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MONTH-IN-BRIEF (Apr 2019)

Business Litigation

The Supreme Court Decides Lamps Plus and Deals a Blow to Class Action Arbitration

By Leslie A. Berkoff, Moritt Hock & Hamroff LLP

 On April 24, 2019, the Court issued its long-awaited decision in Lamps Plus Inc. v. Varela, No. 17-988. In a 5-4 opinion, the court reversed and remanded the 9th Circuit, holding that under “the Federal Arbitration Act, an ambiguous agreement cannot provide the necessary contractual basis for concluding that the parties agreed to submit to class arbitration.” The decision was the latest in a line of rulings which have allowed businesses to utilize arbitration provisions to bar both class actions in court and class-wide arbitration proceedings. The case arose from an employment dispute over the improper release by Lamps Plus of an employee's, Frank Varela's, personal identifiable information. Citing the contract of employment signed by Varela, Lamps Plus moved to compel bilateral arbitration; the district court found that the Agreement is a contract of adhesion and ambiguous as to class arbitration. It construed the ambiguity against the drafter, Lamps Plus, and compelled arbitration of all claims, allowing class-wide arbitration to proceed.   

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