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Lamps Plus, Inc. v. Varela

Supreme Court of the United States

October 29, 2018, Argued; April 24, 2019, Decided

No. 17-988.

Opinion

Chief Justice Roberts delivered the opinion of the Court.

The Federal Arbitration Act requires courts to enforce covered arbitration agreements according to their terms. See 9 U. S. C. §2. In Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U. S. 662, 130 S. Ct. 1758, 176 L. Ed. 2d 605 (2010), we held that a court may not compel arbitration on a classwide basis when an agreement is “silent” on the availability of such arbitration. Because class arbitration fundamentally changes the nature of the “traditional individualized arbitration” envisioned by the FAA, Epic Systems Corp. v. Lewis, 584 U. S. ___, ___, 138 S. Ct. 1612, 200 L. Ed. 2d 889, at 901 (2018), “a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so,” Stolt-Nielsen, 559 U. S., at 684, 130 S. Ct. 1758, 176 L. Ed. 2d 605 (emphasis in original). We now consider whether the FAA similarly bars an order requiring class arbitration when an agreement is not silent, but rather “ambiguous” about the availability of such arbitration.

Petitioner Lamps Plus is a company that sells light fixtures and related products. In 2016, a hacker impersonating a company official [***6]  tricked a Lamps Plus employee into disclosing the tax information of approximately 1,300 other employees. Soon after, a fraudulent federal income tax return was filed in the name of Frank Varela, a Lamps Plus employee and respondent here.

 [*1413]  Like most Lamps Plus employees, Varela had signed an arbitration agreement when he started work at the company. But after the data breach, he sued Lamps Plus in Federal District Court in California, bringing state and federal claims on behalf of a putative class of employees whose tax information had been compromised. Lamps Plus moved to compel arbitration on an individual rather than classwide basis, and to dismiss the lawsuit. In a single order, the District Court granted the motion to compel arbitration and dismissed Varela’s claims without prejudice. But the court rejected Lamps Plus’s request for individual arbitration, instead authorizing arbitration on a classwide basis. Lamps Plus appealed the order, arguing that the court erred by compelling class arbitration.

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139 S. Ct. 1407 *; 203 L. Ed. 2d 636 **; 2019 U.S. LEXIS 2943 ***; 103 Empl. Prac. Dec. (CCH) P46,261; 27 Fla. L. Weekly Fed. S 775; 2019 WL 1780275

LAMPS PLUS, INC., et al., Petitioners v. FRANK VARELA

Notice: The LEXIS pagination of this document is subject to change pending release of the final published version.

Subsequent History: On remand at, Remanded by Varela v. Lamps Plus, Inc., 771 Fed. Appx. 418, 2019 U.S. App. LEXIS 16352 (9th Cir., May 31, 2019)

Prior History:  [***1] ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Varela v. Lamps Plus, Inc., 701 Fed. Appx. 670, 2017 U.S. App. LEXIS 14284 (9th Cir. Cal., Aug. 3, 2017)

Disposition: 701 Fed. Appx. 670, reversed and remanded.

CORE TERMS

arbitration, ambiguous, interlocutory, contractual, consumer, anti-drafter, classwide, proferentem, quotation, default, contra, drafter, join, bargaining, class-action, lawsuit, silence, preemption, mandatory, preempted, displace, mutually, silent, save

Business & Corporate Compliance, Arbitration, Federal Arbitration Act, Arbitration Agreements, Pretrial Matters, Alternative Dispute Resolution, Validity of ADR Methods, Contracts Law, Contract Conditions & Provisions, Arbitration Clauses, Federal Arbitration Act, Civil Procedure, Appeals, Appellate Jurisdiction, Final Judgment Rule, Judicial Review, Contracts Law, Contract Interpretation, Ambiguities & Contra Proferentem, Jurisdiction on Certiorari, Considerations Governing Review, Federal Court Decisions, Orders to Compel Arbitration, Constitutional Law, Supremacy Clause, Federal Preemption, Intent