In a unanimous opinion authored by Justice Kagan, the Supreme Court concluded that an arbitrator did not “exceed [his] powers” under §10(a)(4) of the Federal Arbitration Act (“FAA”) when he found that the parties’ contract provided for class arbitration. The arbitrator interpreted an arbitration clause which provided for final and binding arbitration in lieu of civil action and determined that the clause authorized class arbitration. The party opposing class arbitration twice moved in federal court to vacate the arbitrator’s decision on the ground that he “exceed [his] powers” under § 10(a)(4) and was twice denied by the district court and the Third Circuit. The Supreme Court concluded that the limited judicial review of §10(a)(4) did not allow it to find that the arbitrator exceeded his powers because the only question for a judge under § 10(a)(4) “is whether the arbitrator (even arguably) interpreted the parties’ contract, not whether he got its meaning right or wrong.” Since the arbitrator “articulate[d] a contractual basis for his decision” he did not exceed his powers. Justice Kagan distinguished the Court’s holding in Stolt-Nielsen S.A. v. AnimalFeeds International Corp., in which the Court relied on § 10(a)(4) to vacate an arbitrator’s decision approving class proceedings. According to the Court, the distinction lies in the fact that in Stolt-Nielsen the parties stipulated that they had not reached an agreement regarding class arbitration and the arbitrator simply imposed his own views rather than interpret an agreement. Oxford Health Plans LLC v. Sutter, No. 12-135 (U.S. June 10, 2013).
This post written by Abigail Kortz.
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