The U.S. Supreme Court recently ruled that workers cannot force a company into class arbitration unless their arbitration agreement explicitly lists “class arbitration” as a way to resolve disputes, overturning a Ninth Circuit Court of Appeals decision. In this case, the worker signed a contract prepared by the employer that said the worker agreed to go to arbitration instead of going to court for employment-related matters. The worker (and certainly his attorneys) wanted to resolve the employment dispute in class arbitration, which would have allowed the attorneys to join a bunch of other workers in the same class to the arbitration and pool their resources against the employer. The arbitration agreement didn’t specify whether the arbitration was “individual arbitration” or “class arbitration,” but just said “arbitration…in lieu of any and all lawsuits.”
The U.S. Supreme Court had previously ruled in another case that a worker can’t force an employer into class arbitration if their arbitration agreement is “silent” on the issue of class arbitration. In this case, the Ninth Circuit had said the employer could be forced into class arbitration because the arbitration agreement wasn’t actually “silent” on class arbitration, but instead was “ambiguous,” since it mentioned arbitration, just not class arbitration. The U.S. Supreme Court disagreed and overturned the Ninth Circuit, saying that just because their arbitration agreement uses the word “arbitration” but is ambiguous on class arbitration, that doesn’t mean the employer consented to class arbitration versus individual arbitration. Therefore the worker couldn’t force the employer into class arbitration. Instead, the U.S. Supreme Court said the employer must consent to any class arbitration, and for the employer to consent, the arbitration agreement must explicitly mention “class arbitration” (Lamps Plus, Inc. v. Valera, US, April 2019).
Tips for Employers: Arbitration is a hot topic in the law right now, and a tricky one. State laws often have more requirements for arbitration agreements than federal law, and legislatures and courts keep moving the goal posts, so crafting an arbitration agreement that meets all the necessary requirements is challenging. If you have questions about a new or existing arbitration agreement, see Vigilant’s Legal Guide, Mandatory Arbitration Agreements or Vigilant members should contact their Vigilant employment attorney.
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