PACIFICARE HEALTH SYSTEMS, INC., et al. v. BOOK et al.

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401 OCTOBER TERM, 2002
Syllabus
PACIFICARE HEALTH SYSTEMS, INC., et al. v.
BOOK et al.
certiorari to the united states court of appeals for
the eleventh circuit
No. 02–215. Argued February 24, 2003—Decided April 7, 2003
Respondent physicians filed suit alleging that managed-health-care organi-
zations, including petitioners, violated, inter alia, the Racketeer Influ-
enced and Corrupt Organizations Act (RICO) by failing to reimburse
them for health-care services that they had provided to patients covered
by the organizations’ plans. Petitioners moved to compel arbitration.
The District Court refused to compel arbitration of the RICO claims
on the ground that the arbitration clauses in the parties’ agreements
prohibited awards of “punitive damages,” and hence an arbitrator lacked
authority to award treble damages under RICO. Accordingly, the court
deemed the arbitration agreements unenforceable with respect to those
claims. The Eleventh Circuit affirmed.
Held: It is unclear whether the agreements actually prevent an arbitrator
from awarding treble damages under RICO. This Court’s cases have
placed different statutory treble damages provisions on different points
along the spectrum between purely compensatory and strictly punitive
awards. In particular, the Court has repeatedly acknowledged that
RICO’s treble-damages provision is remedial in nature, and it is not
clear that the parties intended the term “punitive” to encompass claims
for treble damages under RICO. Since the Court does not know how
the arbitrator will construe the remedial limitations, the questions
whether they render the parties’ agreement unenforceable and whether
it is for courts or arbitrators to decide enforceability in the first instance
are unusually abstract. It would be premature for the Court to address
them; the proper course is to compel arbitration. Pp. 403–407.
285 F. 3d 971, reversed and remanded.
Scalia, J., delivered the opinion of the Court, in which all other Mem-
bers joined, except Thomas, J., who took no part in the consideration or
decision of the case.
William E. Grauer argued the cause for petitioners.
With him on the briefs were Christopher R. J. Pace, James
W. Quinn, Jeffrey S. Klein, Edward Soto, and Gregory S.
Coleman.

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402 PACIFICARE HEALTH SYSTEMS, INC. v. BOOK
Opinion of the Court
Joe R. Whatley, Jr., argued the cause for respondents.
With him on the brief were Charlene P. Ford and James B.
Tilghman, Jr.*
Justice Scalia delivered the opinion of the Court.
In this case, we are asked to decide whether respondents
can be compelled to arbitrate claims arising under the Racke-
teer Influenced and Corrupt Organizations Act (RICO), 18
U. S. C. § 1961 et seq., notwithstanding the fact that the par-
ties’ arbitration agreements may be construed to limit the
arbitrator’s authority to award damages under that statute.
I
Respondents are members of a group of physicians who
filed suit against managed-health-care organizations includ-
ing petitioners PacifiCare Health Systems, Inc., and Pacifi-
Care Operations, Inc. (collectively, PacifiCare), and United-
Healthcare, Inc., and UnitedHealth Group Inc. (collectively,
United). These physicians alleged that the defendants un-
lawfully failed to reimburse them for health-care services
that they had provided to patients covered by defendants’
health plans. They brought causes of action under RICO,
the Employee Retirement Income Security Act of 1974
(ERISA), and federal and state prompt-pay statutes, as well
as claims for breach of contract, unjust enrichment, and in
*Briefs of amici curiae urging reversal were filed for the Chamber of
Commerce of the United States by Evan M. Tager, Miriam R. Nemetz,
and Robin S. Conrad; for the National Association of Manufacturers et al.
by Miguel A. Estrada, Andrew S. Tulumello, Jan S. Amundson, Quentin
Riegel, and Stephanie Kanwit; and for the Washington Legal Foundation
by Christopher Landau, Ashley C. Parrish, Daniel J. Popeo, and Richard
A. Samp.
Briefs of amici curiae urging affirmance were filed for the National
Association of Consumer Advocates by Craig Jordan; for Public Citizen,
Inc., by Scott L. Nelson and Brian Wolfman; and for Trial Lawyers for
Public Justice by F. Paul Bland, Jr.

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quantum meruit. In re: Managed Care Litigation, 132
F. Supp. 2d 989, 992 (SD Fla. 2000).
Of particular concern here, PacifiCare and United moved
the District Court to compel arbitration, arguing that provi-
sions in their contracts with respondents required arbitra-
tion of these disputes, including those arising under RICO.
Ibid. Respondents opposed the motion on the ground that,
because the arbitration provisions prohibit an award of puni-
tive damages, see App. 107, 147, 168, 212, respondents could
not obtain “meaningful relief ” in arbitration for their claims
under the RICO statute, which authorizes treble damages,
18 U. S. C. § 1964(c). See Paladino v. Avnet Computer Tech-
nologies, Inc., 134 F. 3d 1054, 1062 (CA11 1998) (holding that
where a remedial limitation in an arbitration agreement pre-
vents a plaintiff from obtaining “meaningful relief ” for a
statutory claim, the agreement to arbitrate is unenforceable
with respect to that claim).
The District Court denied petitioners’ request to compel
arbitration of the RICO claims. 132 F. Supp. 2d, at 1007.
The court concluded that given the remedial limitations in
the relevant contracts, it was, indeed, “faced with a potential
Paladino situation . . . , where the plaintiff may not be able
to obtain meaningful relief for allegations of statutory viola-
tions in an arbitration forum.” Id., at 1005. Accordingly, it
found the arbitration agreements unenforceable with respect
to respondents’ RICO claims. Id., at 1007. The Eleventh
Circuit affirmed “for the reasons set forth in [the District
Court’s] comprehensive opinion,” In re: Humana Inc. Man-
aged Care Litigation, 285 F. 3d 971, 973 (2002), and we
granted certiorari, 537 U. S. 946 (2002).
II
Petitioners argue that whether the remedial limitations
render their arbitration agreements unenforceable is not a
question of “arbitrability,” and hence should have been de-
cided by an arbitrator, rather than a court, in the first in-

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stance. They also claim that even if this question is one of
arbitrability, and is therefore properly within the purview
of the courts at this time, the remedial limitations at issue
do not require invalidation of their arbitration agreements.
Either way, petitioners contend, the lower courts should
have compelled arbitration. We conclude that it would be
premature for us to address these questions at this time.
Our decision in Vimar Seguros y Reaseguros, S. A. v. M/V
Sky Reefer, 515 U. S. 528 (1995), supplies the analytic frame-
work for assessing the ripeness of this dispute. In Vimar,
we dealt with a bill of lading concerning a shipment of goods
from Morocco to Massachusetts. Upon receipt of the goods,
the purchaser discovered that they had been damaged, and,
along with its insurer (Vimar), filed suit against the shipper.
The shipper sought to compel arbitration, relying on choice-
of-law and arbitration clauses in the bill of lading under
which disputes arising out of the parties’ agreement were to
be governed by Japanese law and resolved through arbitra-
tion before the Tokyo Maritime Arbitration Commission.
Vimar countered by arguing that the arbitration clause vio-
lated the Carriage of Goods by Sea Act (COGSA), 46 U. S. C.
App. § 1300 et seq., and hence was unenforceable. 515 U. S.,
at 531–532. In particular, Vimar claimed that “there is no
guarantee foreign arbitrators will apply COGSA”; that the
foreign arbitrator was likely to apply rules of Japanese law
under which respondents’ liability might be less than what it
would be under COGSA; and that this would violate “[t]he
central guarantee of [COGSA] § 3(8) . . . that the terms of a
bill of lading may not relieve the carrier of obligations or
diminish the legal duties specified by the Act.” Id., at 539.
Notwithstanding Vimar’s insistence that the arbitration
agreement violated federal policy as embodied in COGSA,
we declined to reach the issue and held that the arbitration
clause was, at least initially, enforceable. “At this interlocu-
tory stage,” we explained, “it is not established what law the
arbitrators will apply to petitioner’s claims or that petitioner

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will receive diminished protection as a result. The arbitra-
tors may conclude that COGSA applies of its own force or
that Japanese law does not apply so that, under another
clause of the bill of lading, COGSA controls.” Id., at 540.
We further emphasized that “mere speculation that the for-
eign arbitrators might apply Japanese law which, depending
on the proper construction of COGSA, might reduce re-
spondents’ legal obligations, does not in and of itself lessen
liability under COGSA § 3(8),” nor did it provide an adequate
basis upon which to declare the relevant arbitration agree-
ment unenforceable. Id., at 541 (emphases added). We
found that “[w]hatever the merits of petitioner’s comparative
reading of COGSA and its Japanese counterpart, its claim is
premature.” Id., at 540.
The case at bar arrives in a similar posture. Two of the
four arbitration agreements at issue provide that “punitive
damages shall not be awarded [in arbitration],” App. 107,
147; one provides that “[t]he arbitrators . . . shall have no
authority to award any punitive or exemplary damages,” id.,
at 212; and one provides that “[t]he arbitrators . . . shall
have no authority to award extra contractual damages of any
kind, including punitive or exemplary damages . . . ,” id., at
168. Respondents insist, and the District Court agreed, 132
F. Supp. 2d, at 1000–1001, 1005, that these provisions pre-
clude an arbitrator from awarding treble damages under
RICO. We think that neither our precedents nor the ambig-
uous terms of the contracts make this clear.
Our cases have placed different statutory treble-damages
provisions on different points along the spectrum between
purely compensatory and strictly punitive awards. Thus, in
Vermont Agency of Natural Resources v. United States
ex rel. Stevens, 529 U. S. 765, 784 (2000), we characterized
the treble-damages provision of the False Claims Act, 31
U. S. C. §§ 3729–3733, as “essentially punitive in nature.” In
Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U. S. 477,
485 (1977), on the other hand, we explained that the treble-

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406 PACIFICARE HEALTH SYSTEMS, INC. v. BOOK
Opinion of the Court
damages provision of § 4 of the Clayton Act, 15 U. S. C. § 15,
“is in essence a remedial provision.” Likewise in American
Soc. of Mechanical Engineers, Inc. v. Hydrolevel Corp., 456
U. S. 556, 575 (1982), we noted that “the antitrust private
action [which allows for treble damages] was created primar-
ily as a remedy for the victims of antitrust violations.”
(Emphasis added.) And earlier this Term, in Cook County
v. United States ex rel. Chandler, ante, at 130, we stated
that “it is important to realize that treble damages have a
compensatory side, serving remedial purposes in addition to
punitive objectives.” Indeed, we have repeatedly acknowl-
edged that the treble-damages provision contained in RICO
itself is remedial in nature. In Agency Holding Corp. v.
Malley-Duff & Associates, Inc., 483 U. S. 143, 151 (1987), we
stated that “[b]oth RICO and the Clayton Act are designed
to remedy economic injury by providing for the recovery of
treble damages, costs, and attorney’s fees.” (Emphasis
added.) And in Shearson/American Express Inc. v. McMa-
hon, 482 U. S. 220, 241 (1987) we took note of the “remedial
function” of RICO’s treble-damages provision.
In light of our case law’s treatment of statutory treble
damages, and given the uncertainty surrounding the parties’
intent with respect to the contractual term “punitive,” 1 the
application of the disputed language to respondents’ RICO
claims is, to say the least, in doubt. And Vimar instructs
that we should not, on the basis of “mere speculation” that
an arbitrator might interpret these ambiguous agreements
1 Contrary to respondents’ contention, the prohibition in Dr. Manual
Porth’s contract against an arbitrator’s awarding “extracontractual” dam-
ages is likewise ambiguous. This language might mean, as respondents
would have it, that an arbitrator is prohibited from awarding any damages
other than for breach of contract. Brief for Respondents 20–21. But
it might only mean that an arbitrator cannot award noneconomic damages
such as punitive or mental-anguish damages. See 3 D. Dobbs, Law of
Remedies: Damages-Equity-Restitution § 12.1(1), p. 8 (2d ed. 1993) (“Puni-
tive damages and mental anguish damages are thus considered ‘extra-
contractual,’ and usually denied in pure contract cases”).

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in a manner that casts their enforceability into doubt, take
upon ourselves the authority to decide the antecedent ques-
tion of how the ambiguity is to be resolved.2 515 U. S., at
541. In short, since we do not know how the arbitrator will
construe the remedial limitations, the questions whether
they render the parties’ agreements unenforceable and
whether it is for courts or arbitrators to decide enforceability
in the first instance are unusually abstract. As in Vimar,
the proper course is to compel arbitration. The judgment
of the Court of Appeals is reversed, and the case is remanded
for further proceedings consistent with this opinion.
It is so ordered.
Justice Thomas took no part in the consideration or deci-
sion of this case.
2 If the contractual ambiguity could itself be characterized as raising a
“gateway” question of arbitrability, then it would be appropriate for a
court to answer it in the first instance. But we noted just this Term that
“the phrase ‘question of arbitrability’ has a . . . limited scope.” Howsam
v. Dean Witter Reynolds, Inc., 537 U. S. 79, 83 (2002). Indeed, we have
“found the phrase [question of arbitrability] applicable in the kind of nar-
row circumstance where contracting parties would likely have expected a
court to have decided the gateway matter, where they are not likely to
have thought that they had agreed that an arbitrator would do so, and,
consequently, where reference of the gateway dispute to the court avoids
the risk of forcing parties to arbitrate a matter that they may well not
have agreed to arbitrate.” Id., at 83–84. Given our presumption in favor
of arbitration, Moses H. Cone Memorial Hospital v. Mercury Constr.
Corp., 460 U. S. 1, 24–25 (1983), we think the preliminary question whether
the remedial limitations at issue here prohibit an award of RICO treble
damages is not a question of arbitrability.