Last Wednesday, the US Supreme Court issued yet another pro-employer arbitration decision.
In a 5-4 split, the Supreme Court held in Lamps Plus Inc. v. Varela that a party cannot be compelled to submit to a class arbitration (as opposed to the arbitration of individual claims) unless the arbitration agreement explicitly authorizes class proceedings in arbitration.
In doing so, the Supreme Court reiterated two key aspects of its Federal Arbitration Act jurisprudence:
- Arbitration is a matter of consent, not coercion; and
- Class arbitration is fundamentally different than the traditional individualized arbitration envisioned by the FAA.
Because, according to the majority opinion, class arbitration so fundamentally changes the nature of arbitration, a party can only be forced to litigate class claims in arbitration under the FAA if there is a contractual basis for concluding that the party agreed.