Tag Archives: FAA

Sup. Ct. allows Class Action Arbitration under FAA

In Oxford Health Plans LLC v. Sutter, No. 12-125 (2013), the Supreme Court ruled that an arbitrator can require a class action arbitration.

The gist of the case is that Sutter, a pediatrician, had a fee-for-services contract, which required arbitration for all contractual disputes.  When Oxford failed to promptly pay him and other physicians, Sutter filed a class action in New Jersey.  After filing, the court compelled arbitration.  The arbitrator concluded that the contract called for class action arbitration.  Sutter appealed to higher courts, but these appeals were denied.

The Supreme Court explained its decision as follows.  First, the parties agreed to go to arbitration in their contract.  Second, an arbitrator looks at the contract, makes a decision based on the contractual language, and this decision is binding.  Thirdly, and most importantly, the Supreme Court explained that judicial review is limited to whether the arbitrator interpreted the contract, not whether the court agreed with the decision.  Consequently, because the arbitrator considered the contract, the arbitrator’s decision stands.  They only way to vacate an arbitral decision is when an arbitrator strayed from his task of interpreting the contract.  In other words, not when he performed his task poorly.

As a note: In prior decisions (Steelworkers Trilogy/Misco) in the labor context under the Labor Management Relations Act (LMRA), the Supreme Court had ruled that a contractual language had to explicitly allow class actions in the arbitration clause.  Here, the arbitration clause did not do so.

This raises the question of how the Federal Arbitration Act (FAA) reconciles with LMRA arbitrations when they are both present.  In this case, only the FAA was involved.

via Workplace Prof Blog: SCOTUS OKs Class Arbitration.

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Filed under Appellate, courts, employment, labor, legal decision, Supreme Court, union, waiver

Supreme Court Bars Emotional Distress

The ABA Journal News also reports on the FAA v. Cooper decision released on Wednesday:

The U.S. Supreme Court has ruled in the case of an HIV-positive pilot that a Watergate-era privacy law does not authorize suits for mental or emotional distress when the government violates its provisions. The court ruled against plaintiff Stanmore Cooper in a 5-3 opinion (PDF). Justice Elena Kagan did not participate in the decision.

Cooper lost his pilot license after the Social Security Administration revealed to the Federal Aviation Administration that he had received disability benefits for a year because of his illness. The FAA had obtained the records as part of an “Operation Safe Pilot” probe to identify medically unfit individuals. At the time, the FAA did not give licenses to anyone taking medication for the AIDS virus.

Cooper sued for “humiliation, embarrassment, mental anguish, fear of social ostracism, and other severe emotional distress,” but he did not allege economic harm.

The Privacy Act of 1974 says the United States may be liable for “actual damages” in cases of intentional or willful violations of the law, Justice Samuel A. Alito Jr. wrote in the majority opinion.

Alito acknowledged that the term “actual damages” has a “chameleon-like quality” that varies based on the statute being interpreted, but said Congress must speak unequivocally when waiving the government’s sovereign immunity.

Justice Sonia Sotomayor dissented in an opinion joined by Justices Stephen G. Breyer and Ruth Bader Ginsburg. The majority decision, Sotomayor wrote, “cripples the act’s core purpose of redressing and deterring violations of privacy interests.”

via Supreme Court Bars HIV-Positive Pilot’s Suit for Emotional Distress over Records Disclosure – News – ABA Journal.

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