Lamps Plus Inc. v. Varela

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

Petitioner (employer) and Respondent (employee) entered into a standard employment arbitration agreement. Upon Respondent filing a class action lawsuit in federal court, Petitioner moved to compel individual arbitration. The district court denied Petitioner’s motion on the grounds that the language in the arbitration agreement was broad or in the alternative, ambiguous, and should be interpreted against Petitioner. The Ninth Circuit Court of Appeals affirmed stating that the lack of reference to class actions and the encompassing of “all claims,” is enough to authorize class arbitration. In the Petitioner’s brief to the Supreme Court, Petitioner argues that the Federal Arbitration Act (FAA) favors “bilateral arbitration,” as to promote financial and procedural efficiency. Petitioner argues that precedent establishes that class arbitration must be “agreed to” and cannot be “presumed . . . from mere silence on the issue.” Petitioner also argues that the arbitration agreement in question uses standard language that has been interpreted by multiple circuit courts to infer individual arbitration. Upholding this application will promote consistency between the lower courts in determining arbitrability. Petitioner further argues that because arbitration is a consensual process, it would be unfair for absent class members to receive the benefits or burdens resulting from a class arbitration award or lack thereof.