Lamps Plus, Inc. v. Varela

587 U.S. 176, 139 S. Ct. 1407, 203 L. Ed. 2d 636, 2019 U.S. LEXIS 2943
CourtSupreme Court of the United States
DecidedApril 24, 2019
Docket17-988
StatusPublished
Cited by358 cases

This text of 587 U.S. 176 (Lamps Plus, Inc. v. Varela) is published on Counsel Stack Legal Research, covering Supreme Court of the United States primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lamps Plus, Inc. v. Varela, 587 U.S. 176, 139 S. Ct. 1407, 203 L. Ed. 2d 636, 2019 U.S. LEXIS 2943 (2019).

Opinions

Chief Justice ROBERTS delivered the opinion of the Court.

*1412The Federal Arbitration Act requires courts to enforce covered arbitration agreements according to their terms. See 9 U.S.C. § 2. In Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp. , 559 U.S. 662, 130 S.Ct. 1758, 176 L.Ed.2d 605 (2010), we held that a court may not compel arbitration on a classwide basis when an agreement is "silent" on the availability of such arbitration. Because class arbitration fundamentally changes the nature of the "traditional individualized arbitration" envisioned by the FAA, Epic Systems Corp. v. Lewis , 584 U.S. ----, ----, 138 S.Ct. 1612, 1623, 200 L.Ed.2d 889 (2018), "a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so," Stolt-Nielsen , 559 U.S. at 684, 130 S.Ct. 1758 (emphasis in original). We now consider whether the FAA similarly bars an order requiring class arbitration when an agreement is not silent, but rather "ambiguous" about the availability of such arbitration.

I

Petitioner Lamps Plus is a company that sells light fixtures and related products. In 2016, a hacker impersonating a company official tricked a Lamps Plus employee into disclosing the tax information of approximately 1,300 other employees. Soon after, a fraudulent federal income tax return was filed in the name of Frank Varela, a Lamps Plus employee and respondent here.

*1413Like most Lamps Plus employees, Varela had signed an arbitration agreement when he started work at the company. But after the data breach, he sued Lamps Plus in Federal District Court in California, bringing state and federal claims on behalf of a putative class of employees whose tax information had been compromised. Lamps Plus moved to compel arbitration on an individual rather than classwide basis, and to dismiss the lawsuit. In a single order, the District Court granted the motion to compel arbitration and dismissed Varela's claims without prejudice. But the court rejected Lamps Plus's request for individual arbitration, instead authorizing arbitration on a classwide basis. Lamps Plus appealed the order, arguing that the court erred by compelling class arbitration.

The Ninth Circuit affirmed. 701 Fed. Appx. 670 (2017). The court acknowledged that Stolt-Nielsen prohibits forcing a party "to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so" and that Varela's agreement "include[d] no express mention of class proceedings." 701 Fed. Appx., at 672. But that did not end the inquiry, the court reasoned, because the fact that the agreement "does not expressly refer to class arbitration is not the 'silence' contemplated in Stolt-Nielsen ." Ibid. In Stolt-Nielsen , the parties had stipulated that their agreement was silent about class arbitration. Because there was no such stipulation here, the court concluded that Stolt-Nielsen was not controlling.

The Ninth Circuit then determined that the agreement was ambiguous on the issue of class arbitration. On the one hand, as Lamps Plus argued, certain phrases in the agreement seemed to contemplate "purely binary claims." Ibid. At the same time, as Varela asserted, other phrases were capacious enough to include class arbitration, such as one stating that "arbitration shall be in lieu of any and all lawsuits or other civil legal proceedings relating to my employment." Ibid. The Ninth Circuit followed California law to construe the ambiguity against the drafter, a rule that "applies with peculiar force in the case of a contract of adhesion" such as this. Ibid. (quoting Sandquist v. Lebo Auto., Inc. , 1 Cal. 5th 233, 248, 205 Cal.Rptr.3d 359, 376 P.3d 506, 514 (2016) ). Because Lamps Plus had drafted the agreement, the court adopted Varela's interpretation authorizing class arbitration. Judge Fernandez dissented. In his view, the agreement was not ambiguous, and the majority's holding was a "palpable evasion of Stolt-Nielsen ." 701 Fed. Appx., at 673.

Lamps Plus petitioned for a writ of certiorari, arguing that the Ninth Circuit's decision contravened Stolt-Nielsen and created a conflict among the Courts of Appeals. In opposition, Varela not only disputed those contentions but also argued for the first time that the Ninth Circuit lacked jurisdiction over the appeal, and that this Court therefore lacked jurisdiction in turn. We granted certiorari. 584 U.S. ----, 138 S.Ct. 1697, 200 L.Ed.2d 948 (2018).

II

We begin with jurisdiction. Section 16 of the FAA governs appellate review of arbitration orders. 9 U.S.C.

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Cite This Page — Counsel Stack

Bluebook (online)
587 U.S. 176, 139 S. Ct. 1407, 203 L. Ed. 2d 636, 2019 U.S. LEXIS 2943, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lamps-plus-inc-v-varela-scotus-2019.