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United States Supreme Court Employment Law Cases
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Stolt-Nielsen S.A.,
et al. v. AnimalFeeds International Corp. (08-1198)
Imposing class arbitration on parties who have
not agreed to it violates Federal Arbitration Act (5-3)
Decided April 27, 2010
[Full text of opinion]
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The
parties in this case are parties to an international maritime contract that
contains an arbitration clause. The contracts are silent as to whether
arbitration is permissible on behalf of a class, and the parties submitted that
issue to arbitration. A panel of arbitrators decided that the arbitration clause
allowed for class arbitration. The District Court vacated the award on the
ground that it was made in "manifest disregard" of the law. The 2nd
Circuit reversed.
The
US Supreme Court held (5-3) that imposing class arbitration on parties who have
not agreed to authorize class arbitration is inconsistent with the Federal
Arbitration Act (FAA). (1)
The arbitrators exceeded their powers by imposing their own policy choice
instead of identifying and applying a rule of decision derived from the FAA or
from maritime or New York law. (2) Imposing class arbitration in this case is
inconsistent with the FAA. The Court restated the principles that arbitration
"is a matter of consent, not coercion," that "private agreements
to arbitrate are enforced according to their terms," and that parties are
"generally free to structure their arbitration agreements as they see
fit." Based on these principles, "parties may specify WITH WHOM they
chose to arbitrate." [Emphasis in original] Because the parties stipulated
that there was no agreement on class arbitration, the parties cannot be
compelled to submit to class arbitration. The
DISSENT argued that the arbitrators' "partial award" was not ripe for
judicial review. On the merits, the dissent would have upheld the arbitrators
due to the strict limitation the FAA places on judicial review of arbitral
awards.
Case below: Stolt-Nielsen S.A.,
et al. v. AnimalFeeds International Corp. (2nd Cir 11/04/2008)
Question presented:
In Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003),
this Court granted certiorari to decide a question that had divided the lower
courts: whether the Federal Arbitration Act permits the imposition of class
arbitration when the parties’ agreement is silent regarding class arbitration.
The Court was unable to reach that question, however, because a plurality concluded
that the arbitrator first needed to address whether the agreement
there was in fact "silent." That threshold obstacle is not present in
this case, and the question presented here--which continues to divide the lower
courts--is the same one presented in Bazzle:
Whether imposing class arbitration on parties whose arbitration
clauses are silent on that issue is consistent with the Federal Arbitration Act,
9 U.S.C. §§ 1 et seq.
Certiorari Documents:
Briefs on the merits:
Counsel:
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