Supreme Court of the United States

“ Consider this very contract. Lamps Plus, knowing about the anti-drafter rule, still chose not to include a term prohibiting class arbitration. And Varela, seeing only the language sending “any and all disputes, claims, or controversies” to arbitration, had no reason to think class disputes barred. Cf. ibid. (“ [T] he party addressed will understand ambiguous language in the sense most favorable to itself”) . The upshot is that the rule (as this Court recognized in another arbitration case) protects against “unintended” consequences. ”

“ Too few interlocutory appeals will too often impose upon parties delay and expense that an interlocutory appeal, by quickly correcting a lower court error, might have spared them. But too many interlocutory appeals will too often unnecessarily delay proceedings while a party appeals and loses. ”

“ Consent is essential under the FAA because arbitrators wield only the authority they are given. That is, they derive their “powers from the parties’ agreement to forgo the legal process and submit their disputes to private dispute resolution.” Stolt-Nielsen, 559 U. S., at 682. Parties may generally shape such agreements to their liking by specifying with whom they will arbitrate, the issues subject to arbitration, the rules by which they will arbitrate, and the arbitrators who will resolve their disputes. ”

“ Nothing in the Act’s text requires the displacement of state contract rules, as the majority implicitly concedes. See ante, at 6. Nor do the Act’s purposes, so long as the state rule (as is true here) extends to all contracts alike, without disfavoring arbitration. See supra, at 6–7. The idea that the FAA blocks a state rule satisfying that standard because (a court finds) the rule has too much “public policy” in it comes only from the majority’s collective mind. That approach disrespects the preeminent role of the States in designing and enforcing contract rules. ”

“ Like most Lamps Plus employees, Varela had signed an arbitration agreement when he started work at the company. But after the data breach, he sued Lamps Plus in Federal District Court in California, bringing state and federal claims on behalf of a putative class of employees whose tax information had been compromised. Lamps Plus moved to compel arbitration on an individual rather than classwide basis, and to dismiss the lawsuit. In a single order, the District Court granted the motion to compel arbitration and dismissed Varela’s claims without prejudice. ”

“ Nothing in the FAA shields a contracting party, operating against the backdrop of impartial state law, from the consequences of its own drafting decisions. How, then, could the majority go so wrong?
Stolt-Nielsen offers the majority no excuse: Far from “control [ling] ” this case, ante, at 8, that decision addressed a different situation—and explicitly reserved decision of the question here. In Stolt-Nielsen, the contracting parties entered into a formal stipulation that “they had not reached any agreement on the issue of class arbitration.” ”

“ And to dismiss the neutral and commonplace default rule that would construe that contract against the drafting party. No matter what either requires, the majority will prohibit class arbitration. Does that approach remind you of anything? It should. Here (again) is Stolt-Nielsen as Concepcion described it: The panel exceeded its authority by “imposing class procedures based on policy judgments rather than the arbitration agreement itself or some background principle of contract law that would affect its interpretation.” ”

“ Under the FAA, state law controls the interpretation of arbitration agreements unless that law discriminates against arbitration; the anti-drafter default rule is subject to no such objection; the rule therefore compels this Court to hold that the agreement here authorizes class arbitration. That the majority thinks the contract, as so read, seriously disadvantages Lamps Plus, see ante, at 7–8, is of no moment (any more than if state law had instead construed the contract to produce adverse consequences for Varela) . ”

“ Arbitration clauses, the Court has decreed, may preclude judicial remedies even when submission to arbitration is made a take-it-or-leave-it condition of employment or is imposed on a consumer given no genuine choice in the matter. ”

“ The Court has relied on the FAA, not simply to overcome once-prevalent judicial resistance to enforcement of arbitration disputes between businesses. In relatively recent years, it has routinely deployed the law to deny to employees and consumers “effective relief against powerful economic entities.” ”

“ Cauble, 255 U. S. 356, 363 (1921) . Where, as here, an employment agreement provides for arbitration as a forum for all disputes relating to a person’s employment and the rules of that forum allow for class actions, an employee who signs an arbitration agreement should not be expected to realize that she is giving up access to that procedural device.
In any event, as Justice Kagan explains, the employment contract that Frank Varela signed went further. ”

“ Blocking Varela’s path to concerted action, the Court aims to ensure the authenticity of consent to class procedures in arbitration. Ante, at 7–8. 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.” Epic, 584 U. S., at ___, n. 2 (Ginsburg, J., dissenting) (slip op., at 7, n. 2) ; see Circuit City, 532 U. S., at 139 (Souter, J., dissenting) (employees often “lack the bargaining power to resist an arbitration clause if their prospective employers insist on one”) . ”

“ The Ninth Circuit applied California contract law to conclude that the parties’ agreement was ambiguous on the availability of class arbitration. In California, an agreement is ambiguous “when it is capable of two or more constructions, both of which are reasonable.” 701 Fed. Appx., at 672 (quoting Powerine Oil Co. v. Superior Ct., 37 Cal. 4th 377, 390, 118 P. 3d 589, 598 (2005) ) . Following our normal practice, we defer to the Ninth Circuit’s interpretation and application of state law and thus accept that the agreement should be regarded as ambiguous. See, e. ”

“ Kaplan, 514 U. S. 938, 944 (1995) , state law is preempted to the extent it “stands as an obstacle to the accomplishment and execution of the full purposes and objectives” of the FAA, Concepcion, 563 U. S., at 352 (internal quotation marks omitted) . ”

“ The Court, paradoxically reciting the mantra that “ [c] onsent is essential,” ante, at 7, has facilitated companies’ efforts to deny employees and consumers the “important right” to sue in court, and to do so collectively, by inserting solo-arbitration-only clauses that parties lacking bargaining clout cannot remove. CompuCredit Corp. v. Greenwood, 565 U. S. 95, 115 (2012) (Ginsburg, J., dissenting) . When companies can “muffl [e] grievance [s] in the cloakroom of arbitration,” Merrill Lynch, Pierce, Fenner & Smith, Inc. ”

“ Consumer Financial Protection Bureau, Arbitration Study §1.4.1 (Mar. 2015) (“Tens of millions of consumers use consumer financial products or services that are subject to... arbitration clauses”) , online at https://files.consumerfinance.gov/f/201503_cfpb_arbitration-study-report-to-congress-2015.pdf. Piling Pelion on Ossa, the Court has hobbled the capacity of employees and consumers to band together in a judicial or arbitral forum. ”

“ Federal courts must therefore apply “background principles of state contract law” when evaluating arbitration agreements. Arthur Andersen LLP v. Carlisle, 556 U. S. 624, 630 (2009) ; Perry v. Thomas, 482 U. S. 483, 492, n. 9 (1987) . ”

“ Here, Lamps Plus was the defendant, and the District Court compelled class arbitration over the company’s vigorous opposition. ↑ Justice Kagan offers her own interpretation of the contract, concludes that it unambiguously authorizes class arbitration, post, at 2–4, and criticizes us for “disregard [ing] the actual contract the parties signed,” post, at 14. Justice Sotomayor, on the other hand, concludes that the contract is ambiguous about class arbitration but criticizes us for treating the contract as... ambiguous. Post, at 2–3 (dissenting opinion) . ”

“ Spend way, way, way more money than your claim is worth, or relinquish your... rights.”) ; Concepcion, 563 U. S., at 365 (Breyer, J., dissenting) (“What rational lawyer would have signed on to represent the [plaintiffs] for the possibility of fees stemming from a $30.22 [individual] claim?”) ”

“ Levine, 555 U. S. 555, 582–604 (2009) (opinion concurring in judgment) , but I join the opinion of the Court because it correctly applies our FAA precedents, see Epic Systems Corp. v. Lewis, 584 U. S. ___ (2018) ; Concepcion, supra.
↑ Two intermediate California courts have held, based on similar language, that an arbitration agreement did not authorize class arbitration. See Nelsen v. Legacy Partners Residential, Inc., 207 Cal. App. 4th 1115, 1129–1131, 144 Cal. Rptr. 3d 198, 210–211 (2012) ; Kinecta Alternative Financial Solutions, Inc. v. Superior Court of Los Angeles Cty., 205 Cal. App. ”

“ Id., at 687, n. 10 (emphasis added) ; see Oxford Health Plans LLC v. Sutter, 569 U. S. 564, 571 (2013) (“We overturned the arbitral decision [in Stolt-Nielsen] because it lacked any contractual basis for ordering class procedures,” not because it relied on an inadequate one) . ”

“ And delays can clog the appellate system, thereby slowing down the workings, and adding to the costs, of the judicial system seen as a whole. Congress’ jurisdictional statutes consequently compromise, providing, for example, for interlocutory appeals in some instances, such as cases involving injunctive orders, see, e. ”