The Supreme Court recently granted certiorari in Lamps Plus Inc. v. Varela, to determine "[w]hether the Federal Arbitration Act forecloses a state-law interpretation of an arbitration agreement that would authorize class arbitration based solely on general language commonly used in arbitration agreements." In other words, at issue is whether an arbitration clause must explicitly allow for class-wide arbitration, rather than solely on an individual basis, in order to find consent between the parties to resolve disputes in class arbitration proceedings.
The case is on appeal from the Ninth Circuit, which last year rendered a decision affirming the district court's order compelling class-wide arbitration. Despite acknowledging the Supreme Court's 2010 holding in Stolt-Nielsen S.A. v. Animal Feeds Int'l Corp. that "mere silence on the issue of class arbitration" is insufficient evidence to conclude that the parties agreed to arbitrate on a class-wide basis, the Ninth Circuit instead held that the lack of an express reference to class arbitration was "not the 'silence' contemplated in Stolt-Nielsen." As such, the Ninth Circuit construed the language "arbitration shall be in lieu of any and all lawsuits or other civil legal proceedings relating to my employment" as authorizing class arbitration and further found that its interpretation of that clause "require[d] no act of interpretive acrobatics" and was "the most reasonable" interpretation possible. Now it is up to the Supreme Court to determine what, if any, explicit class-wide language must be included in an arbitration agreement.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.