Supreme Court, Agreeing With Arguments Raised in NT Lakis Friend-of-the Court Brief, Rules in Lamps Plus v. Varela That Class Arbitration Cannot Be Inferred From “Contractual Ambiguity”

In another important ruling reaffirming the strong federal policy favoring arbitration, the U.S. Supreme Court has ruled 5 – 4 that an arbitration agreement that does not expressly refer to class arbitration cannot be read to authorize class arbitration procedures, which according to the Court are fundamentally different from the “traditional individualized arbitration” Congress had in mind when it passed the Federal Arbitration Act (FAA).

Ruling in the case of Lamps Plus v. Varela, the Court reversed a troubling ruling by the notoriously anti-arbitration Ninth Circuit Court of Appeals that held among other things that the inherent ambiguity in the parties’ agreement to arbitrate “any and all lawsuits” provided a valid contractual basis for ordering class arbitration. 

Instead, the High Court agreed with arguments NT Lakis lawyers made in its “friend-of-the-court” brief, finding that the mere fact that the agreement’s terms were considered under state law to be ambiguous was insufficient to impose class arbitration: “Like silence, ambiguity does not provide a sufficient basis to conclude that parties to an arbitration agreement agreed to ‘sacrifice the principal advantage of arbitration.’”

Members of the Center for Workplace Compliance (CWC) can read more here.