{"id":1045,"date":"2012-04-10T10:56:23","date_gmt":"2012-04-10T14:56:23","guid":{"rendered":"http:\/\/businessconflictmanagement.com\/blog\/?p=1045"},"modified":"2012-04-10T10:56:23","modified_gmt":"2012-04-10T14:56:23","slug":"third-circuit-permits-class-arbitration-distinguishes-stolt-nielsen","status":"publish","type":"post","link":"http:\/\/www.businessconflictmanagement.com\/blog\/2012\/04\/third-circuit-permits-class-arbitration-distinguishes-stolt-nielsen\/","title":{"rendered":"Third Circuit Permits Class Arbitration, Distinguishes Stolt-Nielsen"},"content":{"rendered":"

For the past ten years (and counting), Dr. Ivan Sutter and Oxford Health Plans have been engaged in a dispute arising from a 1998 agreement pursuant to which Dr. Sutter would provide health services to Oxford’s members and Oxford would compensate the doctor at a predetermined rate.<\/p>\n

Seeking quick, efficient\u00a0resolution of any disputes between them, Oxford and Dr. Sutter agreed that:<\/p>\n

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.<\/p><\/blockquote>\n

The doctor initiated this process, however,\u00a0by\u00a0filing a complaint on behalf of himself and other Oxford providers in New Jersey Superior Court, arguing that referral of class claims to arbitration would violate New Jersey public policy.\u00a0 Oxford successfully moved to compel arbitration, the court leaving to the arbitrator the question whether a class should be certified in the arbitration proceeding.<\/p>\n

The arbitrator (the estimable William L.D. Barrett<\/a>) determined in 2005 that the agreement allowed for class arbitration, basing his finding\u00a0on his interpretation of the arbitration clause.\u00a0\u00a0 Oxford unsuccessfully moved to vacate that Class Determination Award before the US District Court, and the denial was affirmed by the Third Circuit in 2007.\u00a0<\/p>\n

Then the arbitration proceeded\u00a0to the merits.\u00a0 (See how quick arbitration can be, students?)\u00a0 <\/p>\n

In 2010, the US Supreme Court decided Stolt-Neilsen S.A. v. AnimalFeeds International Corp<\/a>., ruling that an arbitrator exceeds her powers when ordering class arbitration where the parties have stipulated that no agreement on that issue had been reached.\u00a0 Oxford the repaired to the US District Court a second time, and for a second time its motion to vacate the arbitrator’s class certification award\u00a0was denied.\u00a0 And once more Oxford appealed to the Third Circuit.<\/p>\n

Affirmed.<\/a><\/p>\n

The Third Circuit noted\u00a0the presumption that\u00a0an arbitration\u00a0award is enforceable and could be vacated only on the four narrow grounds set forth in Section 10(a) of the Federal Arbitration Act.\u00a0 It also noted that “the task of an arbitrator is to interpret and enforce a contract.\u00a0 When\u00a0he makes a good faith attempt to do so, even serious errors of law or fact will not subject his award to vacatur.”<\/p>\n

Thus the nub of the Third Circuit’s analysis, affirming the denial of vacatur despite Stolt-Neilsen<\/em>:\u00a0 While an arbitrator may exceed his powers by ordering class arbitration without contractual authorization<\/em>, he does not do so where there is a contractual basis<\/em> for concluding that the parties agreed to that procedure.<\/p>\n

In Stolt-Neilsen<\/em>, the parties stipulated that their agreement was “silent” on the issue of class arbitration, in the sense that they had not reached an agreement one way or the other on the issue.\u00a0 The Supreme Court held that, in the face of a stipulated finding that there was no agreement with respect to class certification, the arbitrators were not empowered to behave as if there were one and certify a class.<\/p>\n

By contrast,\u00a0Arbitrator Barrett’s 2005 award was based on a contract that was by no means\u00a0“silent” in the way that the parties in Stolt-Neilsen <\/em>stipulated that theirs had been.\u00a0 Oxford contended that the clause did not refer to class arbitration and therefore did not permit it.\u00a0 Dr. Sutter never stipulated to that effect, and indeed actively argued that the arbitration clause, on its face, required “all” and “any” claims to be arbitrated.\u00a0 The arbitrator found for the good doctor, relying on the\u00a0text of the clause.\u00a0<\/p>\n

It begins: “No civil action concerning any dispute arising under this Agreement shall be instituted before any court….”\u00a0 The arbitrator reasoned that the phrase was very broad — broad enough to include every type of action whatsoever, including class actions.\u00a0 If this is so, then the second phrase, requiring arbitration of “all” such actions, would compel every<\/em> type of civil action — including class actions — to be arbitrated.<\/p>\n

The Third Circuit’s opinion is enlightening and, if broadly adopted, may seriously limit the consequences of the holding in Stolt-Neilsen<\/em>.\u00a0 Where it has been conceded by the parties,\u00a0or determined by the arbitrator, that no agreement to arbitrate class claims exists between the parties, then the arbitrator may not order it.\u00a0 But where no such stipulation or finding exists, and\u00a0the arbitrability of class actions is to be determined based on contested contract interpretation, then Stolt-Neilsen<\/em> would not apply, and the arbitrator’s finding would stand.<\/p>\n

One would guess that the former instances are rare.\u00a0 Thus, Sutter v. Oxford Health Plans<\/em> might herald a marginalization of Stolt-Nielsen<\/em>, and a re-empowerment of arbitrators to interpret and enforce the contracts before them as to the question of arbitrability of class claims.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Third Circuit finds that a general arbitration clause permits an arbitrator to consider classwide claims, and distinguishes Stolt-Nielsen<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9,40],"tags":[20,39],"class_list":["post-1045","post","type-post","status-publish","format-standard","hentry","category-arbitration","category-courts","tag-arbitration","tag-courts"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/posts\/1045","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/comments?post=1045"}],"version-history":[{"count":0,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/posts\/1045\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/media?parent=1045"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/categories?post=1045"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/tags?post=1045"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}