Issue: Whether an arbitrator acts within his powers under the Federal Arbitration Act (as the Second and Third Circuits have held) or exceeds those powers (as the Fifth Circuit has held) by determining that parties affirmatively “agreed to authorize class arbitration,” Stolt-Nielsen S.A. v. Animalfeeds Int’l Corp., based solely on their use of broad contractual language precluding litigation and requiring arbitration of any dispute arising under their contract.

Cornell Summary: Over a decade ago, Petitioner Oxford Health Plans, LLC (Oxford) agreed to pay Respondent Dr. Ivan Sutter for providing medical services to members of Oxford’s managed care network. Their contract contains a broad arbitration clause which prohibits litigation of their disputes in court and instead requires that they arbitrate their disputes. In 2002, Sutter complained that Oxford failed to pay him and other primary health care providers for medical services. After an arbitrator decided that their contract clause allowed “class arbitration,” or the consideration of an arbitration claim on behalf of a group of similar claims, Oxford went to federal court to vacate the arbitration award, arguing that the arbitrator exceeded his power to arbitrate. Both the District Court and the United States Court of Appeals for the Third Circuit denied Oxford’s motion to vacate and instead upheld the arbitrator’s decision to hear Sutter’s claim in class arbitration. Oxford argues that the arbitrator’s decision for class arbitration must be vacated because Oxford and Sutter never agreed to class arbitration in their contract exchanging medical services for compensation. In contrast, Sutter argues that the Court should uphold the award because the arbitrator acted within his powers and based his decision on the terms of the agreement between the parties. Oxford warns that a holding for Sutter would discourage parties from agreeing to arbitration to avoid the risk of being saddled with the costs of class arbitration. In contrast, Sutter argues that a holding for Oxford would encourage parties to challenge arbitration decisions in court, undermining the purpose of arbitration to avoid the costs of litigation, and effectively prevent individuals from pursuing their small claims by robbing them of the opportunity to present their claims as a group rather than individually.

Read original article


Tags: Ivan Sutter, LLC, Oxford, Oxford Health Plans LLC, Petitioner Oxford Health Plans