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Samuel Estreicher and Holly H. Weiss Samuel Estreicher and Holly H. Weiss

On Wednesday, April 24, 2019, the U.S. Supreme Court issued an opinion in Lamps Plus v. Varela, 587 U.S. ___ (2019), holding that courts cannot construe ambiguous arbitration clauses to permit class arbitration. The decision follows from the court’s 2010 decision in Stolt-Nielsen S.A. v. AnimalFeeds Int’l, 559 U.S. 662, 668 (2010), in which the court held that courts cannot compel class arbitration when an agreement is silent on the availability of class arbitration. In that case, the parties had entered into an arbitration contract that permitted individual arbitration but stipulated that the agreement was silent about class arbitration. The Stolt-Nielsen court emphasized that the core benefits of arbitration consist of its informality which allows for greater speed and efficiency with lower costs. Class arbitration, by contrast, did not offer the same benefits and introduced new risks. As the court would later explain in Epic Systems v. Lewis, 138 S. Ct. 1612, 1623 (2018), with class arbitration, “the virtues Congress originally saw in arbitration, its speed and simplicity and inexpensiveness, would be shorn away and arbitration would wind up looking like the litigation it was meant to displace.” Because of the “risks and costs for both sides” inherent in class arbitration, consent to individual arbitration cannot be read as tantamount to consent to class arbitration; “courts may not infer consent to participate in class arbitration absent an affirmative ‘contractual basis for concluding that the parties had agreed to do so.’” Lamps Plus, 587 U.S. __ (quoting Stolt-Nielsen S.A. v. AnimalFeeds Int’l, 559 U.S. 662, 684 (2010)).

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