Baker McKenzie’s Mike Leggieri and Robin Samuel were recently interviewed on how best to avoid class arbitration in light of the US Supreme Court April 2019 Lamps Plus, Inc. v. Varela decision.
In Lamps Plus, the Supreme Court held that when an arbitration agreement is ambiguous on the availability of class arbitration, courts may not compel arbitration on a classwide basis. The Supreme Court emphasized that arbitration is a matter of consent under the Federal Arbitration Act (FAA) and ruled that state law contract principles (for example, that ambiguity in a contract should be construed against the drafter) cannot substitute for the parties’ express consent.
In light of Lamps Plus, Mike and Robin recommend that employers updating their arbitration agreements:
- Weigh the potential disadvantages of arbitration against the principle advantages noted by the Supreme Court.
- Clarify that the FAA governs the arbitration agreement.
- the issues subject to arbitration;
- the applicable rules;
- the designated arbitrators; and
- the parties’ intent to arbitrate on an individual basis only.
- Be as clear as possible regarding the parties’ intent.
Click here to read the full article (page 11) and contact your Baker McKenzie employment attorney to develop and implement your company’s arbitration program.
* Originally published in the June/July 2019 issue of Thomson Reuter’s GC Agenda