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Seyfarth Synopsis: On April 30, 2018, the U.S. Supreme Court
granted a writ of certiorari in Lamps Plus Inc. v. Varela, No.
17-988. This matter, which involves the interpretation of workplace
arbitration agreements, has the potential to significantly impact
class action litigation. In today's video, Partner Jerry
Maatman of Seyfarth Shaw explains the legal framework of this case,
as well as its importance for employers.
Lamps Plus Inc. v. Varela began as a putative class
action filed in 2016 after a phishing incident at Lamps Plus.
Specifically, Plaintiff Frank Varela's tax information was
compromised when an unknown individual posed as a company executive
and gained access to confidential employee data. However, Lamps
Plus argued that the company's arbitration agreement signed by
Varela mandated that his claims be handled through arbitration on
an individual basis, thereby precluding his class action. Both the
U.S. District Court for the Central District of California and the
U.S. Court of Appeals for the 9th Circuit agreed with Varela's
argument that the arbitration agreement allowed for class
arbitration.
The major question in this case regards the circumstances in
which class arbitration can be compelled under the Federal
Arbitration Act ("FAA"). Though the Supreme Court agreed
to review this question in the near future, it answered nearly the
same question in 2010 in a case entitled Stolt-Nielsen S.A. v.
AnimalFeeds International Corp., in which it held that class
arbitration is authorized only when all parties specifically agree
to it. Within the next 6-12 months, we can expect the Supreme Court
to again a decision on this important class action topic.
Implications For Employers
Employers and human resources personnel who handle employment
contracts should keep a close eye on this case. The decision in
Lamps Plus Inc. v. Varela may very well impact an
employer's process in drafting arbitration clauses.
Furthermore, the Supreme Court's decision to review this
matter, while also considering Epic Systems Corp. v.
Lewis, No. 16-285, indicates a significant interest in class
action issues. Both of these matters have the potential to greatly
impact employment class action litigation. Make sure to watch the
video above for a detailed explanation of the Varela
debate, and stay tuned to our blog for the latest updates!
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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A $100 million arbitration award against NutraSweet was reinstated by a New York state appellate court due to the "emphatic federal policy in favor of arbitral dispute resolution embodied in the FAA,
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Class Action Issues At The U.S. Supreme Court (Video)
