Did you know that "charter party" means a contract to rent a boat or space in or on it? Lots of weird rules govern such maritime agreements. But does a charter party that by its terms mandates arbitration of "any disputes" — like any other contract — allow arbitration on behalf of a class?
The arbitrators in a case involving claims that owners of ocean-going freighters conspired to fix prices – Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., No. 08-1198 (U.S.) – said it does. The Second Circuit held the neutrals acted within their broad powers.
But today the U.S. Supreme Court thought hard about casting the panel's ruling aside. Their Honors wanted to know if "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."
What did Blawgletter learn from reading the transcript? Just this:
Chief Justice Roberts: I hates class actions! Hates 'em, I tells ya!
Justice Scalia: "I used to teach contracts."
Justice Alito: The arbitrators didn't have power to do what they did. Plus class actions are hated by me, too — but only in the passive voice. Totally different from the Chief. Completely, I tells ya!
Justice Breyer: I regret not having the "pleasure" of learning contracts from my excellent colleague. Although he never taught at Harvard. As I did. Although I didn't teach myself. Despite the fact I could have.
Justice Ginsburg: AnimalFeeds — do they really use that name? I mean really? – won with the arbitrators. Game over, right?
Justice Stevens: I love the smell of class arbitrations in the morning. Also evenings. And afternoons.
Justice Kennedy: Arbitrators, like judges, can do things we don't like. Tough.
Justice Thomas: I will dissent no matter what.
Justice Sotomayor: I can't believe I didn't ask a single question.
Our ruling? The Court would frighten us if it holds that the arbitral panel lacked authority to construe the charter party as permitting the plaintiffs to arbitrate on behalf of a class of freight-shippers. The Court has made clear, in the last decade or so, that the decisions of arbitrators deserve tons of deference. That view, we believe, reflects a doubtful if not hostile attitude towards lawsuits. But logical consistency, if nothing else, should compel the Final Nine to respect the output of the system they have wrought.