Supreme Court Doubles Down on Enforceability of Class Arbitration Waivers
The United States Supreme Court today ruled that arbitration agreements must explicitly provide for class arbitration for that process to be invoked, bolstering the Court’s 2018 decision in Epic Systems Corp. v. Lewis which held that class action waivers in arbitration agreements signed by employees are enforceable and do not violate the National Labor Relations Act. In today’s Lamp’s Plus Inc. et al. v. Frank Varela decision, the Court held that an arbitration agreement that was ambiguous as to whether class arbitration was available “does not provide a sufficient basis to conclude that parties to an arbitration agreement agreed to ‘sacrifice the principal advantage of arbitration.’” In doing so, the Court overturned an appellate court that, using general principles of contractual interpretation, found that the ambiguity in the agreement as to the availability of class arbitration should be construed against the employer who had drafted the agreement.
While today’s decision is another victory for employers seeking to avoid class actions, it serves as a reminder to review the arbitration provisions in your employment and dispute resolution agreements to ensure that they are not subject to challenge.