United States Supreme Court Says Courts Cannot Compel Classwide Arbitration Absent Affirmative Contractual Agreement

In a 5-4 decision authored by Chief Justice Roberts on April 24, 2019, the United States Supreme Court held that the Federal Arbitration Act ("FAA") precludes a court from compelling class arbitration when an agreement is ambiguous on the availability of such arbitration. Lamps Plus Inc. et al. v. Varela, No. 17-988, 587 U.S. ___ (2019). In doing so, the Court reversed a decision by the United States Court of Appeals for the Ninth Circuit that applied California law to construe an ambiguity against the drafter (Lamps Plus) and permit class arbitration. The Court held that the FAA requires an affirmative contractual basis to compel class arbitration, which was indisputably absent here, and that a state law contract principle could not be applied to the extent it was inconsistent with FAA principles.