U.S Supreme Court Restricts Court Interference With Arbitrators’ Decision

On June 10, 2013, in Oxford Health Plans, LLC v. Sutter, the United States Supreme Court reconfirmed the limited circumstances under which Federal Courts may vacate arbitrators’ decisions on the ground of “exceeding their powers” under Section 10(a)(4) of the Federal Arbitration Act.  The remedy, the Supreme Court noted, may be utilized “only in very unusual circumstances…” “It is not enough to show that an arbitrator committed an error-or even a serious error”. In this case, the parties had submitted to the arbitrator the question of “whether [their] agreement allows for class arbitration.” After reviewing the arbitration clause, the arbitrator answered in the affirmative.  The Court held that “[b]ecause the parties bargained for the arbitrator’s construction of their agreement,” his decision could not be overturned “regardless of a court’s view of its (de)merits.”  The parties must live by how the arbitrator construed the agreement — “whether correctly or not makes no difference”. The question of whether class arbitration is a viable procedure, if reviewed de novo by the courts, was acknowledged as a legitimate issue but not decided.

Oxford Health Plans, LLC v. Sutter