The Supreme Court recently granted certiorari in a case that presents the question of whether an arbitration provision that is silent as to class arbitration nevertheless allows for class arbitration. Lamps Plus v Varela has yet to be scheduled for oral argument, but the court’s granting of certiorari hints at a reversal of the 9th Circuit’s holding that the provision does allow class arbitration.

The case arose from a data breach at Lamps Plus, wherein, during a phishing attack, an employee of Lamps Plus was tricked into distributing other employees’ W-2 forms to third parties. See Varela v. Lamps Plus, Inc., No. CV 16-577-DMG (KSX), 2016 WL 9110161, at *1 (C.D. Cal. July 7, 2016), aff’d, 701 F. App’x 670 (9th Cir. 2017), cert. granted, No. 17-988, 2018 WL 398496 (U.S. Apr. 30, 2018). In response, a class action was filed and Lamps Plus responded by attempting to force individual arbitration under the named plaintiff’s arbitration agreement. Id. The district court held that the arbitration provision at issue allowed class arbitration even though it made no mention whatsoever of class arbitration. Id.

The 9th Circuit affirmed the district court in holding that the provision did in fact allow class arbitration. Varela v. Lamps Plus, Inc., 701 F. App’x 670, 673 (9th Cir. 2017), cert. granted, No. 17-988, 2018 WL 398496 (U.S. Apr. 30, 2018). The 9th Circuit turned first to the language of the provision and determined that merely because the agreement did not mention class arbitration does not mean necessarily rule out the possibility of class arbitration. Id. The court then interpreted the contract according to California principles and found that the provision was ambiguous. Id. Thus, the court interpreted the ambiguous provision against the drafters, in this case Lamps Plus. In contrast, the dissent argued that the clause was not ambiguous and that a commonsense interpretation would inevitably mean that class arbitration was not available under the contract. Id.

The significance of the Supreme Court’s decision may not appear very great until one realizes that many existing arbitration provisions are silent as to class arbitration. Therefore, whatever the Court decides can have enormous consequences for future disputes where the arbitration provision is silent as to class arbitration.

(Nick Leyh, a third-year student at the University of Missouri School of Law prepared this post.)