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Employer Wins Right To Compel Individual Arbitration After Litigating All The Way To The Supreme Court

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Written by Rebecca A. Hause-Schultz

Published: 24 April 2019

After many years of litigation, employer Lamps Plus successfully defended its arbitration agreement all the way to the U.S. Supreme Court (“SCOTUS”), when the Court’s conservative majority ruled that a court may not compel class-arbitration unless the parties’ arbitration agreement shows that the parties agreed to that process.

In the case at issue, Varela v. Lamps Plus an employee sued its employer, Lamps Plus, over a data breach issue where 1,300 employees’ tax information was released by a hacker. The employee sued on behalf of himself and other employees whose information was released. The employer sought to enforce its arbitration agreement with employee, arguing that the case should be compelled to individual arbitration—meaning that the employee could arbitrate his claim only. The District Court compelled the claim to arbitration, but authorized the employee to pursue the claims as a class representative—meaning that the case would proceed as a class-action in arbitration. The employer appealed, saying that the employee could not pursue a class claim in arbitration, and that only the employee’s individual claim should be pursued. The issue was heard by the Ninth Circuit, who agreed again with the employee that class treatment in arbitration was appropriate because the arbitration agreement was ambiguous on the issue of class arbitration.

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