Yesterday, the U.S. Supreme Court issued its opinion in Oxford Health Plans LLC v. Sutter, No. 12-135, addressing whether an arbitrator exceeded his powers in deciding that a contract provided for class arbitration (i.e., a class action arbitration proceeding).  The Court held that the arbitrator did not exceed his powers in making that ruling, although I expect this decision to have little impact beyond the unusual circumstances of this case, in which Oxford Health agreed to have the arbitrator decide whether the arbitration provision allowed a class arbitration procedure.  In future cases, it will almost always be the case that either: (1) the arbitration clause will explicitly prohibit class arbitrations; or (2) the defendant will not agree to allow an arbitrator to decide whether the contract permits a class arbitration, and the question of arbitrability will be litigated.  The Oxford Health Plans decision does not impact the Court’s ruling in AT&T v. Concepcion (blog post), which upheld the use of an arbitration clause containing a class action waiver, finding that state law invalidating that waiver was preempted by the Federal Arbitration Act. 

In Oxford Health Plans, an arbitrator had concluded that the arbitration provision in the governing contract between Oxford and certain physicians implicitly allowed class treatment, where the arbitration provision failed to expressly address that subject.  In a short opinion authored by Justice Kagan, the Court held that, where the parties had agreed that the arbitrator would decide whether the contract authorized a class arbitration, and the arbitrator decided that question based on his interpretation of the arbitration provision, the arbitrator did not exceed his powers under § 10(a)(4) of the Federal Arbitration Act.  The Court explained that § 10(a)(4) “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.”  (Slip op. at 7.)  “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).  . . . The arbitrator’s construction holds, however good, bad or ugly.”  (Id.

Footnote 2 of the opinion is particularly important.  It explains that the Court “would face a different issue if Oxford had argued below that the availability of class arbitration is a so-called ‘question of arbitrability,’” which a court may review “de novo absent ‘clear[] and unmistakeable[]’ evidence that the parties wanted an arbitrator to resolve the dispute.”  (Id. at 5 n.2.)  I would expect nearly all defendants to challenge arbitrability when this issue comes up in future cases.  

Also significant was Justice Alito’s concurring opinion (joined by Justice Thomas) explaining that absent class members should not be bound by the outcome of a class arbitration if they never agreed to a class arbitration procedure.  A majority of the Court might well not allow class arbitrations either based on arbitrability or the grounds articulated by Justice Alito. 

So how does this impact insurance class actions?  The insurance industry has not moved to expand the use of arbitration clauses following Concepcion.  So arbitration remains in relatively limited use – typically it applies to uninsured/underinsured motorist auto insurance claims in some jurisdictions.  If a class arbitration were sought, an insurer is likely to have a strong argument with respect to arbitrability and that a class arbitration procedure could not bind absent class members. 

Print:
EmailTweetLikeLinkedIn
Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career at Skadden.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and I was fortunate to have the opportunity to work on some prominent class actions arising from the 2004 hurricanes in Florida and later Hurricane Katrina, including cases involving the applicability of the flood exclusion, statutes known as valued policy laws, and various other issues.  My interest and experience in class actions gradually led me to focus on that area.

In Connecticut courts I’ve defended various kinds of class actions that go beyond insurance, including cases involving products liability, securities, financial services and consumer contracts.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at my desk or flying around the country trying to save insurance companies from the plaintiffs’ bar, or attending a conference on class actions or insurance litigation (for more on those, see the Seminars/Programs page of this blog), I often can be found playing or reading with my young daughter, helping my wife with her real estate and mortgage businesses, reading a book about history or politics, or watching the Boston Red Sox (I managed to find bleacher seats for Game 2 of the 2004 World Series when Curt Schilling pitched with the bloody sock).  When the weather is good I also love to take the ferry to Block Island, Rhode Island and ride a bike or walk the trails there. If you go, I highly recommend the Clay Head Trail.