Is it Arbitrable? #SCOTUS Considering Contractual Rules Incorporation and Parties' Intent
By Sasha Hill
The U.S. Supreme Court will soon consider hearing a case that could have a major impact on how contractual arbitration clauses are interpreted and applied to class arbitration cases. It’s a return to the long-running arbitration practice question of who decides whether and how a case is arbitrated.
On Aug. 28, a group of insurance service providers filed a petition for a writ of certiorari to the Supreme Court seeking review of a March 2025, Fifth U.S. Circuit Court of Appeals ruling that allowed class arbitration in the multiple cases that originally had been filed by the Supreme Court respondents—a group of Louisiana doctors, and the doctors’ practices and insurers, when disputes about servicing agreements arose. The Supreme Court petitioners are the companies that assisted the respondents with their government and private health insurance payments.
The issue in Feldman v. Sullivan, No. 25-240, is whether the parties’ generic incorporation of an arbitration provider’s rules in their arbitration agreement is clear and unmistakable evidence that the parties intended to delegate the issue of class arbitrability to an arbitrator.
The petitioners want the nation’s top Court to resolve a circuit split on the issue. They claim that the Third, Fourth, Sixth, and Eighth Circuits held that the incorporation of standard arbitration rules in an arbitration agreement doesn’t provide clear and unmistakable evidence that the partes intended to delegate the question of class arbitrability to an arbitrator—which aligns with the petitioners’ stance and argument.
On the other hand, the Second, Tenth, and Eleventh Circuits—and including the Fifth Circuit in Feldman--found the opposite, and have held that the incorporation of standard arbitration rules is clear and unmistakable evidence the parties intended to delegate the question of arbitrability to an arbitrator.
The “who decides arbitrability?” question was last confronted--and avoided--by the U.S. Supreme Court in Henry Schein Inc. v. Archer and White Sales Inc., No. 19-963, where the Court dismissed a case after full oral argument, stuck on the issue of incorporation of arbitration rules rather than the arbitration issue that had been presented. Full details and links to history at Russ Bleemer, “Scotus’s Henry Schein No-Decision,” CPR Speaks (Jan. 25, 2021) (available at https://blog.cpradr.org/2021/01/25/scotuss-henry-schein-no-decision/).
The question of whether a case is to be sent to a court, or a designated arbitrator, to determine whether a case should be arbitrated, has produced a line of cases since the seminal First Options of Chicago Inc. v. Kaplan, 514 U.S. 938 (1995) (available at https://bit.ly/39fAwcR). The case stands for the proposition that courts rather than arbitrators decide arbitrability unless there is clear and unmistakable evidence that the parties agreed to arbitrate the question. First Options is notable also because the argument on behalf of the losing petitioner was by Chief Justice John G. Roberts Jr.
Feldman briefing concluded over the holidays, and just before Christmas, the Court scheduled the case for a Jan. 9 conference. No amicus have been filed at this writing.
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Feldman v. Sullivan arises out of a business partnership between the defendants, Sullivan and other Louisiana doctors, and petitioners Feldman, his law firm, and other business entities. Within their contract was an arbitration clause that required disputes between the parties to be arbitrated under the American Arbitration Association Commercial Arbitration Rules; it stated that arbitrability questions are for the arbitrator to decide, while, the petitioners contend, remaining silent about class arbitration.
After disagreements emerged between the parties in 2020, they each initiated multiple arbitration cases—four by the petitioners and five by the respondents. The district court allowed four arbitrations concerning the same dispute to proceed in parallel. One arbitrator, Charles Jones—former Chief Judge of Louisiana’s Fourth Circuit Court of Appeal, who died on July 4 in New Orleans--found that the parties’ agreement allowed class arbitration and held an additional hearing on class damages. Another arbitrator, Mark Glaser, of Houston, found the exact opposite, concluding the agreement did not permit class arbitration.
Three of the arbitrators issued final awards between about $1.5 million and $4.5 million. Jones, the only arbitrator who certified a class, entered a significantly larger final award: $31 million to the class in damages and $89 million to respondents in individual damages, fees, and costs.
The Texas Southern U.S. District Court confirmed all four awards. Although petitioners asked the court to vacate Arbitrator Jones’ award on the grounds that he exceeded his authority by allowing class claims to proceed, the court rejected the argument, concluding that the incorporation of AAA rules granted the arbitrator the authority to decide the issue of class arbitration.
The Fifth Circuit went on to clarify that class arbitrability is a gateway issue that the courts leave to arbitrators if there is evidence the parties clearly and unmistakably intended the result. The panel reasoned that incorporating the AAA Commercial Arbitration Rules also incorporated the AAA Supplementary Rules for Class Arbitration; Rule 4(a) provides that the arbitrator shall determine whether the arbitration clause permits class arbitration.
Thus, the Fifth Circuit panel concluded that the incorporation of these rules demonstrated the parties’ intent to delegate class arbitrability decisions to the arbitrator, and affirmed the four arbitration awards, including Jones’ class arbitration determination, against the petitioners.
The petitioners sought rehearing en banc. The Fifth Circuit denied their petition. They now request Supreme Court review, contending that incorporation of a provider’s rules does not constitute clear and unmistakable evidence that the parties intended to delegate the issue of class arbitrability to an arbitrator.
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The petitioners argue that because arbitration is contract-based, it is rooted in consent where all parties must explicitly agree to arbitrate specific matters. Gateway questions of arbitrability, such as whether a contract allows class arbitration, are presumptively for the courts to decide unless it is clearly delegated otherwise.
The federal circuit courts, however, disagree about whether adopting arbitration rules–as the parties here adopted the AAA’s–demonstrates clear delegation of class arbitrability to an arbitrator. In Chesapeake Appalachia, LLC v. Scout Petroleum LLC, 809 F.3d 746 (3d Cir.), the Third Circuit held that an arbitration agreement’s incorporation of standard rules did not provide enough evidence that the question of class arbitrability should be decided by anyone other than the court system.
Similarly, in Dell Webb Communities Inc. v. Carlson, 817 F.3d 867 (4th Cir. 2016), the Fourth Circuit held that an agreement that used the AAA’s rules, and was silent on class arbitration, and did not provide clear and unmistakable proof that the arbitrator should decide if the agreement authorizes class arbitration.
The Sixth and Eighth Circuits have similarly aligned rulings in both AlixPartners LLP v. Brewington, 836 F.3d 543 (6th Cir. 2016), and Catamaran Corp v. Towncrest Pharmacy, 864 F.3d 966 (8th Cir. 2017), respectively. Therefore, the petitioner’s first argument in its writ for certiorari is that the Supreme Court needs to review the case to resolve the circuit split on rule incorporation.
Diametrically opposed to the aforementioned rulings, in Jock v. Sterling Jewelers, 942 F.3d 617 (2d Cir. 2019), and Wells Fargo Advisors LLC v. Sappington, 884 F.3d 392 (2d Cir. 2018), the Second Circuit ruled that the incorporation of the AAA’s Rules clearly evinces agreement to have an arbitrator decide on the question of class arbitrability.
In the Tenth Circuit’s case, Dish Network LLC v. Ray, 900 F.3d 1240 (10th Cir. 2018), the court found that the incorporation of the AAA’s National Rules for Resolution of Employment Disputes clearly and unmistakably demonstrates that the parties intended for the arbitrator to decide on class arbitrability.
The Eleventh Circuit reached a similar conclusion in Spirit Airlines, Inc. v. Maizes, 899 F.3d 1230 (2018), holding that the incorporation of the AAA’s rules was sufficient to delegate class arbitrability to an arbitrator.
And finally, the Fifth Circuit held that the incorporation of JAMS Employment Arbitration Rules & Procedures clearly delegated class arbitrability to the arbitrator in a predecessor to Feldman, Work v. Intertek Research Solutions Inc., 102 F.4th 769 (5th Cir. 2024).
Therefore, the petitioners’ argue that the circuit split needs to be resolved. “This split is open and notorious,” the cert petition brief states, adding, “multiple courts have acknowledged it.”
The petitioners go on to emphasize that the question of class arbitration arises frequently given the ubiquitous nature of arbitration clauses and the prevalence of its usage in contracts within a variety of industries. They contend that the Supreme Court should clarify how clauses should be interpreted in contracts nationwide, rather than having defendants subject to different rules depending on which state the case is tried in.
Next, Petitioners argue that class arbitration is a “gateway” issue of significant consequence because it fundamentally changes arbitration. Shifting from bilateral to class arbitration sacrifices many of arbitration’s core advantages—lower costs, greater efficiency and speed, and the ability to choose the adjudicators—while simultaneously increasing risks to defendants.
Those risks are exacerbated by the absence of multiple layers of de novo review, the concentration of decision-making power in a single arbitrator, and the reality that judicial review of arbitral awards is extremely limited and only set aside in the rarest of circumstances. Thus, defendants risk an irreversible outcome, even if errors are present in the final decision.
Furthermore, if class arbitrability is delegated too easily to arbitrators, parties may be forced into arbitration without having clearly agreed to it, thus violating arbitration’s core principle of consent.
The petitioners assert that the Fifth Circuit’s ruling is wrong and that “[t]he mere incorporation of standard arbitration rules into an arbitration agreement is not clear and unmistakable evidence that the parties intend to delegate the highly consequential question of class arbitrability to an arbitrator.”
Citing reasoning from Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010), the petition contends that silence or ambiguity of an arbitration clause, or the incorporation of standard rules, is not sufficient to assert that parties to an arbitration agreement agreed to allow the question of class arbitration be decided by an arbitrator.
The petition argues that to have parties sign a contract that stipulates disputes will be arbitrated under standard rules and automatically assume that they have agreed that an arbitrator will decide whether class arbitration is allowed–unless it is explicitly written in the contract that the courts get to decide the issue—is to flip the default by requiring parties expressly reserve class arbitrability for courts, even though the law presumes courts decide that issue unless there is clear evidence to the contrary.
The petitioners argue that this case is an ideal vehicle for resolving the question presented because it directly and unambiguously frames the issue at hand. The case arises from four parallel arbitration proceedings involving the same arbitration agreement and the same class arbitrability question, while also starkly demonstrating the existing circuit split. Moreover, it demonstrates the real-world consequences of permitting arbitrators to decide class arbitrability, as shown by inconsistent rulings across circuits.
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The respondents’ brief, filed earlier this month, argues that the contract delegates arbitrability to the arbitrator, and the “petitioners bizarrely ignore what the parties’ contract actually says.”
First, they state that the question at issue that the petitioners present mischaracterizes the case. They explain that the contract did not just incorporate arbitration rules, but also expressly and unambiguously delegated all arbitrability questions to the arbitrator—though that express language was omitted from the petition.
Next, the respondents assert that there is no circuit split for the case at issue because it exists only where contracts incorporate the AAA rules with no express delegation language. Here, the contract contains express language that divests the court’s powers and grants the arbitrator broad power over deciding threshold questions of arbitrability. This distinct contract would be decided the same way in every circuit because of that explicit language, the response argues, also noting that the petitioners presume to alter the default Fifth Circuit view of delegating arbitrability.
“Petitioners are free to decide how to frame their question presented,” notes the respondents, “But petitioners are not free to reinvent the record. Contracts are read as a whole.”
The respondents also argue that even if the question presented was applicable to this case, it is not a good vehicle for deciding on the issue presented because there are many serious procedural problems. The response brief asserts that the factual and procedural history of the case is complex and messy, and that there are jurisdictional questions, mootness concerns due to a pending arbitration, and preservation-of-records issues.
In all, respondents claim that petitioners overstate the importance of the legal issue they present because even if arbitration questions are important, this particular case does not present them in a way that necessitates Supreme Court intervention. Thus, they argue this petition for review should be denied.
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In a Dec. 22 reply brief, the petitioners highlight the importance of the issue of incorporation of rules as an arbitrability delegation, and reemphasize the need to resolve the circuit split. “Because the decisions below expressly applied a ‘mere incorporation’ rule,” the insurance servicing companies insist, “the propriety of that rule is directly presented.”
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The author is the CPR Institute’s 2025-2026 academic year intern from the Howard University School of Law ADR Program, where she is a second-year student in Washington, D.C., Alternatives to the High Cost of Litigation editor Russ Bleemer contributed to the research.
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