Supreme Court To Determine Whether An Arbitration Clause Must Explicitly Authorize Class-Wide Arbitration

The Supreme Court recently granted certiorari in Lamps Plus Inc. v. Varela, to determine "[w]hether the Federal Arbitration Act forecloses a state-law interpretation of an arbitration agreement that would authorize class arbitration based solely on general language commonly used in arbitration agreements." In other words, at issue is whether an arbitration clause must explicitly allow for class-wide arbitration, rather than solely on an individual basis, in order to find consent between the parties to resolve disputes in class arbitration proceedings.

The case is on appeal from the Ninth Circuit, which last year rendered a decision affirming the district court's order compelling class-wide arbitration. Despite acknowledging the Supreme Court's 2010 holding in Stolt-Nielsen S.A. v. Animal Feeds Int'l Corp. that "mere silence on the issue of class arbitration" is insufficient evidence to conclude that the parties agreed to arbitrate on a class-wide basis, the Ninth