STOLT-NIELSEN S. A. ET AL. v. ANIMALFEEDS INTERNATIONAL CORP.
No. 08-1198
Supreme Court of the United States
Argued December 9, 2009—Decided April 27, 2010
559 U.S. 662
ALITO, J., delivered the opinion of the Court, in which ROBERTS, C. J., and SCALIA, KENNEDY, and THOMAS, JJ., joined. GINSBURG, J., filed a dissenting opinion, in which STEVENS and BREYER, JJ., joined, post, p. 688. SOTOMAYOR, J., took no part in the consideration or decision of the case.
Seth P. Waxman argued the cause for petitioners. With him on the briefs were Edward C. DuMont, Steven F. Cherry, Christopher E. Babbitt, Daniel S. Volchok, Christopher M. Curran, J. Mark Gidley, Peter J. Carney, Eric Grannon, Charles C. Moore, Richard J. Rappaport, Amy B. Manning, Tammy L. Adkins, Angelo M. Russo, Richard C. Siefert, Richard Gluck, and Paul S. Hoff.
Cornelia T. L. Pillard argued the cause for respondent. With her on the brief were Bernard Persky, J. Douglas Richards, Benjamin D. Brown, Christopher J. Cormier, Michael J. Freed, Steven A. Kanner, Michael D. Hausfeld, Hilary K. Ratway, Solomon B. Cera, W. Joseph Bruckner, and Aaron F. Biber.*
*Briefs of amici curiae urging reversal were filed for the Association of Ship Brokers & Agents et al. by William J. Honan, Samuel Spital, and Patrick V. Martin; for the Chamber of Commerce of the United States of America by Carter G. Phillips, Paul J. Zidlicky, Robin S. Conrad, and Amar D. Sarwal; for CTIA-The Wireless Association by Evan M. Tager and Michael F. Altschul; for DRI-The Voice of the Defense Bar by Jerrold J. Ganzfried and Jennifer R. Bagosy; and for the Equal Employment Advisory Council by Rae T. Vann and Judith A. Lampley.
Briefs of amici curiae urging affirmance were filed for the American Antitrust Institute et al. by Dan E. Gustafson, Albert A. Foer, and Richard M. Brunell; for the American Association for Justice et al. by Jeffrey R. White, Julie Nepveu, and Michael Schuster; for Dub Herring Ford Lincoln-Mercury, Inc., by Richard D. Faulkner, James D. Blume, and Shelly L. Skeen; for the Lawyers’ Committee for Civil Rights Under Law et al. by Sarah Crawford, Adam Klein, Lewis M. Steel, Vincent A. Eng, and Dina Lassow; for the Pacific Legal Foundation by Deborah J. La Fetra and Timothy Sandefur; and for Public Justice, P. C., et al. by F. Paul Bland, Jr., Seth E. Mermin, Arthur H. Bryant, and Michael J. Quirk.
Briefs of amici curiae were filed for the American Arbitration Association by Eric P. Tuchmann, William K. Slate II, Patricia A. Millett, and Michael C. Small; and for Public Citizen, Inc., by Scott L. Nelson and Deepak Gupta.
JUSTICE ALITO delivered the opinion of the Court.
We granted certiorari in this case to decide whether imposing class arbitration on parties whose arbitration clauses are “silent” on that issue is consistent with the Federal Arbitration Act (FAA),
I
A
Petitioners are shipping companies that serve a large share of the world market for parcel tankers—seagoing vessels with compartments that are separately chartered to customers wishing to ship liquids in small quantities. One of those customers is AnimalFeeds International Corp. (hereinafter AnimalFeeds), which supplies raw ingredients, such as fish oil, to animal-feed producers around the world. AnimalFeeds
like AnimalFeeds, or their agents—not the shipowners—typically select the
Adopted in 1950, the Vegoilvoy charter party contains the following arbitration clause:
“Arbitration. Any dispute arising from the making, performance or termination of this Charter Party shall be settled in New York, Owner and Charterer each appointing an arbitrator, who shall be a merchant, broker or individual experienced in the shipping business; the two thus chosen, if they cannot agree, shall nominate a third arbitrator who shall be an Admiralty lawyer. Such arbitration shall be conducted in conformity with the provisions and procedure of the United States Arbitration Act [i. e., the FAA], and a judgment of the Court shall be entered upon any award made by said arbitrator.” App. to Pet. for Cert. 69a.
In 2003, a Department of Justice criminal investigation revealed that petitioners were engaging in an illegal price-fixing conspiracy. When AnimalFeeds learned of this, it brought a putative class action against petitioners in the District Court for the Eastern District of Pennsylvania, asserting antitrust claims for supracompetitive prices that petitioners allegedly charged their customers over a period of several years.
Other charterers brought similar suits. In one of these, the District Court for the District of Connecticut held that the charterers’ claims were not subject to arbitration under the applicable arbitration clause, but the Second Circuit reversed. See JLM Industries, Inc. v. Stolt-Nielsen S. A., 387 F. 3d 163, 183 (2004). While that appeal was pending, the Judicial Panel on Multidistrict Litigation ordered the consolidation of then-pending actions against petitioners, including AnimalFeeds’ action, in the District of Connecticut. See In re Parcel Tanker Shipping Servs. Antitrust Litigation, 296 F. Supp. 2d 1370, 1371, and n. 1 (2003). The parties agree that as a consequence of these judgments and orders, AnimalFeeds and petitioners must arbitrate their antitrust dispute.
B
In 2005, AnimalFeeds served petitioners with a demand for class arbitration, designating New York City as the place of arbitration and seeking to represent a class of “[a]ll direct purchasers of parcel tanker transportation services globally for bulk liquid chemicals, edible oils, acids, and other specialty liquids from [petitioners] at any time during the period from August 1, 1998, to November 30, 2002.” 548 F. 3d 85, 87 (CA2 2008) (internal quotation marks omitted). The parties entered into a supplemental agreement providing for the question of class arbitration to be submitted to a panel of three arbitrators who were to “follow and be bound by Rules 3 through 7 of the American Arbitration Association‘s Supplementary Rules for Class Arbitrations (as effective Oct. 8, 2003).” App. to Pet. for Cert. 59a. These rules (hereinafter Class Rules) were developed by the American Arbitration Association (AAA) after our decision in Green Tree Financial Corp. v. Bazzle, 539 U. S. 444 (2003), and Class Rule 3, in accordance with the plurality opinion in that case, requires an arbitrator, as a threshold matter, to determine “whether the applicable arbitration clause permits the arbitration to proceed on behalf of or against a class.” App. 56a.
After hearing argument and evidence, including testimony from petitioners’ experts regarding arbitration customs and usage in the maritime trade, the arbitrators concluded that the arbitration clause allowed for class arbitration. They found persuasive the fact that other arbitrators ruling after Bazzle had construed “a wide variety of clauses in a wide variety of settings as allowing for class arbitration,” but the panel acknowledged that none of these decisions was “exactly comparable” to the present dispute. See App. to Pet. for Cert. 49a-50a. Petitioners’ expert evidence did not show an “inten[t] to preclude class arbitration,” the arbitrators reasoned, and petitioners’ argument would leave “no basis for a class action absent express agreement among all parties and the putative class members.” Id., at 51a.
The arbitrators stayed the proceeding to allow the parties to seek judicial review, and petitioners filed an application to vacate the arbitrators’ award in the District Court for the Southern District of New York. See
AnimalFeeds appealed to the Court of Appeals, which reversed. See
We granted certiorari. 557 U. S. 903 (2009).2
II
A
Petitioners contend that the decision of the arbitration panel must be vacated, but in order to obtain that relief, they must clear a high hurdle. It is not enough for petitioners to show that the panel committed an error—or even a serious error. See Eastern Associated Coal Corp. v. Mine Workers, 531 U. S. 57, 62 (2000); Paperworkers v. Misco, Inc., 484 U. S. 29, 38 (1987). “It is only when [an] arbitrator strays from interpretation and application of the agreement and effectively ‘dispense[s] his own brand of industrial justice’ that his decision may be unenforceable.” Major League Baseball Players Assn. v. Garvey, 532 U. S. 504, 509 (2001) (per curiam) (quoting Steelworkers v. Enterprise Wheel & Car
Corp., 363 U. S. 593, 597 (1960)). In that situation, an arbitration decision may be vacated under
1
In its memorandum of law filed in the arbitration proceedings, AnimalFeeds made three arguments in support of construing the arbitration clause to permit class arbitration:
“The parties’ arbitration clause should be construed to allow class arbitration because (a) the clause is silent on the issue of class treatment and, without express prohibition, class arbitration is permitted under Bazzle; (b) the clause should be construed to permit class arbitration as a matter of public policy; and (c) the clause would be unconscionable and unenforceable if it forbade class arbitration.” App. in No. 06-3474-cv (CA2), at A-308 to A-309 (emphasis added).
The arbitrators expressly rejected AnimalFeeds’ first argument, see App. to Pet. for Cert. 49a, and said nothing about the third. Instead, the panel appears to have rested
its decision on AnimalFeeds’ public policy argument. Because the parties agreed their agreement was “silent” in the sense that they had not reached any agreement on the issue of class arbitration, the arbitrators’ proper task was to identify the rule of law that governs in that situation. Had they engaged in that undertaking, they presumably would have looked either to the FAA itself or to one of the two bodies of law that the parties claimed were governing, i. e., either federal maritime law or New York law. But the panel did not consider whether the FAA provides the rule of decision in such a situation; nor did the panel attempt to determine what rule would govern under either maritime or New York law in the case of a “silent” contract. Instead, the panel based its decision on post-Bazzle arbitral decisions that “construed a wide variety of clauses in a wide variety of settings as allowing for class arbitration.” App. to Pet. for Cert. 49a-50a. The panel did not mention whether any of these decisions were based on a rule derived from the FAA or on maritime or New York law.4
Rather than inquiring whether the FAA, maritime law, or New York law contains
had the authority of a common-law court to develop what it viewed as the best rule to be applied in such a situation. Perceiving a post-Bazzle consensus among arbitrators that class arbitration is beneficial in “a wide variety of settings,” the panel considered only whether there was any good reason not to follow that consensus in this case. App. to Pet. for Cert. 49a-50a. The panel was not persuaded by “court cases denying consolidation of arbitrations,”5 by undisputed evidence that the Vegoilvoy charter party had “never been the basis of a class action,” or by expert opinion that “sophisticated, multinational commercial parties of the type that are sought to be included in the class would never intend that the arbitration clauses would permit a class arbitration.”6
Under both New York law and general maritime law, evidence of “custom and usage” is relevant to determining the parties’ intent when an express agreement is ambiguous. See Excess Ins. Co. v. Factory Mut. Ins. Co., 3 N. Y. 3d 577, 590-591, 822 N. E. 2d 768, 777 (2004) (“Our prece-dent establishes that where there is ambiguity in a reinsurance certificate, the surrounding circumstances, including industry custom and practice, should be taken into consideration“); Lopez v. Consolidated Edison Co. of N. Y., 40 N. Y. 2d 605, 609, 357 N. E. 2d 951, 954-955 (1976) (where contract terms were ambiguous, parol evidence of custom and practice was properly admitted to show parties’ intent); 407 East 61st Garage, Inc. v. Savoy Fifth Avenue Corp., 23 N. Y. 2d 275, 281, 244 N. E. 2d 37, 41 (1968) (contract was “not so free from ambiguity to preclude extrinsic evidence” of industry “custom and usage” that would “establish the correct interpretation or understanding of the agreement as to its term“). See also Great Circle Lines, Ltd. v. Matheson & Co., 681 F. 2d 121, 125 (CA2 1982) (“Certain long-standing customs of the shipping industry are crucial factors to be considered when deciding whether there has been a meeting of the minds on a maritime contract“); Samsun Corp. v. Khozestan Mashine Kar Co., 926 F. Supp. 436, 439 (SDNY 1996) (“[W]here as here the contract is one of charter party, established practices and customs of the shipping industry inform the court‘s analysis of what the parties agreed to“); Hough, Admiralty Jurisdiction—Of Late Years, 37 Harv. L. Rev. 529, 536 (1924) (noting that “maritime law is a body of sea customs” and the “custom of the sea . . . includes a customary interpretation of contract language“).
Id., at 50a-51a. Accordingly, finding no convincing ground for departing from the post-Bazzle arbitral consensus, the panel held that class arbitration was permitted in this case. App. to Pet. for Cert. 52a. The conclusion is inescapable that the panel simply imposed its own conception of sound policy.7
It is true that the panel opinion makes a few references to intent, but none of these shows that the panel did anything other than impose its own policy preference. The opinion states that, under Bazzle, “arbitrators must look to the language of the parties’ agreement to ascertain the parties’ intention whether they intended to permit or to preclude class action,” and the panel added that “[t]his is also consistent with New York law.” App. to Pet. for Cert. 49a. But the panel had no occasion to “ascertain the parties’ intention” in the present case because the parties were in complete agreement regarding their intent. In the very next sentence after the one quoted above, the panel acknowledged that the parties in this case agreed that the Vegoilvoy charter party was “silent on whether [it] permit[ted] or preclude[d] class arbitration,” but that the charter party was “not ambiguous so as to call for parol evidence.” Ibid. This stipulation left no room for an inquiry regarding the parties’ intent, and any inquiry into that settled question would have been outside the panel‘s assigned task.
The panel also commented on the breadth of the language in the Vegoilvoy charter party, see id., at 50a, but since the only task that was left for the panel, in light of the parties’ stipulation, was to identify the governing rule applicable in a case in which neither the language of the contract nor any other evidence established that the parties had reached any agreement on the question of class arbitration, the particular wording of the charter party was quite beside the point.
In sum, instead of identifying and applying a rule of decision derived from the FAA or either maritime or New York
law, the arbitration panel imposed its own policy choice and thus exceeded its powers. As a result, under
III
A
The arbitration panel thought that Bazzle “controlled” the “resolution” of the question whether the Vegoilvoy charter party “permit[s] this arbitration to proceed on behalf of a class,” App. to Pet. for Cert. 48a-49a, but that understanding was incorrect.
Bazzle concerned contracts between a commercial lender (Green Tree) and its customers. These contracts contained an arbitration clause but did not expressly mention class arbitration. Nevertheless, an arbitrator conducted class arbitration proceedings and entered awards for the customers.
The South Carolina Supreme Court affirmed the awards. Bazzle v. Green Tree Financial Corp., 351 S. C. 244, 569 S. E. 2d 349 (2002). After discussing both Seventh Circuit precedent holding that a court lacks authority to order classwide arbitration under
of requiring each aggrieved party to proceed on an individual basis against “resulting prejudice to the drafting party” and should take into account factors such as “efficiency” and “equity.” Id., at 260, and n. 15, 569 S. E. 2d, at 357, and n. 15.
Applying these standards to the case before it, the South Carolina Supreme Court found that the arbitration clause in the Green Tree contracts was “silent regarding class-wide arbitration.” Id., at 263, 569 S. E. 2d, at 359 (emphasis deleted). The court described its holding as follows:
“[W]e . . . hold that class-wide arbitration may be ordered when the arbitration agreement is silent if it would serve efficiency and equity, and would not result in prejudice. If we enforced a mandatory, adhesive arbitration clause, but prohibited class actions in arbitration where the agreement is silent, the drafting party could effectively prevent class actions against it without having to say it was doing so in the agreement.” Id., at 266, 569 S. E. 2d, at 360 (footnote omitted).
When Bazzle reached this Court, no single rationale commanded a majority. The opinions of the Justices who joined the judgment—that is, the plurality opinion and JUSTICE STEVENS’ opinion—collectively addressed three separate questions. The first was which decisionmaker (court or arbitrator) should decide whether the contracts in question were “silent” on the issue of class arbitration. The second was what standard the appropriate decisionmaker should apply in determining whether a contract allows class arbitration. (For example, does the FAA entirely preclude class arbitration? Does the FAA permit class arbitration only under limited circumstances, such as when the contract expressly so provides? Or is this question left entirely to state law?) The final question was whether, under whatever standard is appropriate, class arbitration had been properly ordered in the case at hand.
The plurality opinion decided only the first question, concluding that the arbitrator and not a court should decide whether the contracts were indeed “silent” on the issue of class arbitration. The plurality noted that, “[i]n certain limited circumstances,” involving “gateway matters, such as whether the parties have a valid arbitration agreement at all or whether a concededly binding arbitration clause applies to a certain type of controversy,” it is assumed “that the parties intended courts, not arbitrators,” to make the decision. 539 U. S., at 452. But the plurality opined that the question whether
JUSTICE STEVENS concurred in the judgment vacating and remanding because otherwise there would have been “no controlling judgment of the Court,” but he did not endorse the plurality‘s rationale. Id., at 455 (opinion concurring in judgment and dissenting in part). He did not take a definitive position on the first question, stating only that “[a]rguably the interpretation of the parties’ agreement should have been made in the first instance by the arbitrator.” Ibid. (emphasis added). But because he did not believe that Green Tree had raised the question of the appropriate decisionmaker, he preferred not to reach that question and, instead, would have affirmed the decision of the State Supreme Court on the ground that “the decision to conduct a class-action arbitration was correct as a matter of law.” Ibid. Accordingly, his analysis bypassed the first question noted above and rested instead on his resolution of the second and third questions. Thus, Bazzle did not yield a majority decision on any of the three questions.
B
Unfortunately, the opinions in Bazzle appear to have baffled the parties in this case at the time of the arbitration proceeding. For one thing, the parties appear to have believed that the judgment in Bazzle requires an arbitrator, not a court, to decide whether a contract permits class arbitration. See App. 89a (transcript of argument before arbitration panel) (counsel for Stolt-Nielsen states: “What [Bazzle] says is that the contract interpretation issue is left up to the arbitrator, that‘s the rule in [Bazzle]“). In fact, however, only the plurality decided that question. But we need not revisit that question here because the parties’ supplemental agreement expressly assigned this issue to the arbitration panel, and no party argues that this assignment was impermissible.
Unfortunately, however, both the parties and the arbitration panel seem to have misunderstood Bazzle in another respect, namely, that it established the standard to be applied by a decisionmaker in determining whether a contract may permissibly be interpreted to allow class arbitration. The arbitration panel began its discussion by stating that the parties “differ regarding the rule of interpretation to be gleaned from [the Bazzle] decision.” App. to Pet. for Cert. 49a (emphasis added). The panel continued:
“Claimants argue that Bazzle requires clear language that forbids class arbitration in order to bar a class action. The Panel, however, agrees with Respondents that the test is a more general one—arbitrators must look to the language of the parties’ agreement to ascertain the parties’ intention whether they intended to permit or to preclude class action.” Ibid.
As we have explained, however, Bazzle did not establish the rule to be applied in deciding whether class arbitration is
permitted.8 The decision in Bazzle left that question open, and we turn to it now.
While the interpretation of an arbitration agreement is generally a matter of state law, see Arthur Andersen LLP v. Carlisle, 556 U. S. 624, 630-631 (2009); Perry v. Thomas, 482 U. S. 483, 493, n. 9 (1987), the FAA imposes certain rules of fundamental importance, including the basic precept that arbitration “is a matter of consent, not coercion,” Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U. S. 468, 479 (1989).
A
In 1925, Congress enacted the United States Arbitration Act, as the FAA was formerly known, for the express pur-
pose of making “valid and enforceable written provisions or agreements for arbitration of disputes arising out of contracts, maritime transactions, or commerce among the States or Territories or with foreign nations.”
Whether enforcing an agreement to arbitrate or construing an arbitration clause, courts and arbitrators must
Underscoring the consensual nature of private dispute resolution, we have held that parties are “‘generally free to structure their arbitration agreements as they see fit.‘” Mastrobuono, supra, at 57; see also AT&T Technologies, supra, at 648-649. For example, we have held that parties may agree to limit the issues they choose to arbitrate, see Mitsubishi Motors, supra, at 628, and may agree on rules under which any arbitration will proceed, Volt, supra, at 479. They may choose who will resolve specific disputes. E. g., App. 30a; Alexander v. Gardner-Denver Co., 415 U.S. 36, 57 (1974); Burchell v. Marsh, 17 How. 344, 349 (1855); see also International Produce, Inc. v. A/S Rosshavet, 638 F. 2d 548, 552 (CA2) (“The most sought-after arbitrators are those who are prominent and experienced members of the specific business community in which the dispute to be arbitrated arose“), cert. denied, 451 U.S. 1017 (1981).
We think it is also clear from our precedents and the contractual nature of arbitration that parties may specify with whom they choose to arbitrate their disputes. See EEOC v. Waffle House, Inc., 534 U.S. 279, 289 (2002) (“[N]othing in the [
B
From these principles, it follows that a party may not be compelled under the
In certain contexts, it is appropriate to presume that parties that enter into an arbitration agreement implicitly au- thorize the arbitrator to adopt such procedures as are necessary to give effect to the parties’ agreement. Thus, we have said that “‘procedural’ questions which grow out of the dispute and bear on its final disposition’ are presumptively not for the judge, but for an arbitrator, to decide.” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002) (quoting John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557 (1964)). This recognition is grounded in the background principle that “[w]hen the parties to a bargain sufficiently defined to be a contract have not agreed with respect to a term which is essential to a determination of their rights and duties, a term which is reasonable in the circumstances is supplied by the court.” Restatement (Second) of Contracts § 204 (1979).
An implicit agreement to authorize class-action arbitration, however, is not a term that the arbitrator may infer solely from the fact of the parties’ agreement to arbitrate. This is so because class-action arbitration changes the nature of arbitration to such a degree that it cannot be presumed the parties consented to it by simply agreeing to submit their disputes to an arbitrator. In bilateral arbitration, parties forgo the procedural rigor and appellate review of the courts in order to realize the benefits of private dispute resolution: lower costs, greater efficiency and speed, and the ability to choose expert adjudicators to resolve specialized disputes. See Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 31 (1991); Mitsubishi Motors, 473 U.S., at 628; see also 14 Penn Plaza LLC v. Pyett, 556 U.S. 247, 257 (2009) (“Parties generally favor arbitration precisely because of the economics of dispute resolution” (citing Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 123 (2001))); Gardner-Denver, supra, at 57 (“Parties usually choose an arbitrator because they trust his knowledge and judgment concerning the demands and norms of industrial relations“). But the relative benefits of class-action arbitration are much less assured, giving reason to doubt the parties’ mutual consent to resolve disputes
Consider just some of the fundamental changes brought about by the shift from bilateral arbitration to class-action arbitration. An arbitrator chosen according to an agreed-upon procedure, see, e. g., supra, at 667, no longer resolves a single dispute between the parties to a single agreement, but instead resolves many disputes between hundreds or perhaps even thousands of parties. See App. 86a (“[W]e believe domestic class members could be in the hundreds” and that “[t]here could be class members that ship to and from the U. S. who are not domestic who we think would be covered“); see also, e. g., Bazzle, 351 S. C., at 251, 569 S. E. 2d, at 352-353 (involving a class of 1,899 individuals that was awarded damages, fees, and costs of more than $14 million by a single arbitrator). Under the Class Rules, “[t]he presumption of privacy and confidentiality” that applies in many bilateral arbitrations “shall not apply in class arbitrations,” see Addendum to Brief for AAA as Amicus Curiae 10a (Class Rule 9(a)), thus potentially frustrating the parties’ assumptions when they agreed to arbitrate. The arbitrator‘s award no longer purports to bind just the parties to a single arbitration agreement, but adjudicates the rights of absent parties as well. Cf. Ortiz v. Fibreboard Corp., 527 U.S. 815, 846 (1999) (noting that “the burden of justification rests on the exception” to the general rule that “one is not bound by a judgment in personam in a litigation in which he is not designated as a party or to which he has not been made a party by service of process” (internal quotation marks omitted)). And the commercial stakes of class-action arbitration are comparable to those of class-action litigation, cf. App. in No. 06-3474-cv (CA2), at A-77, A-79, ¶¶ 30, 31, 40, even though the scope of judicial review is much more limited, see Hall Street, 552 U.S., at 588. We think that the differences between bilateral and class-action arbitration are too great for arbitrators to presume, consistent with their limited powers under the
The dissent minimizes these crucial differences by characterizing the question before the arbitrators as being merely what “procedural mode” was available to present AnimalFeeds’ claims. Post, at 696. If the question were that simple, there would be no need to consider the parties’ intent with respect to class arbitration. See Howsam, supra, at 84 (committing “procedural questions” presumptively to the arbitrator‘s discretion (internal quotation marks omitted)). But the
For these reasons, the judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.
It is so ordered.
JUSTICE SOTOMAYOR took no part in the consideration or decision of this case.
JUSTICE GINSBURG, with whom JUSTICE STEVENS and JUSTICE BREYER join, dissenting.
When an arbitration clause is silent on the question, may arbitration proceed on behalf of a class? The Court prematurely takes up that important question and, indulging in de novo review, overturns the ruling of experienced arbitrators.1
The Court errs in addressing an issue not ripe for judicial review. Compounding that error, the Court substitutes its judgment for that of the decisionmakers chosen by the parties. I would dismiss the petition as improvidently granted.2 Were I to reach the merits, I would adhere to the strict limitations the Federal Arbitration Act (
I
As the Court recounts, ante, at 667-670, this case was launched as a class action in federal court charging named ocean carriers (collectively, Stolt-Nielsen) with a conspiracy to extract supracompetitive prices from their customers (buyers of ocean-transportation services). That court action terminated when the Second Circuit held, first, that the parties’ transactions were governed by contracts (charter parties) with enforceable arbitration clauses, and second, that the antitrust claims were arbitrable. JLM Industries, Inc. v. Stolt-Nielsen S. A., 387 F. 3d 163, 175, 181 (2004).
Cargo-shipper AnimalFeeds International Corp. (AnimalFeeds) thereupon filed a demand for class arbitration of the antitrust-conspiracy claims.3 Stolt-Nielsen contested AnimalFeeds’ right to proceed on behalf of a class, but agreed to submission of that threshold dispute to a panel of arbitrators. Thus, the parties entered into a supplemental agreement to choose arbitrators and instruct them to “follow . . . Rul[e] 3 . . . of the American Arbitration Association‘s Supplementary Rules for Class Arbitrations.” App. to Pet. for Cert. 59a. Rule 3, in turn, directed the panel to “determine . . . whether the applicable arbitration clause permits the arbitration to proceed on behalf of . . . a class.” App. 56a.
After receiving written submissions and hearing arguments, the arbitration panel rendered a clause-construction award. It decided unanimously—and only—that the “arbitration claus[e] [used in the parties’ standard-form shipping contracts] permit[s] this . . . arbitration to proceed as a class arbitration.” App. to Pet. for Cert. 52a. Stolt-Nielsen petitioned for court review urging vacatur of the clause-construction
II
I consider, first, the fitness of the arbitrators’ clause-construction award for judicial review. The arbitrators decided the issue, in accord with the parties’ supplemental agreement, “as a threshold matter.” App. 56a. Their decision that the charter-party arbitration clause permitted class arbitration was abstract and highly interlocutory. The panel did not decide whether the particular claims AnimalFeeds advanced were suitable for class resolution, see App. to Pet. for Cert. 48a-49a; much less did it delineate any class or consider whether, “if a class is certified, . . . members of the putative class should be required to ‘opt in’ to th[e] proceeding,” id., at 52a.
The Court, ante, at 670-671, n. 2, does not persuasively justify judicial intervention so early in the game or convincingly reconcile its adjudication with the firm final-judgment rule prevailing in the federal court system. See, e. g.,
We have equated to “final decisions” a slim set of collateral orders that share these characteristics: They “are conclusive, [they] resolve important questions separate from the merits, and [they] are effectively unreviewable on appeal from the final judgment in the underlying action.” Mohawk Industries, Inc. v. Carpenter, 558 U.S. 100, 106 (2009) (quoting Swint v. Chambers County Comm‘n, 514 U.S. 35, 42 (1995)). “[O]rders relating to class certification” in federal court, it is settled, do not fit that bill. Coopers & Lybrand v. Livesay, 437 U.S. 463, 470 (1978).4
Congress, of course, can provide exceptions to the “final-decision” rule. Prescriptions in point include
Lacking this Court‘s definitive guidance, some Courts of Appeals have reviewed arbitration awards “finally and definitely dispos[ing] of a separate independent claim.” E. g., Metallgesellschaft A. G. v. M/V Capitan Constante, 790 F. 2d 280, 283 (CA2 1986).5 Others have considered “partial award[s]” that finally “determin[e] liability, but . . . not . . . damages.” E. g., Hart Surgical, Inc. v. Ultracision, Inc., 244 F. 3d 231, 234 (CA1 2001).6 Another confirmed an interim ruling on a “separate, discrete, independent, severable issue.” Island Creek Coal Sales Co. v. Gainesville, 729 F. 2d 1046, 1049 (CA6 1984) (internal quotation marks omitted), abrogated on other grounds by Cortez Byrd Chips, Inc. v. Bill Harbert Constr. Co., 529 U.S. 193 (2000).
Receptivity to review of preliminary rulings rendered by arbitrators, however, is hardly universal. See Dealer Computer Servs., Inc. v. Dub Herring Ford, 547 F. 3d 558 (CA6 2008) (arbitration panel‘s preliminary ruling that contract did not bar class proceedings held not ripe for review; arbitrators had not yet determined that arbitration should proceed on behalf of a class); Metallgesellschaft A. G., 790 F. 2d, at 283, 285 (Feinberg, C. J., dissenting) (“[Piecemeal review] will make arbitration more like litigation, a result not to be desired. It would be better to minimize the number of occasions the parties to arbitration can come to court; on the whole, this benefits the parties, the arbitration process and the courts.“).
While lower court opinions are thus divided, this much is plain: No decision of this Court, until today, has ever approved immediate judicial review of an arbitrator‘s decision as preliminary as the “partial award” made in this case.7
III
Even if Stolt-Nielsen had a plea ripe for judicial review, the Court should reject it on the merits. Recall that the parties
A
The controlling
catur codified in
The sole
B
The Court‘s characterization of the arbitration panel‘s decision as resting on “policy,” not law, is hardly fair comment, for “policy” is not so much as mentioned in the arbitrators’ award. Instead, the panel tied its conclusion that the arbitration clause permitted class arbitration, App. to Pet. for Cert. 52a, to New York law, federal maritime law, and decisions made by other panels pursuant to Rule 3 of the American Arbitration Association‘s Supplementary Rules for Class Arbitrations. Id., at 49a-50a.
At the outset of its explanation, the panel rejected the argument, proffered by AnimalFeeds, that this Court‘s decision in Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003), settled the matter by “requir[ing] clear language that forbids class arbitration in order to bar a class action.” App. to Pet. for Cert. 49a (emphasis added). Agreeing with Stolt-Nielsen in this regard, the panel said that the test it employed looked to the language of the particular agreement to gauge whether the parties “intended to permit or to preclude class action[s].” Ibid. Concentrating on the wording of the arbitration clause, the panel observed, is “consistent with New York law as articulated by the [New York] Court of Appeals . . . and with federal maritime law.” Ibid.9
Emphasizing the breadth of the clause in question—“‘any dispute arising from the making, performance or termination of this Charter Party’ shall be put to arbitration,” id., at 50a—the panel noted that numerous other partial awards had relied on language similarly comprehensive to permit class proceedings “in a wide variety of settings.” Id., at 49a-50a. The panel further noted “that many of the other panels [had] rejected arguments similar to those advanced by [Stolt-Nielsen].” Id., at 50a.
The Court features a statement counsel for AnimalFeeds made at the hearing before the arbitration panel, and maintains that it belies any argument that the clause in question permits class arbitration: “[A]ll the parties agree that when a contract is silent on an issue there‘s been no agreement that has been reached on that issue.” Ante, at 669 (quoting App. 77a); see ante, at 673, 676, 684, 687, and n. 10. The sentence quoted from the hearing transcript concluded: “[T]herefore there has been no agreement to bar class arbitrations.” App. 77a (emphasis added). Counsel quickly clarified his position: “It‘s also undisputed that the arbitration clause here contains broad language and this language should be interpreted to permit class arbitrations.” Id., at 79a. See also id., at 80a (noting consistent recognition by arbitration panels that “a silent broadly worded arbitration clause, just like the one at issue here, should be construed to permit class arbitration“); id., at 88a (“[B]road . . . language . . . silent as to class proceedings should be interpreted to permit a class proceeding.“).
Stolt-Nielsen, the panel acknowledged, had vigorously argued, with the support of expert testimony, that “the bulk of international shippers would never intend to have their disputes decided in a class arbitration.” App. to Pet. for Cert. 52a. That concern, the panel suggested, might be met at a later stage; “if a class is certified,” the panel noted, class membership could be confined to those who affirmatively “‘opt in‘” to the proceeding. Ibid.
The question properly before the Court is not whether the arbitrators’ ruling was erroneous, but whether the arbitrators “exceeded their powers.”
C
The Court not only intrudes on a decision the parties referred to arbitrators. It compounds the intrusion by according the arbitrators no opportunity to clarify their decision and thereby to cure the error the Court perceives. Section
IV
A
For arbitrators to consider whether a claim should proceed on a class basis, the Court apparently demands contractual language one can read as affirmatively authorizing class arbitration. See ante, at 684 (“[A] party may not be compelled under the
The Court ties the requirement of affirmative authorization to “the basic precept that arbitration ‘is a matter of con-
sent, not coercion.‘” Ante, at 681 (quoting Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989)). Parties may “specify with whom they choose to arbitrate,” the Court observes, just as they may “limit the issues they choose to arbitrate.” Ante, at 683. But arbitrators, in delineating an appropriate class, need not, and should not, disregard such contractual constraints. In this case, for example, AnimalFeeds proposes to pursue, on behalf of a class, only “claims . . . arising out of any [charter-party agreement] . . . that provides for arbitration.” App. to Pet. for Cert. 56a (emphasis added). Should the arbitrators certify the proposed class, they would adjudicate only the rights of persons
The Court also links its affirmative-authorization requirement to the parties’ right to stipulate rules under which arbitration may proceed. See ibid. The question, however, is the proper default rule when there is no stipulation. Arbitration provisions, this Court has noted, are a species of forum-selection clauses. See Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 (1974). Suppose the parties had chosen a New York judicial forum for resolution of “any dispute” involving a contract for ocean carriage of goods. There is little question that the designated court, state or federal, would have authority to conduct claims like AnimalFeeds’ on a class basis. Why should the class-action prospect vanish when the “any dispute” clause is contained in an arbitration agreement? Cf. Connecticut General Life Ins. Co. v. Sun Life Assurance Co. of Canada, 210 F. 3d 771, 774-776 (CA7 2000) (reading contract‘s authorization to arbitrate “[a]ny dispute” to permit consolidation of arbitrations). If the Court is right that arbitrators ordinarily are not equipped to manage class proceedings, see ante, at 685-686, then the claimant should retain its right to proceed in that format in court.
B
When adjudication is costly and individual claims are no more than modest in size, class proceedings may be “the thing,” i. e., without them, potential claimants will have little, if any, incentive to seek vindication of their rights. Amchem Products, Inc. v. Windsor, 521 U.S. 591, 617 (1997); Carnegie v. Household Int‘l, Inc., 376 F. 3d 656, 661 (CA7 2004) (“The realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30.“). Mindful that disallowance of class proceedings severely shrinks the dimensions of the case or controversy a claimant can mount, I note some stopping points in the Court‘s decision.
First, the Court does not insist on express consent to class arbitration. Class arbitration may be ordered if “there is a contractual basis for concluding that the part[ies] agreed” “to submit to class arbitration.” Ante, at 684; see ante, at 687, n. 10 (“We have no occasion to decide what contractual basis may support a finding that the parties agreed to authorize class-action arbitration.“). Second, by observing that “the parties [here] are sophisticated business entities,” and “that it is customary for the shipper to choose the charter party that is used for a particular shipment,” the Court apparently spares from its affirmative-authorization requirement contracts of adhesion presented on a take-it-or-leave-it basis. Ante, at 684. While these qualifications limit the scope of the Court‘s decision, I remain persuaded that the arbitrators’ judgment should not have been disturbed.
*
For the foregoing reasons, I would dismiss the petition for want of a controversy ripe for judicial review. Were I to reach the merits, I would affirm the Second Circuit‘s judgment confirming the arbitrators’ clause-construction decision.
Notes
“In any of the following cases the United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration—
“(1) where the award was procured by corruption, fraud, or undue means;
“(2) where there was evident partiality or corruption in the arbitrators, or either of them;
“(3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or
“(4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.”