author: Justice Ginsburg

text:
    SWINT et al. v. CHAMBERS COUNTY COMMISSION et al.
    No. 93-1636.
    Argued January 10, 1995
    Decided March 1, 1995

      Ginsburg, J., delivered the opinion for a unanimous Court.

      Robert B. McDuff argued the cause for petitioners. With him on the briefs were Carlos A. Williams, Bryan Stevenson, and Bernard Harcourt.

      Paul R. Q. Wolfson argued the cause for the United States as amicus curiae in support of petitioners. On the brief were Solicitor General Days, Assistant Attorney General Patrick, Deputy Solicitor General Bender, Beth S. Brinkmann, Jessica Dunsay Silver, and Linda F. Thome.

      Paul M. Smith argued the cause for respondents. With him on the brief for respondent Chambers County Commission were Bruce J. Ennis, Donald B. Verrilli, Jr., James W. Webb, Kendrick E. Webb, and Bart Harmon.

        J. Michael McGuinness filed a brief for the Southern States Police Benevolent Association as amicus curiae urging reversal.
      Briefs of amici curiae urging affirmance were filed for Jefferson County, Alabama, by Charles S. Wagner; and for the National Association of Counties et al. by Richard Ruda.

        Mitchell F. Dolin, T. Jeremy Gunn, Steven R. Shapiro, Michael A Cooper, Herbert J. Hansell, Norman Redlich, Thomas J. Henderson, and Sharon R. Vinick filed a brief for the American Civil Liberties Union et al. as amici curiae.

   Justice Ginsburg

delivered the opinion of the Court.

In the wake of successive police raids on a nightclub in Chambers County, Alabama, two of the club’s owners joined by an employee and a patron (petitioners here) sued the Chambers County Commission (respondent here), the city of Wadley, and three individual police officers. Petitioners sought damages and other relief, pursuant to 42 U. S. C. § 1988, for alleged civil rights violations. We granted certiorari to review the decision of the United States Court of Appeals for the Eleventh Circuit, which held that the Chambers County Commission qualified for summary judgment because the sheriff who authorized the raids was a state executive officer and not an agent of the county commission. We do not reach that issue, however, because we conclude that the Eleventh Circuit lacked jurisdiction to rule on the county commission’s liability at this interlocutory stage of the litigation.

The Eleventh Circuit unquestionably had jurisdiction to review the denial of the individual police officer defendants’ motions for summary judgment based on their alleged qualified immunity from suit. But the Circuit Court did not thereby gain authority to review the denial of the Chambers County Commission’s motion for summary judgment. The commission’s appeal, we hold, does not fit within the “collateral order” doctrine, nor is there “pendent party” appellate authority to take up the commission’s case. We therefore vacate the relevant portion of the Eleventh Circuit’s judgment and remand the case for proceedings consistent with this opinion.

I

On December 14, 1990, and again on March 29, 1991, law enforcement officers from Chambers County and the city of Wadley, Alabama, raided the Capri Club in Chambers County as part of a narcotics operation. The raids were conducted without a search warrant or an arrest warrant. Petitioners filed suit, alleging, among other claims for relief, violations of their federal civil rights. Petitioners named as defendants the county commission; the city of Wadley; and three individual defendants, Chambers County Sheriff James C. Morgan, Wadley Police Chief Freddie Morgan, and Wadley Police Officer Gregory Dendinger.

The five defendants moved for summary judgment on varying grounds. The three individual defendants asserted qualified immunity from suit on petitioners’ federal claims. See Anderson v. Creighton, 483 U. S. 635, 639 (1987) (governmental officials are immune from suit for civil damages unless their conduct is unreasonable in light of clearly established law). Without addressing the question whether Wadley Police Chief Freddie Morgan, who participated in the raids, was a policymaker for the municipality, the city argued that a respondeat superior theory could not be used to hold it liable under § 1983. See Monell v. New York City Dept. of Social Servs., 436 U. S. 658, 694 (1978) (a local government may not be sued under § 1983 for injury inflicted solely by its nonpolicymaking employees or agents). The Chambers County Commission argued that County Sheriff James C. Morgan, who authorized the raids, was not a policymaker for the county.

The United States District Court for the Middle District of Alabama denied the motions for summary judgment. The District Court agreed that § 1983 liability could not be imposed on the city for an injury inflicted by a nonpolicymaking employee; that court denied the city’s summary judgment motion, however, because the city had failed to argue that Wadley Police Chief Freddie Morgan was not its policymaker for law enforcement. Regarding the county commission’s motion, the District Court was “persuaded by the Plaintiffs that Sheriff [James C.] Morgan may have been the final decision-maker for the County in ferreting out crime, although he is a State of Alabama employee.” App. to Pet. for Cert. 67a. The District Court later denied the defendants’ motions for reconsideration, but indicated its intent to revisit, before jury deliberations, the question whether Sheriff Morgan was a policymaker for the county:

“The Chambers County Defendants correctly point out that whether Sheriff James Morgan was the final policy maker is a question of law that this Court can decide. What th[is] Court decided in its [prior order] was that the Plaintiffs had come forward with sufficient evidence to persuade this Court that Sheriff Morgan may be the final policy maker for the County. The parties will have an opportunity to convince this Court that Sheriff Morgan was or was not the final policy maker for the County, and the Court will make a ruling as a matter of law on that issue before the case goes to the jury.” Id., at 72a.

Invoking the rule that an order denying qualified immunity is appealable before trial, Mitchell v. Forsyth, 472 U. S. 511, 530 (1985), the individual defendants immediately appealed. The city of Wadley and the Chambers County Commission also appealed, arguing, first, that the denial of their summary judgment motions — like the denial of the individual defendants’ summary judgment motions — was immediately appealable as a collateral order satisfying the test announced in Cohen v. Beneficial Industrial Loan Corp., 337 U. S. 541, 546 (1949) (decisions that are conclusive, that resolve important questions apart from the merits of the underlying action, and that are effectively unreviewable on appeal from final judgment may be appealed immediately). Alternatively, the city and county commission urged the Eleventh Circuit Court of Appeals to exercise “pendent appellate jurisdiction,” a power that court had asserted in earlier cases. Stressing the Eleventh Circuit’s undisputed jurisdiction over the individual defendants’ qualified immunity pleas, the city and county commission maintained that, in the interest of judicial economy, the court should resolve, simultaneously, the city’s and commission’s appeals.

The Eleventh Circuit affirmed in part and reversed in part the District Court’s order denying summary judgment for the individual defendants. 5 F. 3d 1435, 1448 (1993), modified, 11 F. 3d 1030, 1031-1032 (1994). Next, the Eleventh Circuit held that the District Court’s rejections of the county commission’s and city’s summary judgment motions were not immediately appealable as collateral orders. 5 F. 3d, at 1449, 1452. Nevertheless, the Circuit Court decided to exercise pendent appellate jurisdiction over the county commission’s appeal. Id., at 1449-1450. Holding that Sheriff James C. Morgan was not a policymaker for the county in the area of law enforcement, the Eleventh Circuit reversed the District Court’s order denying the county commission’s motion for summary judgment. Id., at 1450-1451. The Eleventh Circuit declined to exercise pendent appellate jurisdiction over the city’s appeal because the District Court had not yet decided whether Wadley Police Chief Freddie Morgan was a policymaker for the city. Id., at 1451-1452.

We granted certiorari to review the Court of Appeals’ decision that Sheriff Morgan is not a policymaker for Chambers County. 512 U. S. 1204 (1994). We then instructed the parties to file supplemental briefs addressing this question: Given the Eleventh Circuit’s jurisdiction to review immediately the District Court’s refusal to grant summary judgment for the individual defendants in response to their pleas of qualified immunity, did the Circuit Court also have jurisdiction to review at once the denial of the county commission’s summary judgment motion? 513 U. S. 958 (1994). We now hold that the Eleventh Circuit should have dismissed the county commission’s appeal for want of jurisdiction.

II

We inquire first whether the denial of the county commission’s summary judgment motion was appealable as a collateral order. The answer, as the Court of Appeals recognized, is a firm “No.”

By statute, federal courts of appeals have “jurisdiction of appeals from all final decisions of the district courts,” except where direct review may be had in this Court. 28 U. S. C. § 1291. “The collateral order doctrine is best understood not as an exception to the ‘final decision’ rule laid down by Congress in § 1291, but as a ‘practical construction’ of it.” Digital Equipment Corp. v. Desktop Direct, Inc., 511 U. S. 863, 867 (1994) (quoting Cohen, 337 U. S., at 546). In Cohen, we held that § 1291 permits appeals not only from a final decision by which a district court disassociates itself from a case, but also from a small category of decisions that, although they do not end the litigation, must nonetheless be considered “final.” Id,., at 546. That small category includes only decisions that are conclusive, that resolve important questions separate from the merits, and that are effectively unreviewable on appeal from the final judgment in the underlying action. Ibid.

The District Court planned to reconsider its ruling on the county commission’s summary judgment motion before the case went to the jury. That court had initially determined only that “Sheriff Morgan ... may have been the final policy maker for the County.” App. to Pet. for Cert. 67a (emphasis added). The ruling thus fails the Cohen test, which “disallow[s] appeal from any decision which is tentative, informal or incomplete.” 337 U. S., at 546; see Coopers & Lybrand v. Livesay, 437 U. S. 463, 469 (1978) (order denying class certification held not appealable under collateral order doctrine, in part because such an order is “subject to revision in the District Court”).

Moreover, the order denying the county commission’s summary judgment motion does not satisfy Cohen’s requirement that the decision be effectively unreviewable after final judgment. When we placed within the collateral order doctrine decisions denying pleas of government officials for qualified immunity, we stressed that an official’s qualified immunity is “an immunity from suit rather than a mere defense to liability; and like an absolute immunity, it is effectively lost if a case is erroneously permitted to go to trial.” Mitchell, 472 U. S., at 526 (emphasis in original).

The county commission invokes our decision in Monell, which held that municipalities are liable under § 1983 only for violations of federal law that occur pursuant to official governmental policy or custom. Monell, the commission contends, should be read to accord local governments a qualified right to be free from the burdens of trial. Accordingly, the commission maintains, the commission should be able to appeal immediately the District Court’s denial of its summary judgment motion. This argument undervalues a core point we reiterated last Term: “§ 1291 requires courts of appeals to view claims of a ‘right not to be tried’ with skepticism, if not a jaundiced eye,” Digital Equipment, 511 U. S., at 873, for “virtually every right that could be enforced appropriately by pretrial dismissal might loosely be described as conferring a ‘right not to stand trial,’” ibid.; cf. United States v. MacDonald, 435 U. S. 850, 858-859 (1978) (denial of pretrial motion to dismiss an indictment on speedy trial grounds held not appealable under collateral order doctrine).

The commission’s assertion that Sheriff Morgan is not its policymaker does not rank, under our decisions, as an immunity from suit. Instead, the plea ranks as a “mere defense to liability.” Mitchell, 472 U. S., at 526. An erroneous ruling on liability may be reviewed effectively on appeal from final judgment. Therefore, the order denying the county commission’s summary judgment motion was not an appeal-able collateral order.

Ill

Although the Court of Appeals recognized that the District Court’s order denying the county commission’s summary judgment motion was not appealable as a collateral order, the Circuit Court reviewed that ruling by assuming jurisdiction pendent to its undisputed jurisdiction to review the denial of the individual defendants’ summary judgment motions. Describing this “pendent appellate jurisdiction” as discretionary, the Eleventh Circuit concluded that judicial economy warranted its exercise in the instant case: “If the County Commission is correct about the merits in its appeal,” the court explained, “reviewing the district court’s order would put an end to the entire case against the County____” 5 F. 3d, at 1450.

Petitioners join respondent Chambers County Commission in urging that the Eleventh Circuit had pendent appellate jurisdiction to review, the District Court’s order denying the commission’s summary judgment motion. Both sides emphasize that § 1291’s final decision requirement is designed to prevent parties from interrupting litigation by pursuing piecemeal appeals. Once litigation has already been interrupted by an authorized pretrial appeal, petitioners and the county commission reason, there is no cause to resist the economy that pendent appellate jurisdiction promotes. See Supplemental Brief for Petitioners 16-17; Supplemental Brief for Respondent 5, 9. Respondent county commission invites us to adopt a “‘liberafl]’” construction of § 1291, and petitioners urge an interpretation sufficiently “[practical” and “[flexible” to accommodate pendent appellate review as exercised by the Eleventh Circuit. See id., at 4; Supplemental Brief for Petitioners 14.

These arguments drift away from the statutory instructions Congress has given to control the timing of appellate proceedings. The main rule on review of “final decisions,”. § 1291, is followed by prescriptions for appeals from “interlocutory decisions,” § 1292. Section 1292(a) lists three categories of immediately appealable interlocutory decisions. Of prime significance to the jurisdictional issue before us, Congress, in 1958, augmented the §1292 catalog of immediately appealable orders; Congress added a provision, § 1292(b), according the district courts circumscribed authority to certify for immediate appeal interlocutory orders deemed pivotal and debatable. Section 1292(b) provides:

“When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order. The Court of Appeals which would have jurisdiction of an appeal of such action may thereupon, in its discretion, permit an appeal to be taken from such order, if application is made to it within ten days after the entry of the order: Provided, however, That application for an appeal hereunder shall not stay proceedings in the district court unless the district judge or the Court of Appeals or a judge thereof shall so order.”

Congress thus chose to confer on district courts first line discretion to allow interlocutory appeals. If courts of appeals had discretion to append to a Cohen-authorized appeal from a collateral order further rulings of a kind neither independently appealable nor certified by the district court, then the two-tiered arrangement § 1292(b) mandates would be severely undermined.

Two relatively recent additions to the Judicial Code also counsel resistance to expansion of appellate jurisdiction in the manner endorsed by the Eleventh Circuit. The Rules Enabling Act, 28 U. S. C. § 2071 et seq., gives this Court “the power to prescribe general rules of practice and procedure ... for cases in the United States district courts . . . and courts of appeals.” § 2072(a). In 1990, Congress added § 2072(c), which authorizes us to prescribe rules “defin[ing] when a ruling of a district court is final for the purposes of appeal under section 1291.” Two years later, Congress added § 1292(e), which allows us to “prescribe rules, in accordance with section 2072 ... to provide for an appeal of an interlocutory decision to the courts of appeals that is not otherwise provided for under [§ 1292] (a), (b), (c), or (d).”

Congress thus has empowered this Court to clarify when a decision qualifies as “final” for appellate review purposes, and to expand the list of orders appealable on an interlocutory basis. The procedure Congress ordered for such changes, however, is not expansion by court decision, but by rulemaking under § 2072. Our rulemaking authority is constrained by §§2073 and 2074, which require, among other things, that meetings of bench-bar committees established to recommend rules ordinarily be open to the public, § 2073(c)(1), and that any proposed rule be submitted to Congress before the rule takes effect, § 2074(a). Congress’ designation of the rulemaking process as the way to define or refine when a district court ruling is “final” and when an interlocutory order is appealable warrants the Judiciary’s full respect.

Two decisions of this Court securely support the conclusion that the Eleventh Circuit lacked jurisdiction instantly to review the denial of the county commission’s summary judgment motion: Abney v. United States, 431 U. S. 651 (1977), and United States v. Stanley, 483 U. S. 669 (1987). In Abney, we permitted appeal before trial of an order denying a motion to dismiss an indictment on double jeopardy grounds. Immediate appeal of that ruling, we held, fit within the Cohen collateral order doctrine. 431 U. S., at 662. But we further held that the Court of Appeals lacked authority to review simultaneously the trial court’s rejection of the defendant’s challenge to the sufficiency of the indictment. Id., at 662-663. We explained:

“Our conclusion that a defendant may seek immediate appellate review of a district court’s rejection of his double jeopardy claim is based on the special considerations permeating claims of that nature which justify a departure from the normal rule of finality. Quite obviously, such considerations do not extend beyond the claim of formal jeopardy and encompass other claims presented to, and rejected by, the district court in passing on the accused’s motion to dismiss. Rather, such claims are appealable if, and only if, they too fall within Cohen’s collateral-order exception to the final-judgment rule. Any other rule would encourage criminal defendants to seek review of, or assert, frivolous double jeopardy claims in order to bring more serious, but otherwise nonappealable questions to the attention of the courts of appeals prior to conviction and sentence.” Id., at 663 (citation omitted).

Petitioners suggest that Abney should control in criminal cases only. Supplemental Brief for Petitioners 11. But the concern expressed in Abney — that a rule loosely allowing pendent appellate jurisdiction would encourage parties to parlay Cohen-type collateral orders into multi-issue interlocutory appeal tickets — bears on civil cases as well.

In Stanley, we similarly refused to allow expansion of the scope of an interlocutory appeal. That civil case involved an order certified by the trial court, and accepted by the appellate court, for immediate review pursuant to § 1292(b). Immediate appellate review, we held, was limited to the certified order; issues presented by other, noncertified orders could not be considered simultaneously. 483 U. S., at 676-677.

The parties are correct that we have not universally required courts of appeals to confine review to the precise decision independently subject to appeal. See, e. g., Thornburgh v. American College of Obstetricians and Gynecologists, 476 U. S. 747, 755-757 (1986) (Court of Appeals reviewing District Court’s ruling on preliminary injunction request properly reviewed merits as well); Eisen v. Carlisle & Jacquelin, 417 U. S. 156, 172-173 (1974) (Court of Appeals reviewing District Court’s order allocating costs of class notification also had jurisdiction to review ruling on methods of notification); Chicago, R. I. & P. R. Co. v. Stude, 346 U. S. 574, 578 (1954) (Court of Appeals reviewing order granting motion to dismiss properly reviewed order denying opposing party’s motion to remand); Deckert v. Independence Shares Corp., 311 U. S. 282, 287 (1940) (Court of Appeals reviewing order granting preliminary injunction also had jurisdiction to review order denying motions to dismiss). Cf. Schlagenhauf v. Holder, 379 U. S. 104, 110-111 (1964) (Court of Appeals exercising mandamus power should have reviewed not only whether District Court had authority to order mental and physical examinations of defendant in personal injury case, but also whether there was good cause for the ordered examinations).

We need not definitively or preemptively settle here whether or when it may be proper for a court of appeals, with jurisdiction over one ruling, to review, conjunctively, related rulings that are not themselves independently appealable. See supra, at 48 (describing provisions by Congress for rulemaking regarding appeals prior to the district court’s final disposition of entire case). The parties do not contend that the District Court’s decision to deny the Chambers County Commission’s summary judgment motion was inextricably intertwined with that court’s decision to deny the individual defendants’ qualified immunity motions, or that review of the former decision was necessary to ensure meaningful review of the latter. Cf. Kanji, The Proper Scope of Pendent Appellate Jurisdiction in the Collateral Order Context, 100 Yale L. J. 511, 530 (1990) (“Only where essential to the resolution of properly appealed collateral orders should courts extend their Cohen jurisdiction to rulings that would not otherwise qualify for expedited consideration.”). Nor could the parties so argue. The individual defendants’ qualified immunity turns on whether they violated clearly established federal law; the county commission’s liability turns on the allocation of law enforcement power in Alabama.

* * *

The Eleventh Circuit’s authority immediately to review the District Court’s denial of the individual police officer defendants’ summary judgment motions did not include authority to review at once the unrelated question of the county commission’s liability. The District Court’s preliminary ruling regarding the county did not qualify as a “collateral order,” and there is no “pendent party” appellate jurisdiction of the kind the Eleventh Circuit purported to exercise. We therefore vacate the relevant portion of the Eleventh Circuit’s judgment and remand the case for proceedings consistent with this opinion.

It is so ordered.

       On Sheriff James C. Morgan’s suggestion for rehearing en banc, the Eleventh Circuit modified its opinion with respect to an issue not relevant here and denied rehearing en banc. 11 F. 3d 1030 (1994).

       The Federal Courts of Appeals have endorsed the doctrine of pendent appellate jurisdiction, although they have expressed varying views about when such jurisdiction is properly exercised. See, e. g., Roque-Rodriguez v. Lema Moya, 926 F. 2d 103, 105, n. 2 (CA1 1991) (noting that the First Circuit has “refrained” from exercising pendent appellate jurisdiction, but characterizing the Circuit’s practice as “self-imposed”); Golino v. New Haven, 950 F. 2d 864, 868-869 (CA2 1991) (exercising discretion to consider otherwise nonappealable issues because sufficient overlap exists in the factors relevant to the appealable and nonappealable issues), cert. denied, 505 U. S. 1221 (1992); Natale v. Ridgefield, 927 F. 2d 101, 104 (CA2 1991) (“Only in exceptional circumstances should litigants, over whom this Court cannot ordinarily exercise jurisdiction, be permitted to ride on the jurisdictional coattails of another party."); National Union Fire Ins. Co. v. City Savings, F. S. B., 28 F. 3d 376, 382, and n. 4 (CA3 1994) (reserving question whether pendent appellate jurisdiction is available in any circumstances other than when “necessary to ensure meaningful review of an appealable order”) (internal quotation marks omitted); Roberson v. Mullins, 29 F. 3d 132, 136 (CA4 1994) (recognizing pendent appellate jurisdiction “if the issues involved in the two rulings substantially overlap and review will advance the litigation or avoid further appeals”) (internal quotation marks omitted); Silver Star Enterprises v. M/V SARAMACCA, 19 F. 3d 1008, 1014 (CA5 1994) (declining to exercise pendent appellate jurisdiction because otherwise nonappealable order was not “inextricably entwined” with appealable order); Williams v. Kentucky, 24 F. 3d 1526, 1542 (CA6 1994) (same); United States ex rel. Valders Stone & Marble, Inc. v. C-Way Constr. Co., 909 F. 2d 259, 262 (CA7 1990) (pendent appellate jurisdiction is proper only “[w]hen an ordinarily unappealable interlocutory order is inextricably entwined with an appealable order” and there are “compelling reasons” for immediate review; a “close relationship” between the two orders does not suffice) (internal quotation marks omitted); Drake v. Scott, 812 F. 2d 395, 399 (CA8) (“[Wjhen an interlocutory appeal is properly before us ... we have jurisdiction also to decide closely related issues of law.”), cert. denied, 484 U. S. 965 (1987); TransWorld Airlines, Inc. v. American Coupon Exchange, Inc., 913 F. 2d 676, 680 (CA9 1990) (jurisdiction under § 1291(a)(1) to review on an interlocutory basis a preliminary injunction order “extends to all matters ‘inextricably bound up’ with th[at] order”); Robinson v. Volkswagenwerk AG, 940 F. 2d 1369, 1374 (CA10 1991) (pendent appellate jurisdiction is properly exercised where “review of the appealable issue involves consideration of factors closely related or relevant to the otherwise nonappealable issue” and judicial economy is served by review), cert. denied, 502 U. S. 1091 (1992); Stewart v. Baldwin County Bd. of Ed., 908 F. 2d 1499, 1509 (CA11 1990) (“Pendent jurisdiction is properly exercised over nonappealable decisions of the district court when the reviewing court already has jurisdiction over one issue in the case.”); Consarc Corp. v. Iraqi Ministry, 27 F. 3d 695, 700 (CADC 1994) (“This Circuit has invoked [pendent appellate jurisdiction] only in a narrow class of cases, to review an interlocutory order that itself is not yet subject to appeal but is ‘closely related’ to an appealable order.”).

       Section 1292(a) provides in relevant part:
      “[T]he courts of appeals shall have jurisdiction of appeals from:
      “(1) Interlocutory orders of the district courts ... granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions, except where a direct review may be had in the Supreme Court;
      “(2) Interlocutory orders appointing receivers, or refusing orders to wind up receiverships or to take steps to accomplish the purposes thereof, such as directing sales or other disposals of property;
      “(3) Interlocutory decrees of such district courts or the judges thereof determining the rights and liabilities of the parties to admiralty cases in which appeals from final decrees are allowed.”

       When it passed § 1292(b), Congress had before it a proposal, by Jerome Frank of the Court of Appeals for the Second Circuit, to give the courts of appeals sole discretion to allow interlocutory appeals. Judge Frank had opposed making interlocutory appeal contingent upon procurement of a certificate from the district judge; he advanced instead the following proposal:
      “ ‘It shall be the duty of the district judge to state in writing whether in his opinion the appeal is warranted; this statement shall be appended to the petition for appeal or, as promptly as possible after the filing of such petition in the court of appeals, shall be forwarded to said court by the district judge. The court of appeals shall take into account, but shall not be bound by, such statement in exercising its discretion.’” Undated letter from study committee to the Tenth Circuit Judicial Conference, in S. Rep. No. 2434, 85th Cong., 2d Sess., 8-9 (1958).

       This case indicates how the initial discretion Congress lodged in district courts under § 1292(b) could be circumvented by the “liberal” or “flexible” approach petitioners and respondent prefer. The District Court here ruled only tentatively on the county commission’s motion and apparently contemplated receipt of further evidence from the parties before ruling definitively. See order denying motions to reconsider, App. to Pet. for Cert. 72a (“The parties will have an opportunity to convince this Court that Sheriff Morgan was or was not the final policy maker for the County, and the Court will make a ruling as a matter of law on that issue before the case goes to the jury.”); cf. Swint v. Wadley, 5 F. 3d 1435, 1452 (CA11 1993) (to determine whether an official is a final policymaker, a district court “should examine not only the relevant positive law ... but also the relevant customs and practices having the force of lauf’) (emphasis in original). In view of the incomplete state of the District Court’s adjudication, including some uncertainty whether plaintiffs meant to sue the county as discrete from the commission members, it is unlikely that a 11292(b) certification would have been forthcoming from the District Judge.

       In the instant case, the Eleventh Circuit asserted not merely pendent appellate jurisdiction, but pendent party appellate jurisdiction: The court appended to its jurisdiction to review the denial of the individual defendants’ qualified immunity motions jurisdiction to review the denial of the commission’s summary judgment motion. We note that in 1990, Congress endeavored to clarify and codify instances appropriate for the exercise of pendent or “supplemental” jurisdiction in district courts. 28 U. S. C. § 1367 (1988 ed., Supp. V); see § 1367(a) (providing for “supplemental jurisdiction” over “claims that involve the joinder or intervention of additional parties”).


source: Caselaw Access Project

author: Justice Stevens Justice Thomas,

license: Public Domain

text:
    MASTROBUONO et al. v. SHEARSON LEHMAN HUTTON, INC., et al.
    No. 94-18.
    Argued January 10, 1995
    Decided March 6, 1995

      Stevens, J., delivered the opinion of the Court, in which Rehnquist, C. J., and O’Connor, Scalia, Kennedy, Souter, Ginsburg, and Breyer, JJ., joined. Thomas, J., filed a dissenting opinion, post, p. 64.

      William J. Harte argued the cause for petitioners. With him on the briefs were Robert L. Tucker and Joan M. Mannix.

      Malcolm L. Stewart argued the cause for the United States et al. as amici curiae urging reversal. With him on the brief were Solicitor General Days, Deputy Solicitor General Wallace, Simon M. Lome, Paul Gonson, Jacob H Stillman, Lucinda O. McConathy, and Mark Pennington.

      Joseph Polizzotto argued the cause for respondents. With him on the brief were Phil C. Neal, H. Nicholas Berberian, and Robert J. Mandel.

      Briefs of amici curiae urging reversal were filed for the American Association of Limited Partners by Michael B. Dashjian; for the Public Investors Arbitration Bar Association by Stuart C. Goldberg and Seth E. Lipner.

        Andrew L. Frey, Andrew J. Pincus, and Stuart J. Kaswell filed a brief for the Securities Industry Association as amicus curiae urging affirmance.

   Justice Stevens

delivered the opinion of the Court.

New York law allows courts, but not arbitrators, to award punitive damages. In a dispute arising out of a standard-form contract that expressly provides that it “shall be governed by the laws of the State of New York,” a panel of arbitrators awarded punitive damages. The District Court and Court of Appeals disallowed that award. The question presented is whether the arbitrators’ award is consistent with the central purpose of the Federal Arbitration Act to ensure “that private agreements to arbitrate are enforced according to their terms.” Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U. S. 468, 479 (1989).

I

In 1985, petitioners, Antonio Mastrobuono, then an assistant professor of medieval literature, and his wife Diana Mastrobuono, an artist, opened a securities trading account with respondent Shearson Lehman Hutton, Inc. (Shearson), by executing Shearson’s standard-form Client’s Agreement. Respondent Nick DiMinico, a vice president of Shearson, managed the Mastrobuonos’ account until they closed it in 1987. In 1989, petitioners filed this action in the United States District Court for the Northern District of Illinois, alleging that respondents had mishandled their account and claiming damages on a variety of state and federal law theories.

Paragraph 13 of the parties’ agreement contains an arbitration provision and a choice-of-law provision. Relying on the arbitration provision and on §§3 and 4 of the Federal Arbitration Act (FAA), 9 U. S. C. §§ 3, 4, respondents filed a motion to stay the court proceedings and to compel arbitration pursuant to the rules of the National Association of Securities Dealers. The District Court granted that motion, and a panel of three arbitrators was convened. After conducting hearings in Illinois, the panel ruled in favor of petitioners.

In the arbitration proceedings, respondents argued that the arbitrators had no authority to award punitive damages. Nevertheless, the panel’s award included punitive damages of $400,000, in addition to compensatory damages of $159,327. Respondents paid the compensatory portion of the award but filed a motion in the District Court to vacate the award of punitive damages. The District Court granted the motion, 812 F. Supp. 845 (ND Ill. 1993), and the Court of Appeals for the Seventh Circuit affirmed, 20 F. 3d 713 (1994). Both courts relied on the choice-of-law provision in paragraph 13 of the parties’ agreement, which specifies that the contract shall be governed by New York law. Because the New York Court of Appeals has decided that in New York the power to award punitive damages is limited to judicial tribunals and may not be exercised by arbitrators, Garrity v. Lyle Stuart, Inc., 40 N. Y. 2d 354, 353 N. E. 2d 793 (1976), the District Court and the Seventh Circuit held that the panel of arbitrators had no power to award punitive damages in this case.

We granted certiorari, 513 U. S. 921 (1994), because the Courts of Appeals have expressed differing views on whether a contractual choice-of-law provision may preclude an arbitral award of punitive damages that otherwise would be proper. Compare Barbier v. Shearson Lehman Hutton Inc., 948 F. 2d 117 (CA2 1991), and Pierson v. Dean, Witter, Reynolds, Inc., 742 F. 2d 334 (CA7 1984), with Bonar v. Dean Witter Reynolds, Inc., 835 F. 2d 1378, 1386-1388 (CA11 1988), Raytheon Co. v. Automated Business Systems, Inc., 882 F. 2d 6 (CA1 1989), and Lee v. Chica, 983 F. 2d 883 (CA8 1993). We now reverse.

II

Earlier this Term, we upheld the enforceability of a predispute arbitration agreement governed by Alabama law, even though an Alabama statute provides that arbitration agreements are unenforceable. Allied-Bruce Terminix Cos. v. Dobson, 513 U. S. 265 (1995). Writing for the Court, Justice Breyer observed that Congress passed the FA A “to overcome courts’ refusals to enforce agreements to arbitrate.” Id., at 270. See also Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U. S., at 474; Dean Witter Reynolds Inc. v. Byrd, 470 U. S. 213, 220 (1985). After determining that the FAA applied to the parties’ arbitration agreement, we readily-concluded that the federal statute pre-empted Alabama’s statutory prohibition. Allied-Bruce, 513 U. S., at 272-273, 281-282.

Petitioners seek a similar disposition of the case before us today. Here, the Seventh Circuit interpreted the contract to incorporate New York law, including the Garrity rule that arbitrators may not award punitive damages. Petitioners ask us to hold that the FAA pre-empts New York’s prohibition against arbitral awards of punitive damages because this state law is a vestige of the “ ‘ “ancient” ’ ” judicial hostility to arbitration. See Allied-Bruce, 513 U. S., at 270, quoting Bernhardt v. Polygraphic Co. of America, Inc., 350 U. S. 198, 211, n. 5 (1956) (Frankfurter, J., concurring). Petitioners rely on Southland Corp. v. Keating, 465 U. S. 1 (1984), and Perry v. Thomas, 482 U. S. 483 (1987), in which we held that the FAA pre-empted two California statutes that purported to require judicial resolution of certain disputes. In South-land, we explained that the FAA not only “declared a national policy favoring arbitration,” but actually “withdrew the power of the states to require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration.” 465 U. S., at 10.

Respondents answer that the choice-of-law provision in their contract evidences the parties’ express agreement that punitive damages should not be awarded in the arbitration of any dispute arising under their contract. Thus, they claim, this case is distinguishable from Southland and Perry, in which the parties presumably desired unlimited arbitration but state law stood in their way. Regardless of whether the FAA pre-empts the Garrity decision in contracts not expressly incorporating New York law, respondents argue that the parties may themselves agree to be bound by Garrity, just as they may agree to forgo arbitration altogether. In other words, if the contract says “no punitive damages,” that is the end of the matter, for courts are bound to interpret contracts in accordance with the expressed intentions of the parties — even if the effect of those intentions is to limit arbitration.

We have previously held that the FAA’s proarbitration policy does not operate without regard to the wishes of the contracting parties. In Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U. S. 468 (1989), the California Court of Appeal had construed a contractual provision to mean that the parties intended the California rules of arbitration, rather than the FAA’s rules, to govern the resolution of their dispute. Id., at 472. Noting that the California rules were “manifestly designed to encourage resort to the arbitral process,” id., at 476, and that they “generally foster[ed] the federal policy favoring arbitration,” id., at 476, n. 5, we concluded that such an interpretation was entirely consistent with the federal policy “to ensure the enforceability, according to their terms, of private agreements to arbitrate,” id., at 476. After referring to the holdings in Southland and Perry, which struck down state laws limiting agreed-upon arbitrability, we added:

“But it does not follow that the FAA prevents the enforcement of agreements to arbitrate under different rules than those set forth in the Act itself. Indeed, such a result would be quite inimical to the FAA’s primary purpose of ensuring that private agreements to arbitrate are enforced according to their terms. Arbitration under the Act is a matter of consent, not coercion, and parties are generally free to structure their arbitration agreements as they see fit. Just as they may limit by contract the issues which they will arbitrate, see Mitsubishi [Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U. S. 614, 628 (1985)], so too may they specify by contract the rules under which that arbitration will be conducted.” Volt, 489 U. S., at 479.

Relying on our reasoning in Volt, respondents thus argue that the parties to a contract may lawfully agree to limit the issues to be arbitrated by waiving any claim for punitive damages. On the other hand, we think our decisions in Allied-Bruce, Southland, and Perry make clear that if contracting parties agree to include claims for punitive damages within the issues to be arbitrated, the FAA ensures that their agreement will be enforced according to its terms even if a rule of state law would otherwise exclude such claims from arbitration. Thus, the case before us comes down to what the contract has to say about the arbitrability of petitioners’ claim for punitive damages.

Ill

Shearson’s standard-form “Client Agreement,” which petitioners executed, contains 18 paragraphs. The two relevant provisions of the agreement are found in paragraph 13. The first sentence of that paragraph provides, in part, that the entire agreement “shall be governed by the laws of the State of New York.” App. to Pet. for Cert. 44. The second sentence provides that “any controversy” arising out of the transactions between the parties “shall be settled by arbitration” in accordance with the rules of the National Association of Securities Dealers (NASD), or the Boards of Directors of the New York Stock Exchange and/or the American Stock Exchange. Ibid. The agreement contains no express reference to claims for punitive damages. To ascertain whether paragraph 13 expresses an intent to include or exclude such claims, we first address the impact of each of the two relevant provisions, considered separately. We then move on to the more important inquiry: the meaning of the two provisions taken together. See Restatement (Second) of Contracts §202(2) (1979) (“A writing is interpreted as a whole”).

The choice-of-law provision, when viewed in isolation, may reasonably be read as merely , a substitute for the conflict-of-laws analysis that otherwise would determine what law to apply to disputes arising out of the contractual relationship. Thus, if a similar contract, without a choice-of-law provision, had been signed in New York and was to be performed in New York, presumably “the laws of the State of New York” would apply, even though the contract did not expressly so state. In such event, there would be nothing in the contract that could possibly constitute evidence of an intent to exclude punitive damages claims. Accordingly, punitive damages would be allowed because, in the absence of contractual intent to the contrary, the FAA would pre-empt the Garrity rule. See supra, at 58, and n. 8, infra.

Even if the reference to “the laws of the State of New York” is more than a substitute for ordinary conflict-of-laws analysis and, as respondents urge, includes the caveat, “detached from otherwise-applicable federal law,” the provision might not preclude the award of punitive damages because New York allows its courts, though not its arbitrators, to enter such awards. See Garrity, 40 N. Y. 2d, at 358, 353 N. E. 2d, at 796. In other words, the provision might include only New York’s substantive rights and obligations, and not the State’s allocation of power between alternative tribunals. Respondents’ argument is persuasive only if “New York law” means “New York decisional law, including that State’s allocation of power between courts and arbitrators, notwithstanding otherwise-applicable federal law.” But, as we have demonstrated, the provision need not be read so broadly. It is not, in itself, an unequivocal exclusion of punitive damages claims.

The arbitration provision (the second sentence of paragraph 13) does not improve respondents’ argument. On the contrary, when read separately this clause strongly implies that an arbitral award of punitive damages is appropriate. It explicitly authorizes arbitration in accordance with NASD rules; the panel of arbitrators in fact proceeded under that set of rules. The NASD’s Code of Arbitration Procedure indicates that arbitrators may award “damages and other relief.” NASD Code of Arbitration Procedure ¶ 3741(e) (1993). While not a clear authorization of punitive damages, this provision appears broad enough at least to contemplate such a remedy. Moreover, as the Seventh Circuit noted, a manual provided to NASD arbitrators contains this provision:

“B. Punitive Damages
“The issue of punitive damages may arise with great frequency in arbitrations. Parties to arbitration are informed that arbitrators can consider punitive damages as a remedy.” 20 F. 3d, at 717.

Thus, the text of the arbitration clause itself surely does not support — indeed, it contradicts — the conclusion that the parties agreed to foreclose claims for punitive damages.

Although neither the choice-of-law clause nor the arbitration clause, separately considered, expresses an intent to preclude an award of punitive damages, respondents argue that a fair reading of the entire paragraph 13 leads to that conclusion. On this theory, even if “New York law” is ambiguous, and even if “arbitration in accordance with NASD rules” indicates that punitive damages are permissible, the juxtaposition of the two clauses suggests that the contract incorporates “New York law relating to arbitration.” We disagree. At most, the choice-of-law clause introduces an ambiguity into an arbitration agreement that would otherwise allow punitive damages awards. As we pointed out in Volt, when a court interprets such provisions in an agreement covered by the FAA, “due regard must be given to the federal policy favoring arbitration, and ambiguities as to the scope of the arbitration clause itself resolved in favor of arbitration.” 489 U. S., at 476. See also Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U. S. 1, 24-25 (1983).

Moreover, respondents cannot overcome the common-law rule of contract interpretation that a court should construe ambiguous language against the interest of the party that drafted it. See, e. g., United States Fire Ins. Co. v. Schnackenberg, 88 Ill. 2d 1, 4, 429 N. E. 2d 1203, 1205 (1981); Graff v. Billet, 64 N. Y. 2d 899, 902, 477 N. E. 2d 212, 213-214 (1984); Restatement (Second) of Contracts § 206; United States v. Seckinger, 397 U. S. 203, 210 (1970). Respondents drafted an ambiguous document, and they cannot now claim the benefit of the doubt. The reason for this rule is to protect the party who did not choose the language from an unintended or unfair result. That rationale is well suited to the facts of this case. As a practical matter, it seems unlikely that petitioners were actually aware of New York’s bifurcated approach to punitive damages, or that they had any idea that by signing a standard-form agreement to arbitrate disputes they might be giving up an important substantive right. In the face of such doubt, we are unwilling to impute this intent to petitioners.

Finally respondents’ reading of the two clauses violates another cardinal principle of contract construction: that a document should be read to give effect to all its provisions and to render them consistent with each other. See, e. g., In re Halas, 104 Ill. 2d 83, 92, 470 N. E. 2d 960, 964 (1984); Crimmins Contracting Co. v. City of New York, 74 N. Y. 2d 166, 172-173, 542 N. E. 2d 1097, 1100 (1989); Trump-Equitable Fifth Avenue Co. v. H. R. H. Constr. Corp., 106 App. Div. 2d 242, 244, 485 N. Y. S. 2d 65, 67 (1985); Restatement (Second) of Contracts § 203(a) and Comment b; id., § 202(5). We think the best way to harmonize the choice-of-law provision with the arbitration provision is to read “the laws of the State of New York” to encompass substantive principles that New York courts would apply, but not to include special rules limiting the authority of arbitrators. Thus, the choice-of-law provision covers the rights and duties of the parties, while the arbitration clause covers arbitration; neither sentence intrudes upon the other. In contrast, respondents’ reading sets up the two clauses in conflict with one another: one foreclosing punitive damages, the other allowing them. This interpretation is untenable.

We hold that the Court of Appeals misinterpreted the parties’ agreement. The arbitral award should have been enforced as within the scope of the contract. The judgment of the Court of Appeals is, therefore, reversed.

■It is so ordered.

Justice Thomas,

dissenting.

In Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U. S. 468, 478 (1989), we held that the Federal Arbitration Act (FAA) simply requires courts to enforce private contracts to arbitrate as they would normal contracts — according to their terms. This holding led us to enforce a choice-of-law provision that incorporated a state procedural rule concerning arbitration proceedings. Because the choice-of-law provision here cannot reasonably be distinguished from the one in Volt, I dissent.

I

A

In Volt, Stanford University had entered into a construction contract under which .Volt Information Sciences, Inc., was to install certain electrical systems on the Stanford campus. The contract contained an agreement to arbitrate all disputes arising out of the contract. A choice-of-law clause in the contract provided that “[t]he Contract shall be governed by the law of the place where the Project is located,” id., at 470 (citation and internal quotation marks omitted), which happened to be California. When a dispute arose regarding compensation, Volt invoked arbitration. Stanford filed an action in state court, however, and moved to stay arbitration pursuant to California Rules of Civil Procedure. Cal. Civ. Proc. Code Ann. § 1281.2(c) (West 1982). Opposing the stay, Volt argued that the relevant state statute authorizing the stay was pre-empted by the FAA, 9 U. S. C. § 1 et seq.

We concluded that even if the FAA pre-empted the state statute as applied to other parties, the choice-of-law clause in the contract at issue demonstrated that the parties had agreed to be governed by the statute. Rejecting Volt’s position that the FAA imposes a proarbitration policy that precluded enforcement of the statute permitting the California courts to stay the arbitration proceedings, we concluded that the Act “simply requires courts to enforce privately negotiated agreements to arbitrate, like other contracts, in accordance with their terms.” 489 U. S., at 478. As a result, we interpreted the choice-of-law clause “to make applicable state rules governing the conduct of arbitration,” id., at 476, even if a specific rule itself hampers or delays arbitration. We rejected the argument that the choice-of-law clause was to be construed as incorporating only substantive law, and dismissed the claim that the FAA pre-empted those contract provisions that might hinder arbitration.

We so held in Volt because we concluded that the FAA does not force arbitration on parties who enter into contracts involving interstate commerce. Instead, the FAA requires only that “arbitration proceed in the manner provided for in [the parties’] agreement.” 9 U. S. C. § 4. Although we will construe ambiguities concerning the scope of arbitrability in favor of arbitration, see Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U. S. 1, 24-25 (1983), we remain mindful that “as with any other contract, the parties’ intentions control,” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U. S. 614, 626 (1985). Thus, if the parties intend that state procedure shall govern, federal courts must enforce that understanding. “There is no federal policy favoring arbitration under a certain set of procedural rules; the federal policy is simply to ensure the enforceability, according to their terms, of private agreements to arbitrate.” Volt, 489 U. S., at 476.

B

In this case, as in Volt, the parties agreed to mandatory arbitration of all disputes. As in Volt, the contract at issue here includes a choice-of-law clause. Indeed, the language of the two clauses is functionally equivalent: Whereas the choice-of-law clause in Volt provided that “[t]he Contract shall be governed by the law of [the State of California],” id,., at 470 (citation and internal quotation marks omitted), the one before us today states, in paragraph 13 of the Client’s Agreement, App. to Pet. for Cert. 44, that “[t]his agreement ... shall be governed by the laws of the State of New York.” New York law prohibits arbitrators from awarding punitive damages, Garrity v. Lyle Stuart, Inc., 40 N. Y. 2d 354, 353 N. E. 2d 793 (1976), and permits only courts to award such damages. As in Volt, petitioners here argue that the New York rule is “antiarbitration,” and hence is pre-empted by the FAA. In concluding that the choice-of-law clause is ambiguous, the majority essentially accepts petitioners’ argument. Volt itself found precisely the same argument irrelevant, however, and the majority identifies no reason to think that the state law governing the interpretation of the parties’ choice-of-law clause supports a different result.

The majority claims that the incorporation of New York law “need not be read so broadly” as to include both substantive and procedural law, and that the choice of New York law “is not, in itself, an unequivocal exclusion of punitive damages claims.” Ante, at 60. But we rejected these same arguments in Volt, and the Garrity rule is just the sort of “state rul[e] governing the conduct of arbitration” that Volt requires federal courts to enforce. 489 U. S., at 476. “Just as [the parties] may limit by contract the issues which they will arbitrate, so too may they specify by contract the rules under which that arbitration will be conducted.” Id., at 479 (citation omitted). To be sure, the majority might be correct that Garrity is a rule concerning the State’s allocation of power between “alternative tribunals,” ante, at 60, although Garrity appears to describe itself as substantive New York law. Nonetheless, Volt makes no distinction between rules that serve only to distribute authority between courts and arbitrators (which the majority finds unenforceable) and other types of rules (which the majority finds enforceable). Indeed, the California rule in Volt could be considered to be one that allocates authority between arbitrators and courts, for it permits California courts to stay arbitration pending resolution of related litigation. See Volt, supra, at 471.

II

The majority relies upon two assertions to defend its departure from Volt. First, it contends that “[a]t most, the choice-of-law clause introduces an ambiguity into an arbitration agreement.” Ante, at 62. We are told that the agreement “would otherwise allow punitive damages awards,” ibid., because of paragraph 13’s statement that arbitration would be conducted “in accordance with the rules then in effect, of the National Association of Securities Dealers, Inc. [NASD].” App. to Pet. for Cert. 44. It is unclear which NASD “rules” the parties mean, although I am willing to agree with the majority that the phrase refers to the NASD Code of Arbitration Procedure. But the provision of the NASD Code offered by the majority simply does not speak to the availability of punitive damages. It only states:

“The award shall contain the names of the parties, the name of counsel, if any, a summary of the issues, including the type(s) of any security or product, in controversy, the damages and other relief requested, the damages and other relief awarded, a statement of any other issues resolved, the names of the arbitrators, the dates the claim was filed and the award rendered, the number and dates of hearing sessions, the location of the hearings, and the signatures of the arbitrators concurring in the award.” NASD Code of Arbitration Procedure § 41(e) (1985).

It is clear that § 41(e) does not define or limit the powers of the arbitrators; it merely describes the form in which the arbitrators must announce their decision. The other provisions of §41 confirm this point. See, e.g., § 41(a) (“All awards shall be in writing and signed by a majority of the arbitrators . . .”); § 41(c) (“Director of Arbitration shall endeavor to serve a copy of the award” to the parties); § 41(d) (arbitrators should render an award within 30 days); § 41(f) (awards shall be “publicly available”). The majority cannot find a provision of the NASD Code that specifically addresses punitive damages, or that speaks more generally to the types of damages arbitrators may or may not allow. Such a rule simply does not exist. The code certainly does not require that arbitrators be empowered to award punitive damages; it leaves to the parties to define the arbitrators’ remedial powers.

The majority also purports to find a clear expression of the parties’ agreement on the availability of punitive damages in “a manual provided to NASD arbitrators.” Ante, at 61. But paragraph 13 of the Client’s Agreement nowhere mentions this manual; it mentions only “the rules then in effect, of the [NASD].” App. to Pet. for Cert. 44. The manual does not fit either part of this description: it is neither “of the [NASD],” nor a set of “rules.”

First, the manual apparently is not an official NASD document. The manual was not promulgated or adopted by the NASD. Instead, it apparently was compiled by members of the Securities Industry Conference on Arbitration (SICA) as a supplement to the Uniform Code of Arbitration, which the parties clearly did not adopt in paragraph 13. Petitioners present no evidence that the NASD has a policy of giving this specific manual to its arbitrators. Nor do petitioners assert that this manual was even used in the arbitration that gave rise to this case. More importantly, there is no indication in the text of the Client’s Agreement that the parties intended this manual to be used by the arbitrators.

Second, the manual does not provide any “rules” in the sense contemplated by paragraph 13; instead, it provides general information and advice to the arbitrator, such as “Hints for the Chair.” SICA, Arbitrator’s Manual 21 (1992). The manual is nothing more than a sort of “how to” guide for the arbitrator. One bit of advice, for example, states: “Care should be exercised, particularly when questioning a witness, so that the arbitrator does not indicate disbelief. Grimaces, frowns, or hand signals should all be avoided. A ‘poker’ face is the goal.” Id., at 19.

Even if the parties had intended to adopt the manual, it cannot be read to resolve the issue of punitive damages. When read in context, the portion of the SICA manual upon which the majority relies seems only to explain what punitive damages are, not to establish whether arbitrators have the authority to award them:

“The issue of punitive damages may arise with great frequency in arbitrations. Parties to arbitration are informed that arbitrators can consider punitive damages as a remedy. Generally, in court proceedings, punitive damages consist of compensation in excess of actual damages and are awarded as a form of punishment against the wrongdoer. If punitive damages are awarded, the decision of the arbitrators should clearly specify what portion of the award is intended as punitive damages, and the arbitrators should consider referring to the authority on which they relied.” Id., at 26-27.

A glance at neighboring passages, which explain the purpose of “Compensatory/Actual Damages,” “Injunctive Relief,” “Interest,” “Attorneys’ Fees,” and “Forum Fees,” see id., at 26-29, confirms that the SICA manual does not even attempt to provide a standardized set of procedural rules.

Even if one made the stretch of reading the passage on punitive damages to relate to an NASD arbitrator’s authority, the SICA manual limits its own applicability in the situation presented by this case. According to the manual’s Code of Ethics for Arbitrators, “[w]hen an arbitrator’s authority is derived from an agreement of the parties, the arbitrator should neither exceed that authority nor do less than is required to exercise that authority completely.” Id., at 38. Regarding procedural rules, the code states that “[w]here the agreement of the parties sets forth procedures to be followed in conducting the arbitration or refers to rules to be followed, it is the obligation of the arbitrator to comply with such procedures or rules.” Id., at 38-39. The manual clearly contemplates that the parties’ agreement will define the powers and authorities of the arbitrator. Thus, we are directed back to the rest of paragraph 13 and the intent of the parties, whose only expression on the issue is their decision to incorporate the laws of New York.

My examination of the Client’s Agreement, the choice-of-law provision, the NASD Code of Procedure, and the SICA manual demonstrates that the parties made their intent clear, but not in the way divined by the majority. New York law specifically precludes arbitrators from awarding punitive damages, and it should be clear that there is no “conflict,” as the majority puts it, between the New York law and the NASD rules. The choice-of-law provision speaks directly to the issue, while the NASD Code is silent. Giving effect to every provision of the contract requires us to honor the parties’ intent, as indicated in the text of the agreement, to preclude the award , of punitive damages by arbitrators.

Ill

Thankfully, the import of the majority’s decision is limited and narrow. This case amounts to nothing more than a federal court applying Illinois and New York contract law to an agreement between parties in Illinois. Much like a federal court applying a state rule of decision to a case when sitting in diversity, the majority’s interpretation of the contract represents only the understanding of a single federal court regarding the requirements imposed by state law. As such, the majority’s opinion has applicability only to this specific contract and to no other. But because the majority reaches an erroneous result on even this narrow question, I respectfully dissent.

       Because our disposition would be the same under either a de novo or a deferential standard, we need not decide in this case the proper standard of a court’s review of an arbitrator’s decision as to the arbitrability of a dispute or as to the scope of an arbitration. We recently granted certiorari in a case that involves some of these issues. First Options of Chicago, Inc. v. Kaplan, No. 94-560, now pending before the Court.

       “Paragraph 13 of the Client’s Agreement provides:
      “This agreement shall inure to the benefit of your [Shearson’s] successors and assigns[,] shall be binding on the undersigned, my [petitioners’] heirs, executors, administrators and assigns, and shall be governed by the laws of the State of New York. Unless unenforceable due to federal or state law, any controversy arising out of or relating to [my] accounts, to transactions with you, your officers, directors, agents and/or employees for me or to this agreement or the breach thereof, shall be settled by arbitration in accordance with the rules then in effect, of the National Association of Securities Dealers, Inc. or the Boards of Directors of the New York Stock Exchange, Inc. and/or the American Stock Exchange Inc. as I may elect. If I do not make such election by registered mail addressed to you at your main office within 5 days after demand by you that I make such election, then you may make such election. Judgment upon any award rendered by the arbitrators may be entered in any court having jurisdiction thereof. This agreement to arbitrate does not apply to future disputes arising under certain of the federal securities laws to the extent it has been determined as a matter of law that I cannot be compelled to arbitrate such claims.” App. to Pet. for Cert. 44.

       In a related point, respondents argue that there is no meaningful distinction between “substance” and “remedy,” that is, between an entitlement to prevail on the law and an entitlement to a specific form of damages. See Brief for Respondents 25-27. We do not rely on such a distinction here, nor do we pass upon its persuasiveness.

         The dissent makes much of the similarity between this choice-of-law clause and the one in Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U. S. 468 (1989), which we took to incorporate a California statute allowing a court to stay arbitration pending resolution of related litigation. In Volt, however, we did not interpret the contract de novo. Instead, we deferred to the California court’s construction of its own State’s law. Id., at 474 (“[T]he interpretation of private contracts is ordinarily a question of state law, which this Court does not sit to review”). In the present case, by contrast, we review a federal court’s interpretation of this contract, and our interpretation accords with that of the only decisionmaker arguably entitled to deference — the arbitrator. See n. 1, swpra.

       The contract also authorizes (at petitioners’ election) that the arbitration be governed by the rules of the New York Stock Exchange or the American Stock Exchange, instead of those of the NASD. App. to Pet. for Cert. 44. Neither set of alternative rules purports to limit an arbitrator’s discretion to award punitive damages. Moreover, even if there were any doubt as to the ability of an arbitrator to award punitive damages under the Exchanges’ rules, the contract expressly allows petitioners, the claimants in this case, to choose NASD rules; and the panel of arbitrators in this case in fact proceeded under NASD rules.

       As the Solicitor General reminds us, one NASD rule is not before us, namely Rule 21(f)(4) of the NASD Rules of Fair Practice, which reads: “‘No agreement [between a member and a customer] shall include any condition which ... limits the ability of a party to file any claim in arbitration or limits the ability of the arbitrators to make any award.’” Brief for United States et al. 6.
      Rule 21(f)(4) applies only to contracts executed after September 7,1989. Notwithstanding any effect it may have on agreements signed after that date, this rule is not applicable to the agreement in this case, which was executed in 1985.

       “Were we to confine our analysis to the plain language of the arbitration clause, we would have little trouble concluding that a contract clause which bound the parties to ‘settle’ ‘all disputes’ through arbitration conducted according to rules which allow any form of ‘just and equitable’ ‘remedy of relief’ was sufficiently broad to encompass the award of punitive damages. Inasmuch as agreements to arbitrate are ‘generously construed,’ Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, [Inc., 473 U. S. 614, 626 (1985)], it would seem sensible to interpret the ‘all disputes’ and ‘any remedy or relief’ phrases to indicate, at a minimum, an intention to resolve through arbitration any dispute that would otherwise be settled in a court, and to allow the chosen dispute resolvers to award the same varieties and forms of damages or relief as a court would be empowered to award. Since courts are empowered to award punitive damages with respect to certain types of claims, the Raytheon-Automated arbitrators would be equally empowered.” Raytheon Co. v. Automated Business Systems, Inc., 882 F. 2d 6, 10 (CA1 1989).

       “The Arbitration Act establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.” Moses H. Cone, 460 U. S., at 24-25.

       We cite precedent from Illinois, the forum State and place where the contract was executed, and New York, the State designated in the contract’s choice-of-law clause. The parties suggest no other State’s law as arguably relevant to this controversy.

       The drafters of the Second Restatement justified the rule as follows:
      “Where one party chooses the terms of a contract, he is likely to provide more carefully for the protection of his own interests than for those of the other party. He is also more likely than the other party to have reason to know of uncertainties of meaning. Indeed, he may leave meaning deliberately obscure, intending to decide at a later date what meaning to assert. In cases of doubt, therefore, so long as other factors are not decisive, there is substantial reason for preferring the meaning of the other party.” Restatement (Second) of Contracts §206, Comment a (1979).

       The Seventh Circuit adopted a de novo standard of review of the arbitrators’ decision. Although we have not yet decided what standard of review to apply in cases of this sort, see First Options of Chicago, Inc. v. Kaplan, cert. granted, 513 U. S. 1040 (1994), petitioners waived the argument that a deferential standard was appropriate. Petitioners did not raise the argument in their petition for certiorari or in their opening brief. While the standard of review may be an antecedent question, see United States Nat. Bank of Ore. v. Independent Ins. Agents of America, Inc., 508 U. S. 439 (1993), given petitioners’ waiver of the argument it seems more appropriate to resolve the question in First Options than here.

       The New York Court of Appeals rested its holding on the principle that punitive damages are exemplary social remedies intended to punish, rather than to compensate. Because the power to punish can rest only in the hands of the State, the court found that private arbitrators could not wield the authority to impose such damages. Garrity v. Lyle Stuart, Inc., 40 N. Y. 2d, at 360, 353 N. E. 2d, at 796-797.

       Other “rules” include: “The Chair should maintain decorum at all times. Shouting, profanity, or gratuitous remarks should be stopped.” SICA, Arbitrator’s Manual 20. “Some attorneys think that the more often a statement is made, the truer it becomes. The Chair, however, should discourage needless repetition.” Ibid. “Immediately after the close of the hearing, the arbitrators usually remain in the hearing room either to begin deliberations or set a date for deliberation. Unlike jurors, the panel members are not restricted from discussing the case among themselves.” Id., at 25.

       It is telling that petitioners did not even claim until their reply brief that paragraph 13 expressed an intent to reserve to arbitrators the authority to award punitive damages. Instead, petitioners consistently have argued only that the agreement did not constitute a “waiver” of their “right” to obtain punitive damages.


author: Justice O’Connor

text:
    CURTISS-WRIGHT CORP. v. SCHOONEJONGEN et al.
    No. 93-1935.
    Argued January 17, 1995
    Decided March 6, 1995

      O’Connor, J., delivered the opinion for a unanimous Court.

      Laurence Reich argued the cause for petitioner. With him on the briefs were Stephen F. Payerle and Aaron J. Carr.

      Richard P. Bress argued the cause for the United States as amicus curiae urging reversal. With him on the brief were Solicitor General Days, Deputy Solicitor General Kneedler, Allen H. Feldman, and Ellen L. Beard.

      Thomas M. Kennedy argued the cause for respondents. With him on the brief were Everett E. Lewis, Nicholas F. Lewis, Daniel Clifton, Ira Cure, and Shirley Fingerhood

       Briefs of amici curiae urging reversal were filed for the Chamber of Commerce of the United States by Hollis T. Hurd, Stephen A Bokat, Robin S. Conrad, and Mona C. Zeiberg; for the ERISA Industry Committee et al. by Steven J. Sacher and Susan A Cahoon; for the Manufacturers Alliance for Productivity and Innovation, Inc., by Peter Buscemi and Neal

        D. Mollen; and for the National Union Fire Insurance Co. of Pittsburgh, Pa., by Robert N. Eccles.

      Briefs of amici curiae urging affirmance were filed for the American Association of Retired Persons by Steven S. Zaleznick and Mary Ellen Signorille; and for the National Association of Securities and Commercial Law Attorneys by Jonathan W. Cuneo, Kevin P. Roddy, Steve W. Berman, Bryan L. Clobes, and Henry H. Rossbacher.

   Justice O’Connor

delivered the opinion of the Court.

Section 402(b)(3) of the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 875, 29 U. S. C. § 1102(b)(3), requires that every employee benefit plan provide “a procedure for amending such plan, and for identifying the persons who have authority to amend the plan.” This case presents the question whether the standard provision in many employer-provided benefit plans stating that “The Company reserves the right at any time to amend the plan” sets forth an amendment procedure that satisfies § 402(b)(3). We hold that it does.

I

For many years, petitioner Curtiss-Wright voluntarily maintained a postretirement health plan for employees who had worked at certain Curtiss-Wright facilities; respondents are retirees who had worked at one such facility in Wood-Ridge, New Jersey. The specific terms of the plan, the District Court determined, could be principally found in two plan documents: the plan constitution and the Summary Plan Description (SPD), both of which primarily covered active employee health benefits.

In early 1983, presumably due to the rising cost of health care, a revised SPD was issued with the following new provision: “TERMINATION OF HEALTH CARE BENEFITS .... Coverage under this Plan will cease for retirees and their dependents upon the termination of business operations of the facility from which they retired.” App. 49. The two main authors of the new SPD provision, Curtiss-Wright’s director of benefits and its labor counsel, testified that they did not think the provision effected a “change” in the plan, but rather merely clarified it. Id., at 70-71, 79. Probably for this reason, the record is less than clear as to which Curtiss-Wright officers or committees had authority to make plan amendments on behalf of the company and whether such officers or committees approved or ratified the new SPD provision. In any event, later that year, Curtiss-Wright announced that the Wood-Ridge facility would close. Shortly thereafter, an executive vice president wrote respondents a series of letters informing them that their post-retirement health benefits were being terminated.

Respondents brought suit in federal court over the termination of their benefits, and many years of litigation ensued. The District Court ultimately rejected most of respondents’ claims, including their contention that Curtiss-Wright had bound itself contractually to provide health benefits to them for life. The District Court agreed, however, that the new SPD provision effected a significant change in the plan’s terms and thus constituted an “amendment” to the plan; that the plan documents nowhere contained a valid amendment procedure, as required by § 402(b)(3); and that the proper remedy for the § 402(b)(3) violation was to declare the new SPD provision void ab initio. The court eventually ordered Curtiss-Wright to pay respondents $2,681,086 in back benefits.

On appeal, Curtiss-Wright primarily argued that the plan documents did contain an amendment procedure, namely, the standard reservation clause contained in the plan constitution and in a few secondary plan documents. The clause states: “The Company reserves the right at any time and from time to time to modify or amend, in whole or in part, any or all of the provisions of the Plan.” App. 37; see also 2 RIA Pension Coordinator ¶ 13,181, p. 13,276R-124 (1994) (reproducing IRS’ prototype employee benefits plan, which contains similar language). In Curtiss-Wright’s view, this clause sets forth an amendment procedure as required by the statute. It says, in effect, that the plan is to be amended by “[t]he Company.”

The Court of Appeals for the Third Circuit rejected this argument, as well as all other arguments before it, and affirmed the District Court’s remedy. See 18 F. 3d 1034 (1994). It explained: “A primary purpose of § 402(b)(3) is to ensure that all interested parties [including beneficiaries] will know how a plan may be altered and who may make such alterations. Only if they know this information will they be able to determine with certainty at any given time exactly what the plan provides.” Id., at 1038. And the court suggested that § 402(b)(3) cannot serve that purpose unless it is read to require that every amendment procedure specify precisely “what individuals or bodies within the Company c[an] promulgate an effective amendment.” Id., at 1039. In the court’s view, then, a reservation clause that says that the plan may be amended “by the Company,” without more, is too vague. In so holding, the court distinguished a case, Huber v. Casablanca Industries, Inc., 916 F. 2d 85 (1990), in which it had upheld a reservation clause that said, in effect, that the plan may be amended “by the Trustees.” “By the trustees,” the court reasoned, had a ■very particular meaning in Huber; it meant “by resolutio[n] at a regularly constituted board [of trustees] meeting in accordance with the established process of the trustees.” 18 F. 3d, at 1039 (citation omitted).

In a footnote, the court related the concurring views of Judge Roth. Id., at 1039, n. 3. According to the court, Judge Roth thought that the notion of an amendment “by the Company” should be read in light of traditional corporate law principles, which is to say amendment “by the board of directors or whomever of the company has the authority to take such action.” Ibid. And read in this more specific way, “by the Company” indicates a valid amendment procedure that satisfies § 402(b)(3). She concurred rather than dissented, however, because, in the court’s words, “neither [Curtiss-Wright’s] board nor any other person or entity within [Curtiss-Wright] with the power to act on behalf of ‘the Company’ ratified [the new SPD provision].” Ibid.

Curtiss-Wright petitioned for certiorari on the questions whether a plan provision stating that “[t]he Company” reserves the right to amend the plan states a valid amendment procedure under § 402(b)(3) and, if not, whether the proper remedy is to declare this or any other amendment void ab initio. We granted certiorari on both. 512 U. S. 1288 (1994).

II

In interpreting § 402(b)(3), we are mindful that ERISA does not create any substantive entitlement to employer-provided health benefits or any other kind of welfare benefits. Employers or other plan sponsors are generally free under ERISA, for any reason at any time, to adopt, modify, or terminate welfare plans. See Adams v. Avondale Industries, Inc., 905 F. 2d 943, 947 (CA6 1990) (“[A] company does not act in a fiduciary capacity when deciding to amend or terminate a welfare benefits plan”). Nor does ERISA establish any minimum participation, vesting, or funding requirements for welfare plans as it does for pension plans. See Shaw v. Delta Air Lines, Inc., 463 U. S. 85, 90-91 (1983). Accordingly, that Curtiss-Wright amended its plan to deprive respondents of health benefits is not a cognizable complaint under ERISA; the only cognizable claim is that the company did not do so in a permissible manner.

A

The text of § 402(b)(3) actually requires two things: a “procedure for amending [the] plan” and “[a procedure] for identifying the persons who have authority to amend the plan.” With respect to the second requirement, the general “Definitions” section of ERISA makes quite clear that the term “person,” wherever it appears in the statute, includes companies. See 29 U. S. C. § 1002(9) (“The term ‘person’ means an individual, partnership, joint venture, corporation, mutual company, joint-stock company, trust, estate, unincorporated organization, association, or employee organization”). The Curtiss-Wright reservation clause thus appears to satisfy the statute’s identification requirement by naming “[t]he Company” as “the perso[n]” with amendment authority.

The text of § 402(b)(3) speaks, somewhat awkwardly, of requiring a procedure for identifying the persons with amendment authority, rather than requiring identification of those persons outright. Be that as it may, a plan that simply identifies the persons outright necessarily indicates a procedure for identifying the persons as well. With respect to the Curtiss-Wright plan, for example, to identify “[t]he Company” as the person with amendment authority is to say, in effect, that the procedure for identifying the person with amendment authority is to look always to “[t]he Company.” Such an identification procedure is more substantial than might first appear. To say that one must look always to “[t]he Company” is to say that one must look only to “[t]he Company” and not to any other person — that is, not to any union, not to any third-party trustee, and not to any of the other kinds of outside parties that, in many other plans, exercise amendment authority.

The more difficult question in this case is whether the Curtiss-Wright reservation clause contains a “procedure for amending [the] plan.” To recall, the reservation clause says in effect that the plan may be amended “by the Company.” Curtiss-Wright is correct, we think, that this states an amendment procedure and one that, like the identification procedure, is more substantial than might first appear. It says the plan may be amended by a unilateral company decision to amend, and only by such a decision — and not, for example, by the unilateral decision of a third-party trustee or upon the approval of the union. Moreover, to the extent that this procedure is the barest of procedures, that is because the Curtiss-Wright plan is the simplest of plans: a voluntarily maintained single-employer health plan that is administered by the employer and funded by the employer. More complicated plans, such as multiemployer plans, may have more complicated amendment procedures, and § 402(b)(3) was designed to cover them as well.

In any event, the literal terms of § 402(b)(3) are ultimately indifferent to the level of detail in an amendment procedure, or in an identification procedure for that matter. The provision requires only that there be an amendment procedure, which here there is. A “procedure,” as that term is commonly understood, is a “particular way” of doing something, Webster’s Third New International Dictionary 1807 (1976), or “a manner of proceeding,” Random House Dictionary of the English Language 1542 (2d ed. 1987). Certainly a plan that says it may be amended only by a unilateral company decision adequately sets forth “a particular way” of making an amendment. Adequately, that is, with one refinement.

In order for an amendment procedure that says the plan may be amended by “[t]he Company” to make any sense, there must be some way of determining what it means for “[t]he Company” to make a decision to amend or, in the language of trust law, to “sufficiently manifest [its] intention” to amend. Restatement (Second) of Trusts § 331, Comment c (1957). After all, only natural persons are capable of making decisions. As Judge Roth suggested, however, principles of corporate law provide a ready-made set of rules for determining, in whatever context, who has authority to make decisions on behalf of a company. Consider, for example, an ordinary sales contract between “Company X” and a third party. We would not think of regarding the contract as meaningless, and thus unenforceable, simply because it does not specify on its face exactly who within “Company X” has the power to enter into such an agreement or carry out its terms. Rather, we would look to corporate law principles to give “Company X” content. See 2 W. Fletcher, Cyclopedia of Law of Private Corporations § 466, p. 505 (rev. ed. 1990) (“[A] corporation is bound by contracts entered into by its officers and agents acting on behalf of the corporation and for its benefit, provided they act within the scope of their express or implied powers”). So too here.

In the end, perhaps the strongest argument for a textual reading of § 402(b)(3) is that to read it to require specification of individuals or bodies within a company would lead to improbable results. That is, it might lead to the invalidation of myriad amendment procedures that no one would think violate § 402(b)(3), especially those in multiemployer plans— which, as we said, § 402(b)(3) covers as well. For example, imagine a multiemployer plan that says “This Plan may be amended at any time by written agreement of two-thirds of the participating Companies, subject to the approval of the plan Trustees.” This would seem to be a fairly robust amendment procedure, and we can imagine numerous variants of it. Yet, because our hypothetical procedure does not specify who within any of “the participating Companies” has authority to enter into such an amendment agreement (let alone what counts as the “approval of the plan Trustees”), respondents would say it is insufficiently specific to pass muster under § 402(b)(3). Congress could not have intended such a result.

B

Curtiss-Wright’s reservation clause thus satisfies the plain text of both requirements in § 402(b)(3). Respondents nonetheless argue that, in drafting § 402(b)(3), Congress intended amendment procedures to convey enough detail to serve beneficiaries’ interest in knowing the terms of their plans. Ordinarily, we would be reluctant to indulge an argument based on legislative purpose where the text alone yields a clear answer, but we do so here because it is the argument the Court of Appeals found persuasive.

Section 402(b)(3)’s primary purpose is obviously functional: to ensure that every plan has a workable amendment procedure. This is clear from not only the face of the provision but also its placement in § 402(b), which lays out the requisite functional features of ERISA plans. 29 U. S. C. § 1102(b) (every ERISA plan shall have, in addition to an amendment procedure, “a procedure for establishing and carrying out a funding policy and method,” “[a] procedure under the plan for the allocation of responsibilities for the operation and administration of the plan,” and “[a] basis on which payments are made to and from the plan”).

Requiring every plan to have a coherent amendment procedure serves several laudable goals. First, for a plan not to have such a procedure would risk rendering the plan forever unamendable under standard trust law principles. See Restatement (Second) of Trusts, supra, §331(2). Second, such a requirement increases the likelihood that proposed plan amendments, which are fairly serious events, are recognized as such and given the special consideration they deserve. Finally, having an amendment procedure enables plan administrators, the people who manage the plan on a day-to-day level, to have a mechanism for sorting out, from among the occasional corporate communications that pass through their offices and that conflict with the existing plan terms, the bona fide amendments from those that are not. In fact, plan administrators may have a statutory responsibility to do this sorting out. See 29 U. S. C. § 1104(a)(1)(D) (plan administrators have a duty to run the plan “in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of [the statute],” which would include the amendment procedure provision). That Congress may have had plan administrators in mind is suggested by the fact that § 402(b)(3), and § 402(b) more generally, is located in the “fiduciary responsibility” section of ERISA. See 29 U.S. C. §§1101-1114.

Respondents argue that § 402(b)(3) was intended not only to ensure that every plan has an amendment procedure, but also to guarantee that the procedure conveys enough detail to enable beneficiaries to learn their rights and obligations under the plan at any time. Respondents are no doubt right that one of ERISA’s central goals is to enable plan beneficiaries to learn their rights and obligations at any time. But ERISA already has an elaborate scheme in place for enabling beneficiaries to learn their rights and obligations at any time, a scheme that is built around reliance on the face of written plan documents.

The basis of that scheme is another of ERISA’s core functional requirements, that “[e]very employee benefit plan shall be established and maintained pursuant to a written instrument.” 29 U. S. C. § 1102(a)(1) (emphasis added). In the words of the key congressional report, “[a] written plan is to be required in order that every employee may, on examining the plan documents, determine exactly what his rights and obligations are under the plan.” H. R. Rep. No. 93-1280, p. 297 (1974) (emphasis added). ERISA gives effect to this “written plan documents” scheme through a comprehensive set of “reporting and disclosure” requirements, see 29 U. S. C. §§1021-1031, of which § 402(b)(3) is not part. One provision, for example, requires that plan administrators periodically furnish beneficiaries with a Summary Plan Description, see 29 U. S. C. § 1024(b)(1), the purpose being to communicate to beneficiaries the essential information about the plan. Not surprisingly, the information that every SPD must contain includes the “name and address” of plan administrators and other plan fiduciaries, but not the names and addresses of those individuals with amendment authority. § 1022(b). The same provision also requires that plan administrators furnish beneficiaries with summaries of new amendments no later than 210 days after the end of the plan year in which the amendment is adopted. See § 1024(b)(1). Under ERISA, both Summary Plan Descriptions and plan amendment summaries “shall be written in a manner calculated to be understood by the average plan participant.” § 1022(a)(1).

More important, independent of any information automatically distributed to beneficiaries, ERISA requires that every plan administrator make available for inspection in the administrator’s “principal office” and other designated locations a set of all currently operative, governing plan documents, see § 1024(b)(2), which necessarily includes any new, bona fide amendments. See also § 1024(b)(4) (requiring plan administrators, upon written request, to furnish beneficiaries with copies of governing plan documents for a reasonable copying charge). As indicated earlier, plan administrators appear to have a statutory responsibility actually to run the plan in accordance with the currently operative, governing plan documents and thus an independent incentive for obtaining new amendments as quickly as possible and for weeding out defective ones.

This may not be a foolproof informational scheme, although it is quite thorough. Either way, it is the scheme that Congress devised. And we do not think Congress intended it to be supplemented by a faraway provision in another part of the statute, least of all in a way that would lead to improbable results, supra, at 81.

In concluding that Curtiss-Wright’s reservation clause sets forth a valid amendment procedure, we do not mean to imply that there is anything wrong with plan beneficiaries trying to prove that unfavorable plan amendments were not properly adopted and are thus invalid. This is exactly what respondents are trying to do here, and nothing in ERISA is designed to obstruct such efforts. But nothing in ERISA is designed to facilitate such efforts either. To be sure, some companies that have plans with the standard reservation clause may want to provide greater specification to their amendment procedures precisely to avoid such costly litigation. Or they may want to retain the flexibility that designating “[t]he Company” (read in light of corporate law) provides them. But either way, this is simply a species of a larger dilemma companies face whenever they must designate who, on behalf of the company, may take legally binding actions that third parties may later have an interest in challenging as unauthorized. Cf. R. Clark, Corporate Law §3.3.2 (1986). It is not a dilemma ERISA addresses. ERISA, rather, follows standard trust law principles in dictating only that whatever level of specificity a company ultimately chooses, in an amendment procedure or elsewhere, it is bound to that level.

Ill

Having determined that the Curtiss-Wright plan satisfies § 402(b)(3), we do not reach the question of the proper remedy for a § 402(b)(3) violation. On remand, the Court of Appeals will have to decide the question that has always been at the heart of this case: whether Curtiss-Wright’s valid amendment procedure — amendment “by the Company”— was complied with in this case. The answer will depend on a fact-intensive inquiry, under applicable corporate law principles, into what persons or committees within CurtissWright possessed plan amendment authority, either by express delegation or impliedly, and whether those persons or committees actually approved the new plan provision contained in the revised SPD. See 2 W. Fletcher, Cyclopedia of the Law of Private Corporations § 444, pp. 397-398 (1990) (authority may be by express delegation or it “may be inferred from circumstances or implied from the acquiescence of the corporation or its agents in a general course of business”). If the new plan provision is found not to have been properly authorized when issued, the question would then arise whether any subsequent actions, such as the executive vice president’s letters informing respondents of the termination, served to ratify the provision ex post. See id., § 437.10, at 386.

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.