The Supreme Court’s conservative majority has been consistently skeptical of arguments that individual consumers or employees who have agreed to bring their legal claims in arbitration have a right to do so on an aggregated basis, such as in a class action. At the same time, arbitration is a function of contract, meaning parties can agree to aggregated arbitrations. The main question in Lamps Plus Inc. v. Varela, which involves contract language that arguably allows aggregated arbitrations, is how to reconcile these two ideas. After argument, it appears that the Supreme Court is divided on this question, but likely to hold that the language in the Lamps Plus arbitration contract was not clear enough to give rise to an obligation to arbitrate on a class basis.

In the decision under review, the U.S. Court of Appeals for the 9th Circuit construed Lamps Plus’ arbitration contract to allow respondent Frank Varela to arbitrate on a class basis against his employer, rather than limiting him to individual arbitration. The lower court reached that result by applying California law to construe against Lamps Plus ambiguous contract language about whether employees could aggregate their claims. However, Lamps Plus argues that federal law demands clearer language before a party can be required to arbitrate on an aggregated basis.

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