U.S. Supreme Court Grants Review to Decide When Consent to Class Arbitration Can Be Inferred From Silence in Arbitration Agreement
May 2, 2018
Lamps Plus, Inc. v. Varela
(No. 17-988, April 30, 2018)
A party to an arbitration agreement cannot be forced to arbitrate on a class basis unless there is a “contractual basis” for concluding the party has “agreed to” class arbitration; such consent cannot be inferred from “mere silence on the issue of class arbitration” or “from the fact of the parties’ agreement to arbitrate.” Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 685, 687 (2010). In reaching this conclusion, the U.S. Supreme Court left open what contractual basis would suffice to conclude that a party has agreed to classwide arbitration. Id. at 687 n.10.
In Lamps Plus, Inc. v. Varela, plaintiff brought a putative class action against his employer after his private information was inadvertently disclosed by another employee as part of a data breach in which Lamps Plus was targeted by hackers.
Lamps Plus moved to compel plaintiff to individually arbitrate his claims based on the arbitration agreement plaintiff signed on becoming a Lamps Plus employee. The district court compelled arbitration but did so on a classwide basis.
Pointing to generic language in the arbitration agreement submitting all disputes between plaintiff and Lamps Plus to arbitration, the Ninth Circuit affirmed in an unpublished disposition.
The Supreme Court has now granted certiorari to decide whether the Federal Arbitration Act allows consent to class arbitration to be inferred from general language commonly used in arbitration agreements without any specific textual reference to class arbitration.