Supreme Court to Decide Class Arbitration Case

Lamps Plus Inc. v. Varela, from the Ninth Circuit, concerns "Whether 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."

The US Chamber of Commerce wants the Ninth Circuit reversed. As Supreme Court has decided many recent arbitration cases along predictable political lines, and there was a dissent to the Ninth Circuit opinion including the famously progressive (late) Judge Reinhardt, such a reversal would fit the usual pattern. Public Citizen predictably opposes the Chamber on this case.

As John Lewis of BakerHostletler writes, "the district court interpreted the arbitration agreement to authorize class arbitration. A divided 9th Circuit panel affirmed. Judges Reinhardt and Wardlaw first distinguished Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 55 U.S. 662, 684 (2010). In Stolt-Nielsen, “silence” was “more than the mere absence of language explicitly referring to class arbitration; instead, it meant absence of agreement.” So, merely because an agreement does not expressly refer to class arbitration is not determinative according to the judges. The majority then applied California contract principles to interpret the arbitration agreement. They found the agreement was ambiguous as to class arbitration and construed it against the drafter, Lamps Plus."