The Supreme Court today decided Oxford Health Plans LLC v. Sutter. This decision expands the scope of class actions in arbitration. In Oxford Health, the court took back what the court gave in Stolt-Nielsen, where the court had ruled that an arbitrator may not order a class arbitration when the parties’ contract is silent on the point. Here, the contract seemed to be silent, but was broadly written. Too broadly written, as it turned out.
The language authorizing a “civil action” in arbitration allowed the arbitrator to rule that the parties intended for class arbitration to be maintained because a class action is a “civil action.” As long as there is some basis for that decision, as there was here, the Supreme Court will not overturn it.
The lesson continues to be for companies to include clear prohibitions of class arbitrations in their contracts. Otherwise, as the court noted in its decision, the “potential for those mistakes is the price of agreeing to arbitration.”
