Supreme Court rules in favor of businesses seeking to block class-action lawsuits

Supreme Court rules in favor of businesses seeking to block class-action lawsuits
© Greg Nash

The Supreme Court on Wednesday ruled on behalf of a business seeking to stop a class-action lawsuit brought forward by an employee, handing a win to companies that want to block some types of litigation.

In a 5-4 ruling divided along ideological lines, Chief Justice John Roberts wrote that under the Federal Arbitration Act, an "ambiguous" arbitration agreement between an employee and their employer does not mean that that both parties agreed to any class arbitration.

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Roberts was joined in the decision by conservative Justices Neil Gorsuch, Samuel Alito, Brett KavanaughBrett Michael KavanaughSupreme Court declines to overturn doctrine on regulatory clarity Gorsuch joins liberal justices in ruling against federal criminal statute Susan Collins: Trump's 'she's not my type' defense is 'extremely bizarre' MORE and Clarence Thomas, who also wrote his own concurring opinion.

However, each of the court's four liberal justices wrote their own dissenting opinions opposing the ruling, signaling a deep divide on the court when it comes to arbitration cases.

The case centered around any employee named Frank Varela, who filed a class-action lawsuit against his employer, Lamps Plus, after a hacker used a spear-phishing attempt to get another employee to inadvertently reveal the tax information of about 1,300 staffers.

Varela had signed an arbitration agreement with the company, but filed state and federal lawsuits against Lamps Plus. The business sought to dismiss the lawsuits, pushing for individual legal action instead.

A district court and the Ninth Circuit Court of Appeals sided with Varela, finding that the arbitration agreement he signed “include[d] no express mention of class proceedings.”

However, the conservative majority on the court on Wednesday overturned those rulings.

Roberts wrote that “[c]lass arbitration is not only markedly different” from the individual lawsuits covered by the Federal Arbitration Act, but that it “also undermines the most important benefits” of traditional individual lawsuits.

“The statute therefore requires more than ambiguity to ensure that the parties actually agreed to arbitrate on a classwide basis,” Roberts stated.

The liberal minority rebuked Roberts’s findings in each of their individual dissenting opinions.

“I write separately to emphasize once again how treacherously the Court has strayed from the principle that ‘arbitration is a matter of consent, not coercion,’” Justice Ruth Bader Ginsburg wrote in her opinion, referencing a previous Supreme Court ruling on arbitration.

Ginsburg wrote that the Supreme Court in recent years “has routinely deployed to the law to deny to employees and consumers ‘effective relief against powerful economic entities’” and that it “has hobbled the capacity of employees and consumers to band together in a judicial or arbitral forum.”

--This report was updated at 11:02 a.m.