S.C. § 1332. We have
jurisdiction over Oxford‟s appeal under the Federal
Arbitration Act, 9 U.S.C. § 16(a)(1)(D) (“An appeal may be
taken from . . . an order . . . confirming or denying
confirmation of an award or partial award.”).1
1
Anomalously, the Federal Arbitration Act creates a body of
federal substantive law without creating any independent
6
On appeal from a district court‟s ruling on a motion to
confirm or vacate an arbitration award, we review its legal
conclusions de novo and its factual findings for clear error.
First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 947-
48 (1995), aff’g 19 F.3d 1503, 1509 (3d Cir. 1994); China
Minmetals Materials Imp. & Exp. Co. v. Chi Mei Corp., 334
F.3d 274, 278-79 (3d Cir. 2003).
A more deferential standard of review applies to the
arbitration award itself. We do not entertain claims that an
arbitrator has made factual or legal errors. Rather, mindful of
the strong federal policy in favor of commercial arbitration,
we begin with the presumption that the award is enforceable.
See Moses H. Cone Memorial Hosp. v. Mercury Const. Corp.,
460 U.S. 1, 24-25 (1983). An award may be vacated only
upon one of the four narrow grounds enumerated in the
Federal Arbitration Act:
(1) where the award was procured by
corruption, fraud, or undue means;
(2) where there was evident partiality or
corruption in the arbitrators, or either of them;
federal-question jurisdiction. Moses H. Cone Memorial
Hosp. v. Mercury Const. Corp., 460 U.S. 1, 25 n.32 (1983).
It does, however, confer appellate jurisdiction, including over
interlocutory judicial orders. See 9 U.S.C. § 16(a). In a court
of competent jurisdiction, assuming ripeness, interlocutory
arbitral awards on the availability of class arbitration are
reviewable under the Act. See Stolt-Nielsen, 130 S. Ct. at1766-67 & n.2.
7
(3) where the arbitrators were guilty of
misconduct in refusing to postpone the hearing,
upon sufficient cause shown, or in refusing to
hear evidence pertinent and material to the
controversy; or of any other misbehavior by
which the rights of any party have been
prejudiced; or
(4) where the arbitrators exceeded their powers,
or so imperfectly executed them that a mutual,
final, and definite award upon the subject matter
submitted was not made.
9 U.S.C. § 10(a). These grounds are exclusive and may not
be supplemented by contract. Hall St. Assocs., L.L.C. v.
Mattel, Inc., 552 U.S. 576, 584 (2008), overruling Roadway
Package Sys., Inc. v. Kayser, 257 F.3d 287, 288 (3d Cir.
2001). In sum, when parties agree to resolve their disputes
before an arbitrator without involving the courts, the courts
will enforce the bargains implicit in such agreements by
enforcing arbitration awards absent a reason to doubt the
authority or integrity of the arbitral forum. See id. at 586
(characterizing the exclusive statutory bases for vacatur as
“egregious departures from the parties‟ agreed-upon
arbitration”).
The basis for vacatur asserted in this case, § 10(a)(4)
of the Federal Arbitration Act, permits district courts to
vacate awards when arbitrators exceed their powers.
“Arbitration under the Act is a matter of consent, not
coercion, and parties are generally free to structure their
arbitration agreements as they see fit.” Volt Info. Scis., Inc. v.
8
Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S.
468, 479 (1989). By contractually restricting the issues they
will arbitrate, the individuals with whom they will arbitrate,
and the arbitration procedures that will govern, parties to an
arbitration agreement may place limits upon the arbitrator‟s
powers that are enforceable by the courts. See Puleo v. Chase
Bank USA, N.A., 605 F.3d 172, 181 (3d Cir. 2010) (en banc).
An arbitrator oversteps these limits, and subjects his award to
judicial vacatur under § 10(a)(4), when he decides an issue
not submitted to him, grants relief in a form that cannot be
rationally derived from the parties‟ agreement and
submissions, or issues an award that is so completely
irrational that it lacks support altogether. Ario v.
Underwriting Members of Syndicate 53 at Lloyds for the 1998
Year of Account, 618 F.3d 277, 295-96 (3d Cir. 2010) (citing
Mut. Fire, Marine & Inland Ins. Co. v. Norad Reins. Co., 868
F.2d 52, 56 (3d Cir. 1989)). In other words, the task of an
arbitrator is to interpret and enforce a contract. When he
makes a good faith attempt to do so, even serious errors of
law or fact will not subject his award to vacatur. See
Brentwood Med. Assocs. v. United Mine Workers of Am., 396
F.3d 237, 243 (3d Cir. 2005) (upholding an arbitration award
despite the arbitrator‟s inexplicable reliance on language not
found in the relevant agreement). But when the arbitrator
“strays from interpretation and application of the agreement
and effectively „dispenses his own brand of industrial
justice,‟” he exceeds his powers and his award will be
unenforceable. Stolt-Nielsen, 130 S. Ct. at 1767 (quoting
Major League Baseball Players Ass’n. v. Garvey, 532 U.S.
504, 509 (2001) (per curiam) (quoting Steelworkers v.
Enterprise Wheel & Car Corp., 363 U.S. 593, 597 (1960))).2
2
Like the Supreme Court, this Court will refer to the federal
9
An arbitrator may exceed his powers by ordering class
arbitration without authorization. In Stolt-Nielsen, the
Supreme Court held that arbitrators may not infer parties‟
consent to class arbitration procedures solely from the fact of
their agreement to arbitrate. 130 S. Ct. at 1775. Therefore,
an arbitrator lacks the power to order class arbitration unless
there is a contractual basis for concluding that the parties
agreed to that procedure. Id.III
Stolt-Nielsen arose out of a Department of Justice
investigation which revealed that Stolt-Nielsen and other
shipping companies were engaged in an illegal price fixing
conspiracy. Id. at 1765. AnimalFeeds and other customers of
the shipping companies brought class action antitrust
lawsuits, which were consolidated by the Judicial Panel on
Multidistrict Litigation. Id. AnimalFeeds‟ suit was
subsequently referred to arbitration on the basis of an
arbitration clause in the “Vegoilvoy” charter party, a standard
common law developed under Textile Workers Union of Am.
v. Lincoln Mills of Ala., 353 U.S. 448, 456-57 (1957), for
judicial review of labor arbitration awards under the Labor
Management Relations Act, 29 U.S.C. § 185, to elaborate the
meaning of the Federal Arbitration Act‟s statutory grounds
for vacatur. See Swift Indus., Inc. v. Botany Indus., Inc., 466
F.2d 1125, 1130 & n.11 (3d Cir. 1972); cf. Hall St., 552 U.S.
at 585 (suggesting without deciding that the judicially created
manifest disregard of law ground for vacatur may be properly
considered only as a judicial gloss on the statutory grounds);
Stolt-Nielsen, 130 S. Ct. at 1768 n.3 (same).
10
form shipping contract that AnimalFeeds had selected. Id. at
1764-65. When AnimalFeeds then sought to proceed in
arbitration on a classwide basis, the parties agreed to submit
the issue of class arbitration to a panel of three arbitrators. Id.
at 1765. After hearing argument and testimony, the
arbitrators concluded that class arbitration was permitted. Id.
at 1766.
Before the arbitrators, the parties stipulated that the
arbitration clause in the Vegoilvoy charter party was “silent”
with respect to class arbitration, in the sense that they had not
reached any agreement on that issue. Id. at 1766. “Counsel
for AnimalFeeds explained to the arbitration panel that the
term „silent‟ did not simply mean that the clause made no
express reference to class arbitration. Rather, he said, „all
parties agree that when a contract is silent on an issue there‟s
been no agreement that has been reached on that issue.‟” Id.Thus, the arbitration clause was silent but “not ambiguous so
as to call for parol evidence” because “the parties were in
complete agreement regarding their intent.” Id. at 1770(internal quotation marks omitted). The arbitrators were
bound to conclude that the parties intended neither to
authorize nor to preclude class arbitration. See id.The parties‟ stipulation left the arbitrators unable to
apply traditional principles of contract interpretation. It
obviously “left no room for an inquiry regarding the parties‟
intent, and any inquiry into that settled question would have
been outside the panel‟s assigned task.” Id. Nor could the
panel construe the text of the arbitration clause because, in
light of the parties‟ stipulation, “the particular wording of the
charter party was quite beside the point.” Id.11
“Because the parties agreed their agreement was
„silent‟ in the sense that they had not reached any agreement
on the issue of class arbitration, the arbitrators‟ proper task
was to identify the rule of law that governs in that situation.”
Id. at 1768 (identifying the Federal Arbitration Act, federal
maritime law, and New York law as possible sources of a
governing rule). Instead, the panel based its decision that
class arbitration was permitted on the parties‟ failure to
contractually preclude the procedure and on other arbitral
decisions construing other clauses to allow class arbitration.
Id. In so doing, the Supreme Court held, the arbitrators
impermissibly assumed the power of a common law court to
fashion a rule of decision. Id. at 1769. By doing so, rather
than interpreting the contract under the governing law, the
arbitrators exceeded their powers within the meaning of
§ 10(a)(4) of the Federal Arbitration Act. Id. at 1770.
The Supreme Court held 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.” Id. at 1775 (emphasis in original). The
Court therefore faulted the arbitrators for imposing class
arbitration in the absence of any agreement on the issue and
on the basis that the parties had not intended to preclude class
arbitration. Id. Although parties may implicitly authorize
arbitrators to adopt necessary procedures, the Court held that
“[a]n implicit agreement to authorize class-action
arbitration . . . is not a term that the arbitrator may infer solely
from the fact of the parties‟ agreement to arbitrate.” Id.
“[T]he differences between bilateral and class-action
arbitration are too great for arbitrators to presume . . . that the
parties‟ mere silence on the issue of class-action arbitration
constitutes consent to resolve their disputes in class
12
proceedings.” Id. at 1776; see also AT&T Mobility LLC v.
Concepcion, 131 S. Ct. 1740, 1752 (2011) (further
articulating the “fundamental” differences between bilateral
arbitration and class arbitration).3
Stolt-Nielsen did not establish a bright line rule that
class arbitration is allowed only under an arbitration
agreement that incants “class arbitration” or otherwise
expressly provides for aggregate procedures. Stolt-Nielsen,
130 S. Ct. at 1776 n.10; Jock v . Sterling Jewelers Inc., 646
F.3d 113, 124 (2d Cir. 2011) (holding that an arbitrator did
not exceed her powers by ruling that class arbitration was
allowed under an agreement lacking an express class
provision). The Court underscored this point, writing, “We
have no occasion to decide what contractual basis may
3
In AT&T Mobility LLC v. Concepcion, the Supreme Court
held that the Federal Arbitration Act preempts a California
common law rule invalidating class waivers in arbitration
clauses as unconscionable. See 131 S. Ct. 1740, 1753 (2011).
The Court found its decision in Stolt-Nielsen to be
“instructive.” Id. at 1750. Because class arbitration
necessarily sacrifices the informality, speed, and cost savings
of arbitration and increases the stakes without increasing the
level of judicial scrutiny available under the Federal
Arbitration Act, the Court found “it hard to believe that
defendants would bet the company with no effective means of
review, and even harder to believe that Congress would have
intended to allow state courts to force such a decision.” Id. at
1752. Recognizing that parties could agree to class
arbitration if they so chose, the Court held that this procedure
may not be required by state law. Id. at 1752-53.
13
support a finding that the parties agreed to authorize class-
action arbitration. Here, as noted, the parties stipulated that
there was „no agreement‟ on the issue of class-action
arbitration.” 130 S. Ct. at 1776 n.10; see also id. at 1783(Ginsburg, J., dissenting) (“[T]he Court does not insist on
express consent to class arbitration.”).
Instead, Stolt-Nielsen established a default rule under
the Federal Arbitration Act: “[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.” Id. at 1775 (emphasis in original). Absent a contractual
basis for finding that the parties agreed to class arbitration, an
arbitration award ordering that procedure exceeds the
arbitrator‟s powers and will be subject to vacatur under
§ 10(a)(4).4
IV
Oxford argues that the clause construction award at
issue in this case should be vacated because the arbitrator
4
Thus, the District Court misstated the law when it wrote that
the arbitrator must decide whether the arbitration clause
“forbids” class arbitration. See Sutter v. Oxford Health Plans,
LLC, 2011 U.S Dist. LEXIS 17123, at *12 (quoting Vilches v.
The Travelers Cos., 413 F. App‟x 487, 492 (3d Cir. 2011)). It
is evident from the District Court‟s discussion, however, that
it properly understood that Stolt-Nielsen allows class
arbitration only where the parties intend to authorize it, as the
arbitrator found they did in this case. In any event, upon de
novo review under the appropriate standard, we conclude that
the arbitration award stands.
14
exceeded his powers under Stolt-Nielsen. According to
Oxford, “the arbitrator found that the arbitration clause
between Sutter and Oxford is silent on the issue of class
arbitration, but he went on to conclude that the clause permits
class arbitration in light of its breadth and the absence of a
class arbitration exclusion.” (Appellant‟s Br. at 14). Oxford
charges that the arbitrator imposed his own default rule, in
derogation of Stolt-Nielsen and New Jersey law, based on his
own conceptions of public policy.
As an initial matter, we reject Oxford‟s attempt to cast
this case in the mold of Stolt-Nielsen. The arbitration clause
in its Agreement does not refer to class arbitration. Yet it is
not “silent” in the way that the Vegoilvoy charter party was
“silent” in Stolt-Nielsen, and Oxford equivocates when it
suggests otherwise.5 No stipulation between Oxford and
5
Oxford seems to suggest that an arbitration provision is
“silent” whenever the words “class arbitration” are not
written into the text of the arbitration clause. This rule finds
no support in Stolt-Nielsen. It would effectively impose on
all contracting parties an obligation to use the words “class
arbitration” to signal their intention to authorize class
arbitration. But Stolt-Nielsen did not purport to restrict the
freedom of contracting parties in this way. Rather, it
repeatedly emphasized that the fundamental duty of the
arbitrator and the courts to effectuate parties‟ intentions.
Stolt-Nielsen, 130 S. Ct. at 1773-74. Oxford‟s approach
would cabin the freedom of contracting parties, safeguarded
by the Federal Arbitration Act, to structure their arbitration
provisions as they see fit. See id. at 1774 (“Underscoring the
consensual nature of private dispute resolution, we have held
that parties are generally free to structure their arbitration
15
Sutter is conclusive of the parties‟ intent and, indeed, the
parties dispute whether or not they intended to authorize class
arbitration. Therefore, the arbitrator in this case was not
constrained to conclude that the parties did not intend to
authorize class arbitration or, on the other hand, to identify a
contrary default rule of New Jersey law. Cf. Stolt-Nielsen,
130 S. Ct. at 1769-70. His decision to order class arbitration
is within his authority so long as it stands on a contractual
basis. See id. at 1775.
As Oxford concedes, the arbitrator did articulate a
contractual basis for his decision to order class arbitration.
Appropriately, the arbitrator made first resort to the text of the
arbitration clause:
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. 55). He reasoned that the clause‟s first phrase, “No
civil action concerning any dispute arising under this
Agreement shall be instituted before any court,” is broad
enough to include class actions. Thus, its second phrase, “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,” sends
agreements as they see fit.”) (internal quotation marks and
citation omitted).
16
all conceivable civil actions—including class actions—to
arbitration. In other words, the phrase “no civil action . . .
shall be instituted in any court” meant that a class action may
not be instituted in a court of law. “All such disputes” must
go to arbitration.
Oxford attacks the contractual basis for the arbitrator‟s
decision by asserting that the arbitrator‟s purported
examination of the parties‟ intent was pretext for the
imposition of his policy preferences. See Stolt-Nielsen, 130
S. Ct. at 1769-70 (concluding that the arbitral panel had
impermissibly imposed its preferred policy notwithstanding
its references to the parties‟ intent, where the parties
stipulated that they had formed no intent). According to
Oxford, if the arbitrator were actually desirous of determining
the parties‟ intent, he would have sought it not in the text of
their agreement to arbitrate but instead in their briefing before
the New Jersey Superior Court. In that forum, Sutter opposed
enforcement of the arbitration agreement on the ground that it
would send the dispute to individual arbitration, which, he
argued, would be contrary to New Jersey public policy.
Oxford argues that Sutter‟s submissions to the Superior
Court, together with Oxford‟s own representations that its
Agreement did not contemplate arbitration on a classwide
basis, were tantamount to a stipulation that the parties did not
intend to authorize class arbitration. Cf. id. at 1766.
Oxford‟s argument lacks force because Sutter‟s
litigation position in the Superior Court is not conclusive, or
even particularly probative, of the meaning of a clause drafted
solely by Oxford. Cf. id. at 1775 (relying on the stipulation of
the sophisticated business entity that had selected the charter
party). We observe, further, that Sutter‟s litigation position
17
was not uniform: Sutter alternatively urged the Superior
Court to certify the class before sending the claims to
arbitration, and he argued before the arbitrator that the clause
could be construed to affirmatively authorize class arbitration.
Without a conclusive statement of the parties‟ intent or clear
evidence of arbitral overreaching, we must conclude that the
arbitrator performed his duty appropriately and endeavored to
give effect to the parties‟ intent. In this light, Oxford‟s
allegations of pretext are simply dressed-up arguments that
the arbitrator interpreted its agreement erroneously.
The remainder of Oxford‟s arguments are similarly
uncognizable claims of factual and legal error. In particular,
Oxford argues that the arbitrator improperly inferred the
parties‟ intent to authorize class arbitration from the breadth
of the parties‟ arbitration agreement and from its failure to
preclude class arbitration. In his clause construction award,
the arbitrator remarked that the parties‟ arbitration clause was
unique in its breadth. Construing the broad text and structure
of the clause, he concluded that the parties affirmatively
intended to authorize arbitration on a classwide basis. Then,
given his construction of the clause, the arbitrator noted that
an express exception for class arbitration would be required to
carve out and prohibit class arbitration. Oxford submits that
the arbitrator thereby relied on two grounds that Stolt-Nielsen
had expressly proscribed.
The arbitrator unquestionably relied on the breadth of
the arbitration agreement, but Stolt-Nielsen does not proscribe
such reliance. Rather, it acknowledges the relevance of an
arbitration agreement‟s breadth to the determination of
whether it authorizes class arbitration. In Stolt-Nielsen, the
Supreme Court concluded that the arbitration panel “imposed
18
its own conception of sound policy” in derogation of its duty
to interpret the arbitration agreement and apply the law. 130
S. Ct. at 1769. The Court acknowledged indications that were
arguably contrary to its conclusion: The panel had referred to
the parties‟ intent and had commented on the breadth of the
arbitration agreement. Id. at 1770. But the Court nonetheless
held that these references and comments could not overcome
the parties‟ stipulation that they had reached no agreement on
the issue of class arbitration. In light of the parties‟
stipulation, “the panel had no occasion to ascertain the
parties‟ intention” and “the particular wording of the charter
party was quite beside the point.” Id. (internal quotation
marks omitted). The lesson from this discussion is that
where, as here, the parties‟ intent with respect to class
arbitration is in question, the breadth of their arbitration
agreement is relevant to the resolution of that question.
Stolt-Nielsen does prohibit an arbitrator from inferring
parties‟ consent to class arbitration solely from their failure to
preclude that procedure, but the arbitrator did not draw the
proscribed inference in this case. Rather, the arbitrator
construed the text of the arbitration agreement to authorize
and require class arbitration. Then he observed that an
express carve-out for class arbitration would have made it
unavailable even under the clause‟s otherwise broad
language. As the arbitrator later articulated when he revisited
his construction of the clause in light of Stolt-Nielsen, the lack
of an express exclusion was merely corroborative of his
primary holding that the parties‟ clause authorized class
arbitration; it was not the basis of that holding. Thus, the
arbitrator did not impermissibly infer the parties‟ intent to
authorize class arbitration from their failure to preclude it.
19
We are satisfied that the arbitrator endeavored to
interpret the parties‟ agreement within the bounds of the law,
and we cannot say that his interpretation was totally
irrational. Nothing more is required under § 10(a)(4) of the
Federal Arbitration Act.
V
Because the arbitrator did not exceed his powers by
construing the parties‟ arbitration agreement to authorize
class arbitration, we will affirm the Order of the District
Court.
20