A Divided Court Holds That Under The Federal Arbitration Act An Ambiguous Agreement Cannot Provide A Basis For Compelling Class Arbitration

On April 24, 2019, in a 5-4 vote, the Supreme Court in Lamps Plus, Inc. v. Varela held that under the Federal Arbitration Act (the "FAA"), an ambiguous agreement cannot provide the necessary contractual basis for compelling class arbitration. This decision extends the Court's 2010 Stolt-Nielsen opinion, where the Court held that arbitration could not be compelled on a class-wide basis when an arbitration agreement is silent on the issue, and reflects the Court's continued reluctance to allow class arbitrations unless specifically articulated in the arbitration agreement.

In 2016, Lamps Plus was the victim of a phishing attack, which resulted in the improper dissemination of employee data.[1] One of the employees and alleged victims of the phishing attack, Frank Varela, filed a class action lawsuit on behalf of himself and fellow employees in federal court in California, and Lamps Plus moved to compel individual arbitration of Varela's claim.[2] The district court