Supreme Court Invalidates Class Action Lawsuit on the Basis It Wasn’t Expressly Authorized

The trend of the US Supreme Court to make it harder for consumers and employers accountable continued with a 5-4 decision in the case of Lamps Plus, Inc. v. Varela. More and more the Supreme Court, according to Slate Magazine, which reported on the Lamps Plus, Inc. case, is favoring employers who draft employment contracts and consumer contracts that favor individual arbitration lawsuits – as opposed to jury trials and class action lawsuits or class action arbitrations.

Jury trials force corporate executives and defendants to testify in public. The discovery process, which employees and individuals need because the corporation controls the paperwork, are more extensive injury trial cases than arbitrations. Juries are much more likely to award punitive damages and higher awards than arbitrators are.

Class actions allow individuals who have suffered small amounts of harm on a mass scale to bring one lawsuit instead of multiple lawsuits. Often, the cost of the trial or arbitration simply isn’t worth it for just one individual.

In the Lamps Plus case, an employee brought a class action lawsuit after he learned a tax return had been fraudulently filed in his name because the company site had been hacked. The employee, Mr. Varela, agreed that the company contract which forced the dispute to arbitration should apply. He asserted though, that since the contract was silent or ambiguous as to whether a class action arbitration or individual arbitration could be brought – that all ambiguities should be resolved in favor of the employee. The lower court and Ninth Circuit agreed that since the corporation drafted the contract, that the ambiguity should be resolved in favor of the employee – and that a class action arbitration was justified.

In April 2019, the Supreme Court ruled that the ambiguity didn’t matter. It ruled that unless there was an express consent in the employment contract to have a class action arbitration, that the arbitration should be on an individual arbitration, not a class action arbitration. The Court also reasoned that The Federal Arbitration Act requires that ambiguity about the arbitration favors individualized arbitration – due to the complexity of class action arbitrations.

Justice Ruth Bader Ginsburg in dissent, wrote, “Shut from the Court’s sight is the ‘Hobson’s choice’ employees face: ‘accept arbitration on their employer’s terms or give up their jobs.”

At the Law Offices of Stephen Danz & Associates, we have been fighting for employees for more than 40 years. We have offices throughout California. Our lawyers try cases before juries, before arbitration panels, and before state and federal agencies. To speak with a strong advocate who is not afraid of insurance companies and employers, call (877)789-9707 today. Se Habla Espanol.