Class arbitration came back before the Supreme Court this term in Lamps Plus, Inc. v. Varela. Today, the Supreme Court issued a 5-4 decision in Lamps Plus, holding that, under the Federal Arbitration Act, “courts may not infer from an ambiguous agreement that parties have consented to arbitrate on a classwide basis.” Rather, class arbitration must be expressly authorized by contract.
The facts of Lamps Plus are straightforward. An employee had signed an arbitration agreement upon being hired to work for Lamps Plus. After a data breach, the employee sued Lamps Plus in federal court. Lamps Plus filed a motion to compel individual arbitration, and the district court granted the motion to compel but authorized arbitration on a class basis. The Ninth Circuit affirmed, reasoning that the arbitration provision was ambiguous as to class arbitration and must be construed against the employer under California’s contra proferentem rule that ambiguities in a contract must be