Skip to Main Content

Keeping you informed

Supreme Court Says Arbitrator Can Decide Whether Class Action Arbitrations Allowed

    Client Alerts
  • June 14, 2013

As chronicled in EmployNews over the past several years, the U.S. Supreme Court has repeatedly been called upon to decide the extent to which employers and other parties can mandate that disputes be heard by an arbitrator instead of a judge and jury. For employers, one of the benefits of mandatory arbitration is the ability to require that employees individually litigate claims instead of proceeding as members of class or collective actions.

On Tuesday, the Court unanimously held that the arbitrator has the power to determine whether a silent arbitration agreement permits class arbitrations, and that this interpretation is generally not reviewable in court. Oxford Health Plans, LLC v. Sutter involved claims by a group of doctors that claimed they were not properly compensated for their services. The defendant contended that the doctors had individual agreements with the Plan, and that these agreements made no provision for class arbitration. The arbitrator found that there was an implicit agreement between the parties allowing class claims.

The Supreme Court refused to substitute its judgment for that of the arbitrator. As long as the parties clearly agree to allow the arbitrator to make determinations such as the permissibility of class arbitrations, courts cannot review the interpretation regardless of whether it appears to have been in error.

This case may have limited application to employment arbitrations, because these agreements increasingly specifically exclude class or collective action arbitration. The Court did not address whether claims are subject to class action arbitration to begin with, or whether federal labor laws make prohibition on class action claims in employment cases unenforceable.