ERISA plan sponsors, and employers more broadly, have been anxiously awaiting two rulings from the U.S. Supreme Court that they hope would clarify the ability to enforce class action waivers in arbitration agreements. Yesterday, the Court issued the first of these decisions in Oxford Health Plans LLC v. Sutter, a case in which Sutter alleged on behalf of himself and a class of health care providers that Oxford and other insurers had breached their contract and committed various state law violations. The Supreme Court determined that an arbitrator had interpreted the arbitration provision at issue as allowing class actions and thus there was no basis to conclude that the arbitrator had exceeded his powers.
Although the decision does not expressly address the underlying issues that employers and ERISA plan sponsors had hoped it would, the Court’s decision may be most important for what was not said. In particular, the Court’s decision to leave intact an arbitrator’s ruling that allowed a class action to proceed in arbitration and not comment (or even suggest) that a prohibition on class action waivers would be inappropriate could be a signal that the Court would enforce an appropriately drafted arbitration agreement that requires the arbitration of all claims and, at the same time, precludes class action arbitrations. There remains hope that the Court will further address this issue in the second ruling expected by the end of the Court’s term this month. That case is American Express Co. v. Italian Colors Restaurant and there the Court is expected to address in an anti-trust action whether a class action waiver is enforceable even if plaintiffs could demonstrate that the practical effect of enforcement would be to preclude them from vindicating their federal statutory rights. Stay tuned . . . .