After recently hearing oral argument in Lamps Plus Inc. v.
Varela, the United States Supreme Court is set to decide
whether the Federal Arbitration Act forecloses a state-law
interpretation of an arbitration agreement that would result in
permitting class arbitration. Arbitration is a function of
contract, and therefore parties may agree to aggregated
arbitrations in theory, though many questioned their practicality
given the principal aims of arbitration – efficiency, speed,
and finality. The question before the Court, however, is whether
state-law contract interpretative principles should control when
arbitration agreements are silent on the issue of class
arbitration.
In the underlying decision, the Ninth Circuit held that, under
California law, when an arbitration agreement is silent on the
issue of class arbitration, it may be ambiguous, and therefore
subject to interpretation against the drafter, i.e., interpreted to
permit class arbitration. Lamps Plus,
