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SUPREME COURT OF THE UNITED STATES
_________________
No. 12–135
_________________
OXFORD HEALTH PLANS LLC, PETITIONER
v.
JOHN IVAN SUTTER
on writ of certiorari to the united states
court of appeals for the third circuit
[June 10, 2013]
Justice Kagan delivered the opinion of the
Court.
Class arbitration is a matter of consent: An
arbitrator may employ class procedures only if the parties have
au-thorized them. See
Stolt-Nielsen S. A. v.
AnimalFeeds Int’l Corp.,
559 U.S.
662, 684 (2010). In this case, an arbitrator found that the
parties’ contract provided for class arbitration. The
question presented is whether in doing so he “exceeded [his]
powers” under §10(a)(4) of the Federal Arbitration Act
(FAA or Act), 9 U. S. C. §1
et seq. We
conclude that the arbitrator’s decision survives the limited
judicial review §10(a)(4) allows.
I
Respondent John Sutter, a pediatrician,
entered into a contract with petitioner Oxford Health Plans, a
health in-surance company. Sutter agreed to provide medical care to
members of Oxford’s network, and Oxford agreed to pay for
those services at prescribed rates. Several years later, Sutter
filed suit against Oxford in New Jersey Superior Court on behalf of
himself and a proposed class of other New Jersey physicians under
contract with Oxford. The complaint alleged that Oxford had failed
to make full and prompt payment to the doctors, in violation of
their agree-ments and various state laws.
Oxford moved to compel arbitration of
Sutter’s claims, relying on the following clause in their
contract:
“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.” App.
15–16.
The state court granted Oxford’s motion,
thus referring the suit to arbitration.
The parties agreed that the arbitrator should
decide whether their contract authorized class arbitration, and he
determined that it did. Noting that the question turned on
“construction of the parties’ agreement,” the
arbitrator focused on the text of the arbitration clause quoted
above.
Id., at 30. He reasoned that the clause sent to
arbitration “the same universal class of disputes” that
it barred the parties from bringing “as civil actions”
in court: The “intent of the clause” was “to vest
in the arbitration process everything that is prohibited from the
court process.”
Id., at 31. And a class action, the
arbitrator continued, “is plainly one of the possible forms
of civil action that could be brought in a court” absent the
agreement.
Ibid. Accordingly, he concluded that “on
its face, the arbitration clause . . . expresses the
parties’ intent that class arbitration can be
maintained.”
Id., at 32.
Oxford filed a motion in federal court to vacate
the arbitrator’s decision on the ground that he had
“exceeded [his] powers” under §10(a)(4) of the
FAA. The District Court denied the motion, and the Court of Appeals
for the Third Circuit affirmed. See 05–CV–2198, 2005 WL
6795061 (D NJ, Oct. 31, 2005), aff’d, 227 Fed. Appx. 135
(2007).
While the arbitration proceeded, this Court held
in
Stolt-Nielsen that “a party may not be compelled
under the FAA to submit to class arbitration unless there is a
contractual basis for concluding that the party
agreed to do
so.” 559 U. S., at 684. The parties in
Stolt-Nielsen had stipulated that they had never reached an
agreement on class arbitration. Relying on §10(a)(4), we
vacated the arbitrators’ decision approving class proceedings
because, in the absence of such an agreement, the arbitrators had
“simply . . . imposed [their] own view of sound
policy.”
Id., at 672.
Oxford immediately asked the arbitrator to
reconsider his decision on class arbitration in light of
Stolt-Nielsen. The arbitrator issued a new opinion holding
that
Stolt-Nielsen had no effect on the case because this
agreement authorized class arbitration. Unlike in
Stolt-Nielsen, the arbitrator explained, the parties here
disputed the meaning of their contract; he had therefore been
required “to construe the arbitration clause in the ordinary
way to glean the parties’ intent.” App. 72. And in
performing that task, the arbitrator continued, he had “found
that the arbitration clause unambiguously evinced an intention to
allow class arbitration.”
Id., at 70. The arbitrator
con-cluded by reconfirming his reasons for so construing the
clause.
Oxford then returned to federal court, renewing
its effort to vacate the arbitrator’s decision under
§10(a)(4). Once again, the District Court denied the motion,
and the Third Circuit affirmed. The Court of Appeals first
underscored the limited scope of judicial review that
§10(a)(4) allows: So long as an arbitrator “makes a good
faith attempt” to interpret a contract, “even serious
errors of law or fact will not subject his award to vacatur.”
675 F.3d 215, 220 (2012). Oxford could not prevail under that
standard, the court held, because the arbitrator had
“endeavored to give effect to the parties’
intent” and “articulate[d] a contractual basis for his
decision.”
Id., at 223–224. Oxford’s
objections to the ruling were “simply dressed-up arguments
that the arbitrator interpreted its agreement erroneously.”
Id., at 224.
We granted certiorari, 568 U. S. ___
(2012), to address a circuit split on whether §10(a)(4) allows
a court to vacate an arbitral award in similar
circumstances.[
1] Holding that
it does not, we affirm the Court of Appeals.
II
Under the FAA, courts may vacate an
arbitrator’s decision “only in very unusual
circumstances.”
First Options of Chicago, Inc. v.
Kaplan,
514 U.S.
938, 942 (1995). That limited judicial review, we have
explained, “maintain[s] arbitration’s essential virtue
of resolving disputes straightaway.”
Hall Street
Associates, L. L. C. v.
Mattel, Inc.,
552 U.S.
576, 588 (2008). If parties could take “full-bore legal
and evidentiary appeals,” arbitration would become
“merely a prelude to a more cumbersome and time-consuming
judicial review process.”
Ibid.
Here, Oxford invokes §10(a)(4) of the Act,
which authorizes a federal court to set aside an arbitral award
“where the arbitrator[] exceeded [his] powers.” A party
seeking relief under that provision bears a heavy burden. “It
is not enough . . . to show that the [arbitrator]
committed an error—or even a serious error.”
Stolt-Nielsen, 559 U. S., at 671. Because the parties
“bargained for the arbitra-tor’s construction of their
agreement,” an arbitral decision “even arguably
construing or applying the contract” must stand, regardless
of a court’s view of its (de)merits.
Eastern Associated
Coal Corp. v.
Mine Workers,
531 U.S.
57, 62 (2000) (quoting
Steelworkers v.
Enterprise
Wheel & Car Corp.,
363 U.S.
593, 599 (1960);
Paperworkers v.
Misco, Inc.,
484 U.S.
29, 38 (1987); internal quotation marks omitted). Only if
“the arbitrator act[s] outside the scope of his contractually
delegated authority”—issuing an award that
“simply reflect[s] [his] own notions of [economic]
justice” rather than “draw[ing] its essence from the
con-tract”—may a court overturn his determination.
Eastern Associated Coal, 531 U. S., at 62 (quoting
Misco, 484 U. S., at 38). So the sole question for us
is whether the arbitrator (even arguably) interpreted the
parties’ contract, not whether he got its meaning right or
wrong.[
2]
And we have already all but answered that
question just by summarizing the arbitrator’s decisions, see
supra, at 2–3; they are, through and through,
interpretations of the parties’ agreement. The
arbitrator’s first ruling recited the “question of
construction” the parties had submitted to him:
“whether [their] Agreement allows for class action
arbitration.” App. 29–30. To resolve that matter, the
arbitrator focused on the arbitration clause’s text,
analyzing (whether correctly or not makes no difference) the scope
of both what it barred from court and what it sent to arbitration.
The arbitrator concluded, based on that textual exegesis, that the
clause “on its face . . . expresses the
parties’ intent that class action arbitration can be
maintained.”
Id., at 32. When Oxford requested
reconsideration in light of
Stolt-Nielsen, the arbitrator
explained that his prior decision was “concerned solely with
the par-ties’ intent as evidenced by the words of the
arbitration clause itself.” App. 69. He then ran through his
textual analysis again, and reiterated his conclusion: “[T]he
text of the clause itself authorizes” class arbitration.
Id., at 73. Twice, then, the arbitrator did what the parties
had asked: He considered their contract and decided whether it
reflected an agreement to permit class proceedings. That suffices
to show that the arbitrator did not “exceed[ ] [his]
powers.” §10(a)(4).
Oxford’s contrary view relies principally
on
Stolt-Nielsen. As noted earlier, we found there that an
arbitration panel exceeded its powers under §10(a)(4) when it
ordered a party to submit to class arbitration. See
supra,
at 3. Oxford takes that decision to mean that “even the
‘high hurdle’ of Section 10(a)(4) review is overcome
when an arbitrator imposes class arbitration without a sufficient
contractual basis.” Reply Brief 5 (quoting
Stolt-Nielsen, 559 U. S., at 671). Under
Stolt-Nielson, Oxford asserts, a court may thus vacate
“as
ultra vires” an arbitral decision like this
one for misconstruing a contract to approve class proceedings.
Reply Brief 7.
But Oxford misreads
Stolt-Nielsen: We
overturned the arbitral decision there because it lacked
any
contractual basis for ordering class procedures, not because it
lacked, in Oxford’s terminology, a “sufficient”
one. The parties in
Stolt-Nielsen had entered into an
unusual stipulation that they had never reached an agreement on
class arbitration. See 559 U. S., at 668–669, 673. In
that circumstance, we noted, the panel’s decision was
not—indeed, could not have been—“based on a
determination regarding the parties’ intent.”
Id., at 673, n. 4; see
id., at 676 (“Th[e]
stipulation left no room for an inquiry regarding the
parties’ intent”). Nor, we continued, did the panel
attempt to ascertain whether federal or state law established a
“default rule” to take effect absent an agreement.
Id., at 673. Instead, “the panel simply imposed its
own conception of sound policy” when it ordered class
proceedings.
Id., at 675. But “the task of an
arbitrator,” we stated, “is to interpret and enforce a
contract, not to make public policy.”
Id., at 672. In
“impos[ing] its own policy choice,” the panel
“thus exceeded its powers.”
Id., at 677.
The contrast with this case is stark. In
Stolt-Nielsen, the arbitrators did not construe the
parties’ contract, and did not identify any agreement
authorizing class proceedings. So in setting aside the
arbitrators’ decision, we found not that they had
misinterpreted the contract, but that they had abandoned their
interpretive role. Here, the arbitrator did construe the contract
(focusing, per usual, on its language), and did find an agreement
to permit class arbitration. So to overturn his decision, we would
have to rely on a finding that he misapprehended the
par-ties’ intent. But §10(a)(4) bars that course: It
permits courts to vacate an arbitral decision only when the
arbitrator strayed from his delegated task of interpreting a
contract, not when he performed that task poorly.
Stolt-Nielsen and this case thus fall on opposite sides of
the line that §10(a)(4) draws to delimit judicial review of
arbitral decisions.
The remainder of Oxford’s argument
addresses merely the merits: The arbitrator, Oxford contends at
length, badly misunderstood the contract’s arbitration
clause. See Brief for Petitioner 21–28. The key text, again,
goes as follows: “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.” App. 15–16. The arbitrator thought that
clause sent to arbitration all “civil action[s]” barred
from court, and viewed class actions as falling within that
category. See
supra, at 2. But Oxford points out that the
provision submits to arbitration not any “civil
action[s],” but instead any “dispute arising
under” the agreement. And in any event, Oxford claims, a
class action is not a form of “civil action,” as the
arbitrator thought, but merely a procedural device that may be
available in a court. At bottom, Oxford maintains, this is a
garden-variety arbi-tration clause, lacking any of the terms or
features that would indicate an agreement to use class
procedures.
We reject this argument because, and only
because, it is not properly addressed to a court. Nothing we say in
this opinion should be taken to reflect any agreement with the
arbitrator’s contract interpretation, or any quarrel with
Oxford’s contrary reading. All we say is that convincing a
court of an arbitrator’s error—even his grave
error—is not enough. So long as the arbitrator was
“arguably construing” the contract—which this one
was—a court may not correct his mistakes under
§10(a)(4).
Eastern Associated Coal, 531 U. S., at 62
(internal quotation marks omitted). The potential for those
mistakes is the price of agreeing to arbitration. As we have held
before, we hold again: “It is the arbitrator’s
construction [of the contract] which was bargained for; and so far
as the arbitrator’s decision concerns construction of the
contract, the courts have no business overruling him because their
interpretation of the contract is different from his.”
Enterprise Wheel, 363 U.S. at 599. The arbitrator’s
construction holds, however good, bad, or ugly.
In sum, Oxford chose arbitration, and it must
now live with that choice. Oxford agreed with Sutter that an
arbitrator should determine what their contract meant, including
whether its terms approved class arbitration. The arbitrator did
what the parties requested: He provided an interpretation of the
contract resolving that disputed issue. His interpretation went
against Oxford, maybe mistakenly so. But still, Oxford does not get
to rerun the matter in a court. Under §10(a)(4), the question
for a judge is not whether the arbitrator construed the
parties’ contract correctly, but whether he construed it at
all. Because he did, and therefore did not “exceed his
powers,” we cannot give Oxford the relief it wants. We
accordingly affirm the judgment of the Court of Appeals.
It is so ordered.
